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What Happens After You Automate Accounts Payable?
If you’re on the fence about whether to implement modern business process automation (BPA) software in your company’s accounts payable (AP) department, it can help if you know what AP would look like after automation. Automation software is highly customizable, so it’ll look a little different for each company based on how you plan to use it, but there are certain things you can count on.
BPA software standardizes and streamlines your AP workflow. It also shifts your staff’s responsibilities; rather than replacing employees, it lets them focus on different tasks. In the months after automating, you’ll notice processing costs go down compared to earlier manual processes. The software also improves processing accuracy and data collection, while reducing the risks of errors and fraud. Finally, you’ll enjoy a process that’s working smoothly, scales to your company’s needs, and is easy to integrate with other software.
The Workflow Changes
One of the goals with AP automation is for the software to take over most of the processing tasks. When everything goes well, invoices enter the system and the software handles processing all the way through to payment approvals. The workflow starts with invoices being digitally entered into the system, either from electronic files (like an emailed invoice) or scans of printed files. The system automatically captures invoice data, generating a digital version of any printed invoices.
Next, the software system checks invoices for errors or unexpected data. If the invoice matches an associated purchase order, it’s automatically routed for approval. If it doesn’t, the system tries to authenticate it and alerts an employee if the invoice requires manual approval. You can set up automated approvals for certain types of invoices (e.g. PO-matched invoices, invoices from approved suppliers, and/or invoices under a certain payment threshold). If the invoice requires manual approval, the software system alerts approvers, who can log in to approve invoices from any internet-enabled device.
We describe an invoice as being “auto-processed” when it is scanned into the software system, processed, and approved without human interference. With a system like NextProcess, you can achieve up to 90% auto-processing in your AP department.
Staff Workload Shifts
Before automation, employees in a typical AP department spend a large amount of time on manual labor such as entering data, checking for errors, and reconciling issues with suppliers. In fact, the Institute of Financial Management (IOFM) estimates that 84% of an employee’s workday in the accounts payable department is wasted on manual tasks like this which could easily be automated.
AP automation takes over data entry and invoice processing tasks for the vast majority of invoices that go through your company. It can even take over some of the customer service tasks. With NextProcess’s AP automation software, you can set up a supplier self-help portal so they can log in and update their vendor information or check on the status of an invoice.
The relatively few invoices that BPA software can’t auto-process will be routed to human employees. With exception invoices identified quickly and more time available since they’re not bogged down with other invoices, employees can quickly handle issues that arise. Accounts payable staff will also have more time for value-added tasks including data analysis and identifying strategic opportunities.
Costs Go Down
Automation saves money. Exactly how much money your company will save depends on a wide variety of factors, but here at NextProcess, we find that the average organization with fully automated AP processing saves an average of $14.93 per invoice compared to organizations that manually process invoices. Across the board, our clients typically break even in 9-12 months and see additional reductions in processing costs as they continue using the software.
The biggest savings come from faster processing. The price per invoice goes down because employees aren’t spending so much time processing each invoice. Faster processing and better data management also mean no late fees. You’ll also save money by reducing costly errors. Your company might even be able to negotiate early payment discounts.
Accuracy and Data Improve
When your AP department relies on manual data entry, there’s always a risk of human error. It’s simply inevitable. Digital data capture technology—including optical character recognition (OCR) and data indexing—significantly reduce errors. Ensuring that accurate data enters the system is a major step toward improving accuracy in the AP department.
Accurate data collection—including data from invoices and data about invoice processing—makes it much easier for your company to make strategic decisions. The software system logs data and updates in real-time, so you’ll always have access to timely data regarding cash flow and involving patterns. Data analysis, audits, forecasting, and budgeting are a few of the tasks that become much easier with AP automation software making accurate, timely data easily accessible.
Risk of Fraud and Errors Drops
In addition to collecting accurate invoice data and eliminating human error in data entry, an automated AP system also checks for common errors during invoice processing. The system catches issues like duplicate invoices and discrepancies between invoices and POs before they become a bigger problem.
AP automation software can’t eliminate fraud on its own, but it does provide tools for catching and preventing fraud. The same features that check for accidental errors also catch discrepancies that could indicate fraud. The accounts payable department is one of the most common targets of internal and external fraudsters, and automation can be a big help in empowering employees to catch and prevent fraud.
A good AP automation system also automatically creates a clear, reliable audit trail. This makes it much easier for internal and external audits to go smoothly and catch anything that your company will need to correct. Accurate, reliable documentation can also help your company avoid fines, legal action, and loss of reputation that could come from a botched audit.
Processes Scale Easily
One of the great things about cloud-based SaaS BPA is that it scales so easily to match your company’s needs. Whether your company processes tens, hundreds, or thousands of invoices each month, the software adjusts to fit your needs. Transaction-based pricing means you pay based on use, and no additional fees for user licenses means you can have as many employees working on the software as you want.
Automating in one department also sets the stage for further automation in other departments. With NextProcess software in particular, you can create an end-to-end financial processing solution for your company. We offer the only suite of software with modules that cover budgeting, project management, purchasing, travel and expenses, accounts payable, and payments. Our software also integrates seamlessly with your existing ERP system, and we handle all the software updates to keep that integration running smoothly. Contact us today to learn more or schedule a free demo so you can see our accounts payable software in action.
