If you are an accountant working within accounts payable, chances are you’ve got an interest in automation. From eliminating manual processes to making timely payments to maintaining strong vendor relationships, a streamlined accounts payable process is crucial to the overall financial health of a business.
But what should you look for in an accounts payable automation solution? From understanding the why and the how, to knowing what to look for, let us be your guide to accounts payable automation.
The basics of accounts payable
The term accounts payable (AP) refers to all business expenses except payroll. It is essentially a list of all amounts a company owes to its vendors and suppliers for products and services provided to the business—before they are paid.
The accounts payable process is primarily made up of four actions.
- Purchasing the order.
- Receiving the order.
- Paying the invoice.
- Resolving the accounting records.
How can I improve my accounts payable?
Automation is key to improve the accounts payable process. With it, businesses can increase financial visibility, unlock insights, and strengthen relationships with vendors and suppliers.
Enhancing your accounts payable process with automation also improves the accuracy of your cash flow forecasts. Ultimately, this can improve liquidity, mitigate risk, and help your business realize higher profits. An integration automation solution can also streamline the accounts receivable process.
What is accounts payable automation?
Accounts payable automation is the use of technology to streamline the accounts payable process. With automation, businesses can automatically find and verify financial information and integrate it with other applications. This means less time searching for and entering data. With automation, tracking and retrieving accounts payable details is fast and easy.
With the ability to filter accounts payable by fields like invoice amount, issue date, and more, you can gain full visibility into your financial data and prevent fraud. Plus, cloud-based accounts payable automation software lets you work securely in real time and collaborate from anywhere.
If you’re an accountant, look for professional accounting software that pulls data directly from your clients’ spreadsheets or QuickBooks® and integrates transactions with their financial institution. You can even work with different entity types, reporting periods, and locational and departmental clients. Generate custom reports based on your clients’ needs, while also maintaining standardized reporting and financial statement formatting.
How does accounts payable automation work?
By automating the accounts payable process, businesses can eliminate tedious data entry and paper-based processes, streamline operations, boost accuracy, and unlock insight into critical financial processes. Accounts payable automation also generates an audit trail that can save significant time in the event of an audit.
From an accountant’s perspective, accounts payable automation enables your firm to:
- Pull data directly from your clients’ spreadsheets or QuickBooks® and integrate transactions with their financial institution.
- Work with different entity types, reporting periods, and locational and departmental clients.
- Process multiple clients at once and have multiple users within your firm working within a single client project at the same time.
- Set up controls so you choose how much information your clients can see. Plus, monitor activity by date, time, and staff member.
- Customize reports based on client needs, while also maintaining standardized reporting and financial statement formatting.
- Collaborate with your clients in real time, using this shared online portal to handle their bookkeeping and payroll tasks.
Why automate accounts payable?
Software that automates the accounts payable process makes it easy for businesses to submit invoices and process payments through a single platform—all of which saves time and money.
By eliminating the need for manual, paper-based workflows, businesses can increase the speed and accuracy of low-level, high-volume tasks. It also enables automatic three-way matching, expense coding, and adherence to Generally Accepted Accounting Principles (GAAP).
With smarter approval workflows and simplified vendor onboarding, you can solidify vendor and supplier relationships and optimize data for enhanced financial analysis and reporting.
How to automate accounts payable
Start by documenting your current accounts payable workflow. Include decision points and pathways to approval.
Next, take a look at the reasoning at each decision point and assign the amount of time needed. Also, try to quantify the volume of invoices. Be sure to document any pain points along the way.
Common accounts payable pain points:
- Manual processes
- Lack of data visibility
- Potential for fraud
- Delayed or inaccurate payments to vendors
From there, it’s time to look for an accounts payable automation solution. Ask several technology providers to demo the tool using your invoices. The result should be increased accuracy, significant time savings, automatic 3-way matching capabilities, fraud prevention, audit trail, as well as enhanced financial visibility using reporting and dashboard capabilities.
Work together with the chosen technology provider to automate your accounts payable process and customize it to meet your business needs.
Accounts payable invoice automation
What happens when you miss a payment to an important vendor or supplier? The results can be damaging. That’s why automating accounts payable invoices is another way to maintain healthy supplier and vendor relationships.
Invoice automation extracts data from purchasing documents and stores it in an easily accessible, organized way. When set up properly, invoice automation enables your business to process payments quickly and with almost no manual data entry.
Invoice automation supports strong vendor and supplier relationships because it facilitates communication and unlocks insight that improves decision-making.
How to select an accounts payable automation solution
Once you’ve documented your accounts payable workflow and identified the pain points you’d like to remedy, it’s time to select an accounts payable automation tool.
Start by looking for a technology provider that offers an accounts payable automation solution. Better yet, find one that offers an intelligent interface that automatically finds and verifies financial information and integrates with other applications. The most forward-thinking technology providers also offer cloud-based accounting that enables you to work securely with others in real time from anywhere.
If you’re an accountant, Accounting CS delivers all of this and much more. By combining write-up, trial balance, payroll, financial statement analysis, and more, it’s designed for professional accountants who serve multiple clients with the flexibility to handle all types of industry and entity types.
To learn more, read our blog on frequently asked questions about accounts payable.