Accounts payable (AP) processes are all about getting invoices approved and paid, but if you pay attention over time, you will begin to see trends in your AP cycle. When you study your AP cycle you will learn when to expect increased expenses or expect periods with fewer bills. Having this knowledge will help when it comes to financial planning for your business.
These days, you can maximize your AP cycle’s efficiency by automating much of the process — and that means you will have more time to focus on the parts of your business that you love. Plus, it’ll mean faster payments to your vendors, which will keep them happy and help to foster stronger vendor relationships. You can speed up your AP cycle when you automate these five processes.
Matching and Verifying Invoices
You should never pay an invoice without comparing it to the purchase order, packing lists, and other relevant documentation, but you don’t need to sit down and manually go through all of the invoices by hand to do this. That process can take a long time, especially if you’re matching each invoice to multiple documents. Not only is it inefficient, but it also opens up the possibility of matching errors that occur when the process is handled by fallible human beings.
When you automate invoice matching and verification, you can cut out the bottleneck that often occurs when invoices must be matched and verified by hand. Workflow automation software can store all the relevant documentation that should accompany each invoice. You can use optical character recognition (OCR) tools to capture the data on these documents and on your invoices easily, and then the software can match relevant information across the documentation for you to verify that invoices are ready for approval.
You also can’t pay an invoice without verifying its accuracy and validity in a process known as approval. Depending on the size of your company, an invoice might just need your approval, or it might need to go through several employees’ hands, being approved each time, before it can finally be paid. Doing this manually can mean sending a paper invoice from one person’s desk to another’s multiple times.
This process can lead to delays in payments or even a loss of the invoice– all of which could mean an unhappy vendor. To avoid this, automate the routing and approval process so that invoices can move at digital speed for faster payment processing and less risk of delays.
Vendor Risk Management
Do you know what your vendors’ risk profiles are? How likely are they to deliver inferior goods or fail to come through with an order? If the vendor does not meet your expectations, are they willing to work with you to provide better quality supplies or merchandise in the future? Could problems with vendors put your supply chain at risk and damage your business’s profits and reputation?
When you automate supplier risk management, you can take the guesswork out of monitoring your vendors’ risk profiles. Many business owners still audit their vendors quarterly or yearly to assess supplier risk, but modern procurement software monitors vendor risk profiles in real time and can let you know when a vendor’s risk level has increased. You’ll also have more flexibility to change contract terms, put purchases from a newly high-risk supplier on hold, or search for alternative suppliers.
Invoice Submission and Sorting
Different vendors send invoices through different message services like snail mail, email, fax, or even digital formats. This can make sorting and classifying them a complex and time-consuming task, but it’s one that might be a waste of time and money for an employee to do by hand.
Instead, automate invoice submission and sorting and require vendors to submit their invoices electronically to cut down on paper waste, increase privacy, and eliminate the need for someone to spend their time scanning invoices into the system. You might still have to scan other documentation, but the more parts of the process you can automate, the more time and money you’ll save.
Entering data manually is expensive, it takes a long time, you’re more likely to get errors, and your data entry person might just drop dead of boredom. Thanks to advanced intelligent character recognition (ICR) tools that can recognize handwriting and translate it into type, you can easily automate data entry. These tools speed up AP processes, eliminate clerical errors, and save your intern’s life.
Because of technology, AP processes no longer have to eat up hours of your time every week. In fact, automating these five processes will give you more time to focus on the more important aspects of your business.