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10 Best Practices that Impact Accounts Payable Automation

  • 10 Best Practices that Impact Accounts Payable Automation

    10 Best Practices that Impact Accounts Payable Automation

    10 Best Practices that Impact Accounts Payable Automation

    All around the world, mistakes happen in accounts payable departments every day. We’re all human; we make mistakes and it’s not the end of the world. But sometimes, errors can be costly. Since the accounts payable department handles money leaving the company, mistakes that happen here mean companies are losing money.

    While a few mistakes are understandable, the costs can add up quickly if an AP department doesn’t take steps to stop errors from happening. In some more extreme cases, issues that arise within accounts payable actually have the potential to sink your company.

    The good news is that you can prevent many mistakes in the AP department by implementing a best practices policy. In this article, we’ll look at ten best practices in accounts payable processing that will help your company prevent costly mistakes like those from human error, unclear policies, and misplaced records.

    We’ll also look at best practices for automating accounts payable. As more and more companies go digital, automation is an essential consideration when implementing new and improved policies. The policies that support best practices in the accounts payable process are most effective when you support them with AP automation.

    10 Best Practices that Impact Accounts Payable Automation AP SaaS

    1) Enter New Invoices Immediately

    Get invoice processing off to a good start by entering new invoices into the system the same day they arrive. This ensures you won’t lose incoming invoices. It also provides more accurate insight into an accounts payable department’s current workload.

    With a quality automation software system in place, the only manual task you’ll have to do to support this AP automation best practice is to scan paper invoices. Most digital invoices will enter the system automatically once you’ve worked with your software supplier to implement accounts payable automation. For paper invoices, you can outsource scanning to NextProcess if you don’t want to scan the invoices yourself. We offer same-day turnaround on our document scanning.

    2) Centralize Information Management

    If you don’t want to lose track of accounting records, you need a way to capture and manage all the information in one central location. Invoice receipt, data extraction, and validation shouldn’t be happening in different places. This is true for AP departments that still manually process paper invoices as well as digitized departments. However, it’s much easier to centralize document management if you’re using automation software to manage AP processing.

    Even if the people in charge of different tasks aren’t physically in the same location, AP automation software makes it easy to centralize all accounts payable processing. This makes it much simpler to enforce company policies and streamline accounts payable processing. Also, with cloud-based automation from a Software-as-a-Service (SaaS) company, your employees will be able to log in to the software from any internet-enabled location.

    3) Establish Access Controls

    Making sure everyone involved in accounts payable processing has access to centralized information is vital for a smooth workflow. At the same time, it’s also important to manage who has access to AP information.

    For example, not every AP employee should have editing access to your company’s Master Vendor File. Similarly, only a few people should have the authority to approve invoices with high price points that fall outside automated approval thresholds. Segregation of duties and similar internal controls help keep AP running smoothly and maintain vital security measures.

    You’ll also want to make sure you partner with a software supplier that prioritizes digital security. Only your employees should have access to the software, and your software supplier should provide assurances of digital security. For example, NextProcess is an SSAE-16 and HIPPA-compliant service provider, so you can rest assured that your data is guarded by the best security measures.

    4) Store Digital Records

    Paper records take up large amounts of storage space. It’s often difficult and/or time-consuming to find information in paper files. Plus, a fire or a water leak can destroy years’ worth of files very quickly. To help support best practices in AP, you’re going to want digital records of all your invoices and their processing history. Digital records are secure, easy to search, and won’t get lost or damaged as easily as paper can be.

    If you’re already scanning paper invoices into the system for processing, your AP automation software should back up and store that information as well. You can also scan old paper files into the system so you can easily manage all your records. Our document imaging service can help with that if you’d rather outsource file scanning than handle it in-house.

    10 Best Practices that Impact Accounts Payable Automation AP Software

    5) Define Workflow Rules

    Anytime you have multiple employees working together, you need a clear system in place. Without best practices policies to help everyone figure out who should do what tasks, it’s easy to end up working at cross-purposes. Everyone in the accounts payable department should be on the same page about approval deadlines, policies for handling exceptions, how to make payments, etc.

