Businesses that haven’t yet modernized their AP functions are stumbling into costly bottlenecks from manual data entry errors, fraud, and lack of controls — to disconnected communication efforts spent tracking down invoice approvals.
A good first step for improving the Accounts Payable process is by capturing all invoices or bills into a centralized repository such as an AP Automation platform. Using modern technologies, bills are automatically and accurately entered into the central system for complete visibility into the invoice lifecycle. Modernizing the AP function also establishes full control over procure-to-pay (P2P) by creating digital audit trails that tracks every step, invoice changes, communications, and approvals associated with an invoice.
When artificial intelligence (AI) technologies are used, suggestions of key information are provided, such as invoice number, amount, vendor information, and GL codes, to save time on manual data entry. Additionally, potential duplicate invoices, purchase order (PO) mismatches, and other issues can be automatically flagged for AP to quickly investigate the issues.
AP Automation can solve several of these bottlenecks caused by manual processes and increase Accounts Payable efficiency. In this blog, we highlight 6 ways automation improves your Accounts Payable processes:
1. Expedites Invoice Verification
The main role of Accounts Payable is to verify invoices. Even if three-way matching is typically associated with invoices backed by purchase orders, a similar process should be used for processing all vendor bills. When invoices are approved manually, verifications become time intensive and three-way matching can be nearly impossible for invoices without POs. However, automation can make the verification process straightforward while providing the necessary controls for all types of invoices.
One of the key capabilities for invoice verifications is the integration between the AP Automation system and financial system, such as Oracle NetSuite, Sage Intacct, SAP, or Intuit QuickBooks. When purchase orders are used, integrations are particularly useful since invoice matching against open POs can be done automatically. If invoices are received for closed POs or when invoice information does not match what is on a PO, the discrepancies can be quickly identified and handled appropriately.
Another savvy benefit of AP Automation is the ability to communicate with anyone involved with a purchase (e.g., approvers, purchase requesters, shipping receivers, procurement managers, etc). By easily adding anyone in an organization to answer questions or provide missing information is crucial to make three-way matching possible for AP teams and increasing AP efficiencies.
2. Archives Invoices Electronically
Companies using manual, paper-based Accounts Payable processes need to store physical files in binders, file cabinets, and/or offsite storage facilities. Locating past invoice files can be daunting and take as much time to find as it does to manually chase down approvals.
Businesses can make accounts payable process improvements by going digital and electronically archiving their invoices through an AP Automation platform. Files can be quickly searched and available for immediate retrieval. Digital archives provide easy access to invoice approvals for auditors and help businesses comply with compliance or regulatory requirements.
3. Centralizes Invoice Communications
Communications play a key role in Accounts Payable and invoice approvals. An invoice can involve multiple people – including purchase requesters, approvers, managers, receivers, contributors, and vendors. The ability to track and log communications that occur on an invoice is another key accounts payable process improvement that your AP Automation platform should solve.
The invoice should act as the centralized communications hub in which questions, field updates, comments, rejections, and approvals are directly available. This makes all communication threads and information related to the invoice quickly accessible to make it easier for approvers to quickly approve the invoice. Long emails, voicemail messages, unreturned phone calls, and face-to-face meetings are no longer needed.
Stampli is the only AP Automation platform that provides a communications hub so all your conversations happen on top of the invoice.
4. Identifies Bottlenecks
When invoices get stuck in a queue waiting for feedback or approval, a company runs the risk of late payments, damaged supplier relationships, and missed opportunities to manage cash flow. AP Automation platforms that provide invoice management dashboards and reports can help identify potential bottlenecks – such as finding individuals that are taking longer than expected to approve invoices – can help companies improve the process. Additionally, reminders and notifications of open and late tasks can help bring accountability and motivation for prompt responses and actions.
5. Detects Potential Fraud
Unfortunately, stories of companies – large and small – that have lost money by paying phony or fake invoices are quite prevalent. Companies that are using manual processes are most prone to these schemes. It is important for an AP platform to set up and adapt to the businesses workflows based on its multiple permissions and roles throughout its departments.
In addition to reducing manual data entry, AP Automation platforms can help identify duplicate invoices based on invoice number, invoice date, vendor name, line items, and/or amount. The ability to easily view past invoices from a specific vendor can help flag invoices that may require further investigation. Enforcing three-way invoice matching and verification is another tool for detecting fraudulent invoices.
6. Makes Invoice Management Easy
Since purchases involve people across multiple departments and roles, it is imperative to make the invoice management process easy and painless for all. Having a platform that is intuitive and easy to use for anyone – whether they approve invoices every day or provide context into the invoice, the platform must make it easy for anyone to review and approve invoices.
Creating efficiencies in the Accounts Payable workflow can help shorten the invoice approval process, minimize errors, reduce the risk for fraud, help free up valuable working capital and much more. Click here to contact one of our accounts payables specialists to find out how we can kickstart your Accounts Payable process improvement efforts today.
With three-way matching, companies should first match a copy of the invoice to the purchase order to verify that the invoice represents a valid purchase. Next, the invoice should be compared with the receiving report to ensure that the product was delivered. When an invoice arrives to us, the system can interface with the company’s financial system to locate the corresponding purchase order. If we do not find a purchase order, the appropriate parties can be notified to research further.
We also empower vendors to participate in the collaboration by allowing companies to set up a specialized vendor portal. Within the portal, vendors can see invoices they’ve submitted and respond to questions on specific invoices. Sometimes the bottleneck in the traditional AP workflow is communication. Consider communication in the traditional process. Often, employees lose precious invoice processing time due to waiting for feedback from other employees or the vendor. Companies that implement our system benefit from a centralized collaboration platform that ensures all parties can easily and quickly communicate on invoices.