Accounts Payable: Key Factors for Automating AP Invoice Processing

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Accounts Payable: Key Factors for Automating AP Invoice Processing

CFO Tech Outlook | Tuesday, July 20, 2021

Accounts payable automation can reduce the average cost of processing a single invoice (including labor, overhead, technology, and so on) by roughly 13 percent.

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Accounts payable automation improves the effectiveness of Accounts Payable (AP) processes by improving information accuracy, providing total visibility into AP department performance, and ensuring compliance with company and industry requirements. AP Automation software speeds up and ensures payment accuracy by automating time-consuming human operations such as invoice data entry, gap analysis, and approval workflow. Approved payments can often be scheduled and automatically adjusted on the due date.

Four Reasons for Automating AP Invoice Processing

Enhance Invoice Processing Accuracy

Errors in accounts payable management are costly and time-consuming to correct. Discrepancies in PO and invoice data, missing/incorrect POs, and bottlenecks in the approval workflow are all common causes of exceptions. An invoice exception happens when there is an issue with an invoice, such as delayed approval or routing faults. This can bring the payables process to a halt, and without verification or centralized information access, duplicate payments and other payment problems are a possibility.

AP Automation can help with several issues, including:

  • Automate manual processes, which is known to have a greater rate of error.
  • Validate invoices electronically against contracts, commodities received, and purchase order data.
  • AP staff workflow automation streamlines every step of the invoice approval process, eliminates back-and-forth administrative activities, and allows for more accurate communication between business units.

Mitigate Invoice Processing Costs

When AP departments automate invoice processing, they may reduce processing expenses and save money from the start. Changing from manual to automated AP can allow businesses to access invoices, extract information, sort, scan, validate, match, and archive. The ultimate goal is to minimize manual handling, cycle time, and expenses. AP automation can reduce the average cost of processing a single invoice (including labor, overhead, technology, and so on) by roughly 13 percent. This implies that it improves the day-to-day activities that enable invoice processing, and organizations that do not prioritize AP performance fall behind.

Boost Productivity

Discrepancies in PO and invoice data, missing/incorrect POs, and bottlenecks in the approval workflow are common causes of exceptions. An invoice exception happens when there is a problem with an invoice, such as a pending approval or routing error. This can bring the paying process to a halt, and without verification or centralized information access, there is a risk of repeat payments and other payment problems.

A Simpler Approach to Spend Analytics

Spend visibility and planning, particularly with paper-based invoices, is a crucial issue. Delays are avoided when human operations are replaced with automation. When firms have easy access to digital archives, they can forget about lost or missing bills. Spend visibility helps planning by enabling more precise budgeting and forecasting. It provides more openness and insight into how money is spent. AP automation software provides real-time dashboards that track invoice status and critical AP KPIs.

See Also: Enterprise Performance Management

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