    It’s important that you clearly define workflow rules as part of your AP automation best practices policy. Once you have your rules in place, then you can customize your accounts payable automation software to help enforce workflow best practices.

    6) Track KPIs

    If you want to know how well your company is doing at maintaining accounts payable best practices, you’ll need to track Key Performance Indicators. Tracking KPIs lets you measure AP performance so you can determine if your company is hitting goals for best practices and identify areas for improvement.

    KPIs to track in accounts payable include the average time from receipt to payment, processing cost per invoice, the total number of invoices received, and the number of duplicate, late, or erroneous payments. Ongoing measurement of KPIs helps your company track compliance with best practices. It’ll show areas where AP is strong and places where there’s still room for improvement.

    7) Manage Vendor Information

    You need a single, clean master list that collects all your vendor information in one place. Incomplete, fraudulent, or duplicate vendor information can creep into your system if you don’t have a proper vetting process. Those types of inaccuracies put your company at risk of fraud or making inaccurate payments.

    Keeping your vendor information up to date is easier with the right accounts payable automation software. AP automation like we offer here at NextProcess makes managing vendor information simple. You’ll be able to organize vendors and suppliers in a database that’s easy to search and update.

    8) Offer Supplier Self-Service

    Managing vendor information can take time away from other AP tasks if your employees need to manually update information. They can also lose time answering vendor questions about processing times and payment statuses. You don’t want your accounts payable department to get bogged down in handling customer service, but you also want to maintain good relationships with vendors and suppliers.

    NextProcess’ AP automation software lets you set up a vendor access portal so your approved vendors can update their own information. This self-service portal also lets vendors and suppliers check the status of their invoices and find answers to common questions. This portal makes things easier on your vendors and frees up your AP department because they won’t need to take so many customer service calls.

    10 Best Practices that Impact Accounts Payable Automation Accounts Payable SaaS

    9) Improve Tax Info Management

    Tax season is hard enough without finding out that you don’t have all the information you need on file already. It’s a good policy to have a W-9 for each vendor before you issue payments to them. That’ll save a lot of hassle when you need to prepare 1099 forms. It’ll also help you avoid fines for not complying with reporting requirements. You’ll also need well-defined procedures in place for managing sales and use tax.

    Automating helps with both taxes and audits by supporting best practices in accounts payable. The digitized records system makes all the information you need for taxes easy to access. Plus, controls built into the automation system help ensure accurate information so there’s less risk of delays or other issues caused by finding a problem in your records.

    10) Prioritize Fraud Identification and Prevention

    The accounts payable department is one of the most common targets for fraud. This sort of fraud often takes the form of a fake invoice. The fraudster may be someone outside the company, but studies show that more often it’s a current or former employee.

    Best practices in accounts payable include attention to fraud identification and prevention. Employee reports are by far the most common way of catching fraud, so make sure that your company is set up so it’s easy for employees to report suspicious activity. Additionally, internal controls—such as regular internal audits and software that automatically checks for invoices from unknown vendors—also help.

    Implementing Best Practices Alongside Automation

    Implementing best practices policies alongside accounts payable automation keeps your AP department running smoothly. Together, your policies and quality automation software improve cash management, save money, and speed up invoice processing. They’re also going to help you fight fraud, improve vendor relationships, and make taxes and audits easier to deal with.

    Of course, to get the most benefits from AP automation and best practices, you need a high-quality software system. NextProcess’s AP Automation Software fits that description. We offer a reliable, user-friendly system that is easy to customize to your company’s specific needs. It also seamlessly integrates with your existing ERPs for hassle-free improvements to your accounts payable processing. Plus, we offer a full software suite of programs that you can implement alongside AP software to provide an end-to-end financial processing solution.

    We also back up our software with customer service you can count on. NextProcess will be right there with you every step of the implementation and integration process to make sure your software is set up and working just how you want it to. You’ll be able to customize the software to support your company’s individual AP best practices policies. We’ll also keep the system updated for you, so you won’t need to worry about missing out on important new tech and security upgrades.

    To find out exactly how well AP software can work for your company, get in touch with us. We’ll set up a free demo so you can see first-hand what a difference accounts payable automation can make in implementing best practices for your company.