From providing timely payment approvals to policy compliance assurance, accounts payable includes this and a lot more. There comes a saturation point where it becomes tedious for organizations to process these tasks manually. Lack of control over accounts payable can leave a business with insufficient cash and poor liquidity.
To overcome these issues, you can invest in an automated accounts payable system that increases the productivity of your business. In this article, we’ll discuss how to best control your accounts payable, but before that, let’s understand the difference between manual and automated accounts payable.
Manual Accounts Payable
Manual management of accounts payable is prone to error and time-consuming. The system can overload with an increase in volume, leading to invoice matching errors, compliance issues, or month-end accounts closure errors.
But how does it work? Well, to begin with, the finance department receives the invoice for any goods or services. Upon verification and confirmation, the invoice is approved by the payment department. The next step includes manual typing of all the invoices into the accounting file long with a physical copy. The payment is processed after the completion of the above steps.
Since everything is done manually, there’s a chance of error, which can further delay the payment process. If a manual error occurs in any of the above-mentioned processes, there can be a huge delay in the payment process and it can harm the relationship between vendor and buyer.
Automated Accounts Payable
If you are looking for a process that is time-saving, cheaper, accurate, and efficient, consider investing in ERP accounting software. The automated system automates invoice matching, minimizes the payment cycle, manages the financial policies, controls the payment approvals, and stores the data safely. Plus, the entire process is paperless, which is good for the environment too.
The process? Once the system receives the invoice, a check begins for each item and purchase order to eliminates any error. The system can also set up automated emails for pending approval, delayed payment, and more.
6 Ways to Manage and Automate Your Accounts Payable
- Avoid Errors – Accounts payable automation reduces the error during money transfers and avoids theft. For instance, the one-time setup of recurring payments requires more than one person to authorize a payment, email, or other notification.
- Repetitive Tasks Automation – Accounts payable includes repetitive tasks like purchase approval and invoice payments, which are tedious and time-consuming. Automation allows you to set up email alerts for invoice matching, pending approval, payment processing, etc. It increases productivity and gives your employees enough time to focus on more crucial tasks.
- Ease of Communication – The automated system includes a vendor portal that allows your vendor to send in and track the quote rather than sending overlooked emails. It enhances the communication between the vendor and purchasing team and helps receive automated payments.
- Audit Tracks – Once the purchase orders are processed, the system generates complete transaction details, where everything is recorded precisely. The system offers easy access to complete accounts and spending records.
- Automatic Settlements – A purchase order established via an automated system, delivery of the products, and payments – all of these can easily be mapped against the invoice received.
- Business Payment Automation – A transaction ID is generated when payment is processed, and the accounts payable software track the invoice for real-time matching.
AP automation boosts productivity, streamlines processes, manages the budget spend, enhances communication, accelerates invoice processing, and reduces overall risks. The tool is fast, seamless, and a great investment for businesses in the long run.
Have you thought of integrating AP automation into your business? Tell us in the comments below.
Kenneth is a proud native of sydney, born and raised there. However, he pursued his education abroad and studied in Australia. Kenneth has worked as a journalist for almost a decade, making valuable contributions to prominent publications such as Yahoo News and The Verge. Currently, he serves as a journalist for The Hear Up, where he focuses on covering climate and science news. You can reach Kenneth at [email protected].