What are the benefits of automating Accounts Payable?

Automation of accounts payable entails creating workflows to channel the invoice through various departments for faster approval. Small businesses or larger enterprises, automated invoice processing comes with numerous benefits for all.

In this blog, we take a closer look at the benefits of accounts payable automation along with understanding what accounts payable automation is. 

So, let’s jump right into it:-

What is accounts payable automation?

Accounts payable automation leverages the advanced data capture technologies to streamline the payment process, thereby, reducing human intervention and improving financial transparency. The automation helps businesses improve vendor relationships, identify cost-cutting opportunities, and save valuable resources. 

The process involves three steps: 

• Invoices and purchase orders are ingested into an OCR or AI-based document processing solution for data capture, and the captured data is stored into a structured database for analytics. 
• As the next step, data captured from invoices is reconciled against purchase orders. 
• Once the data is validated, invoices are sent for review, approvals, and payment processing. 

Benefits of accounts payable automation 

Here are the growth opportunities your business is missing out on, if you haven’t already automated the accounts payable process:-

1. Automation reduces the turnaround time by 10X 

Generally, confirming the invoice terms, getting the necessary approval, and signing off the documents can take a couple of weeks. But, with the implementation of accounts payable automation, dispatching the pending invoices only takes minutes. Accounts payable automation streamlines processes to move things faster and improves the turnaround time by 10X. 

Deploying AI-based automated accounts payable software improves invoicing starting from elimination to data entry to faster match times. The software automatically matches the invoice with the purchase order (PO), and the goods received note (GNR). This prevents major backlogs and makes the cash outlay more predictable for the business. 

2. Get more than 99% accurate data from invoices 

The goal of employing accounts payable automation is to minimize human intervention and increase the efficiency of the processes. Unlike manual labor, automation is scalable and can function with the same efficiency 24/7. Moreover, automating the majority of the accounts payable process eliminates human errors. 

Accounting errors and following the wrong filing procedures can create bottlenecks that seriously affect the productivity of multiple departments. More often than not, you have to pause essential business activities and reallocate resources to resolve these issues. ‍

3. AP automation leads to a 65% cost reduction 

Sure, the implementation of the AP automation software would come at a cost along with a learning curve for your employees. However, the ROI offered by the implementation of accounts payable automation is unmatched in the long run. 

Let’s see how:- 

i) First, it saves valuable monetary resources by preventing duplicate payments happening because of human errors. The software can be calibrated to send automatic alerts to the accountants whenever there is a duplicate entry. Additionally, making quicker payments to your vendors enables you to avail of early-pay discounts. 

ii) Next, digital storage reduces printing costs as the receipts and invoices are archived on the cloud or local servers. Maintaining digital storage is also comparatively more economical than manually archiving paperwork. 

iii) Finally, competent accounts payable automation software can instantly flag fraudulent payments and immediately notify the relevant authorities. 

‍4. Increases data accessibility and reduces the invoice processing time to 30-60 seconds 

Automation makes it possible to store all financial data and invoices at the same place. Accountants can access and review this data whenever required. Pulling up invoices, purchase orders, and goods received notes also becomes easier from the AP automation software which is a single source of truth. 

Automating accounts payable also improves interdepartmental communications. For example, it makes it easier for the relevant department heads to quickly access the invoice and sign their approval to fast-track the entire process. Automation platforms can effortlessly identify errors and exceptions and inform the relevant personnel. 

You can instantly compare the invoice data with POs and GRNs. It frees up the employees to focus on productivity. As you can see, accounts payable automation software validates the data entered and expedites the bookkeeping process, increasing the overall efficiency of your operations and adding scalability to the entire process. 

‍5. Improved analytical ability enables better business decisions

Analytics and reporting features of the automation platform offer greater data visibility. This means accountants get real-time insights and recognize data patterns to help them make better financial decisions. Report generation and sharing also become easy. 

Data accessibility also makes significant quality-of-life improvements to multiple business systems through third-party integration. Apart from that financial departments, you can also improve the vendor access points and customer services. The seamless exchange of digitized data helps the business set up more optimized workflows. Some automation portals also enable you to establish vendor access portals where they can check the status of their invoices and raise concerns. 

6. Enhances security with end-to-end encryption 

Establishing secure audit trails and enterprise-grade security are benefits of AP automation software that cannot be underestimated. The automation process ensures that the team conforms to all the guidelines and sticks to the correct approval procedure while filing the invoices. Ensuring the legitimacy of the invoices with end-to-end data encryption helps the company curtail the risk of fraudulent transactions. 

With role-based access rights, you can grant users specific rights to access data. You can also define if the user has right-only or write access for enhanced security. 

Building workflows with multiple approval levels helps the business identify fraudulent or incorrect invoices much sooner. It also helps the accountant to check for missing data. 

The company also gains the ability to set different compliance parameters to ensure the invoices are in accordance with the organization’s rules and regulations. Similarly, these parameters also check whether the invoices and approved transactions are compliant with legal requirements and government policies.

Lastly, the AP automation platform maintains a record of all the actions taken on the invoice. These records include the time when the changes were suggested, the employee name, the employee ID number, and the tools they used. The availability of this data helps the company make its employees accountable for any errors.

7. Improves scalability by processing thousands of invoices 

As mentioned earlier, automating accounts payable reduces the number of repetitive and manual tasks. Consequently, it frees up personnel for strategic planning and business development. You can even reallocate the employees to focus more on improving vendor and customer relationships. Assigning them to other revenue-generating operations also helps the business establish new cash flows. 

You can create customized workflows to address your business’s unique invoicing challenges. Added features include setting up alerts, notifications, and approval timers. 

How to automate accounts payable with Docsumo?

Docsumo automates accounts payable in 4 easy steps:-

Step 1 - Invoice ingestion

Upload invoices directly to Docsumo’s pre-trained API specially built for invoice data capture directly from your email inboxes. The API supports all the popular formats for invoices, including scanned photos of paper invoices, and can adapt to any changes in formats/templates/layouts of invoices.

Step 2 - Smart data capture

The system scans the document and automatically extracts valuable information like the payee's name, the amount due, account numbers, invoice numbers, and due dates. Docsumo measures up to 99% data capture accuracy.

Step 3 - Data validation

‍Captured data is validated for accuracy before improved accuracy. Reviews are held for manual review.  

Step 4 - Integration and post-processing

Docsumo can easily be integrated with any CRM or ERP software. Post-processed data is pushed into a database for analytics and decision-making. 

Here’s how Docsumo optimizes your accounts payable process:-

• Improves efficiency by 10X with end-to-end automated workflows and validation logic.
• Extracts account payable data with 99% accuracy and zero human intervention. 
• Matches invoices with their purchase orders and receipts using 2-way/3-way/4-way technologies. 
• Reduces the turnaround time for invoice processing from weeks and days to < 60 seconds. 

To summarize, accounts payable automation offers increased efficiency, cost savings, and data accessibility. Reduction in manual entry errors and improved control over the finances empower the brands to shift their focus toward critical value-added business strategies. In a nutshell, switching to accounts payable automation improves your business’s profitability along with saving time on the cost of invoice processing. 

If you’re looking to automate your accounts payable, try out 14-day free trial to Docsumo’s smart invoice capture API, or talk to our automation experts.