The purpose of automating your Accounts Payable process is to improve speed and accuracy, increase access and accountability, minimize errors and significantly reduce costs while increasing visibility in every stage of your AP process. Further savings will be achieved through a reduction in processing time, allowing you to take advantage of early payment discounts. Implementing workflow automation will positively impact your entire accounting process – from simply routing an invoice electronically – to fully integrating with your ERP.
Organizations that have implemented the initial phase of AP workflow automation significantly reduce costs by eliminating manual filing, storage and retrieval. As a result, the average Cost Per Invoice (CPI) works out to be approximately $6.86. Organizations that have taken advantage of advanced AP workflow automation with invoices that are matched, routed, approved and filed – without any human intervention – average a CPI of $2.67.
Many efficiencies will be gained by implementing an AP workflow automation solution. There is room for time and cost savings in each step of the AP process; from purchase order and receipt of invoice to routing for approval, matching, coding, data entry, reconciling with your general ledger – and ultimately processing the invoice for payment.
When processing invoices manually, a great deal of visibility is lost – not only while trying to manage the initial processing of an invoice and its approval, but also when faced with the task of searching historical data for reference and/or audits. Electronically searching for invoices, related documents and status is much easier than looking through paper files.
The first step toward AP workflow automation is scanning invoice documents and making them available on a network. As a result, document access is immediately increased and the cost of copying, faxing or mailing is completely eliminated. This increased access will permit emailing digital invoices for attention or approval, thereby eliminating the time it would take to manually handle invoices. This can all be done with minimal upfront investment. As an initial step, even this small level of automation provides significant benefits.
By moving to the next step of implementing AP workflow automation involving more advanced technologies such as barcode readers, Optical Character Recognition (OCR) or Intelligent Data Capture(IDC), the process of capturing your invoice data will become much faster. In addition to data being captured in a more efficient manner, digitizing your invoices allows them to be stored in a centralized location making them easily searchable for improved access and control while simultaneously populating your ERP or accounting system transactions. Businesses that have a large number of invoices to process can realize significant time and cost savings from having an AP workflow automation system that automatically reads, indexes, classifies and stores data. Anyone in an organization – from an AP clerk to the CFO – will have access to the same information simultaneously without having to search through paper files.
The result of this advanced level of workflow automation not only improves productivity in an AP department but also significantly improves business processes. Now, with digital documents being directed automatically to the right person, at the right time, with the added benefit of email notifications – businesses can increase speed, reduce costs, enhance visibility as well as improve internal controls, accuracy and cash management.
Productivity reports can show you what’s been done and what is still outstanding. Invoice 3-way matching is accomplished via integration with your ERP backend and sent for approval / payment. With one-click ERP retrieval or by pushing data automatically into an AP/ERP system, you can eliminate double or even triple data entry. With less time spent on entering information, more time can be spent determining status and assignment of all in process invoices so you can take appropriate action when necessary.
Document management systems can transform manual labor into intelligent, efficient automated processes, freeing up your staff for more important tasks. Ultimately, having invoices enter your system without manual intervention would save even more time.
But this requires cooperation with your vendors. When you compel vendors and suppliers to submit invoices electronically you can eliminate the time to scan these documents, manage paper, postage and handling and are at less risk of an invoice getting lost.
You can also work with them to negotiate early pay discounts. Many of your vendors may already be doing this with other customers and it can’t hurt to start the discussion now as systems across industries are moving to automation.
AP can be a strategic asset to any organization with better control. Identify where you want to be, research what technology fits your needs best and measure the success of your changes.
And don’t stop there.
Document management systems can take care of everything from travel and expense form workflow to HR records management, new hire onboarding, legal, medical and compliance documentation and more. By starting in one area of the business, many systems can be successfully utilized in other departments.
From emailing an invoice for approval to automatically advancing files to multiple branches with complex business rules, workflow – from basic to advanced – is a powerful way to streamline your entire AP Process. And you can start today.