How to Automate Accounts Receivables?
We've accumulated the list of questions you should be asking before automating accounts receivable process in your company. This article helps you filter out the solutions for your consideration list.
Accounts payable automation plays a major role in optimizing cash outflows and budgeting for fast-scaling businesses. In other words, accounts payable automation helps organizations manage their current liabilities more efficiently. And, with better current liability management comes improved working capital performance.
In the simplest terms, working capital is the difference between current assets (cash, accounts receivables, and liquid assets) and current liabilities. It helps gauge the short-term financial health of the company. So, if your organization is not already using AP automation, here are the 3 compelling reasons why you should implement it immediately.
Accounts Payable automation improves multiple aspects of an organization’s financial management. Companies that revamp their working capital management style benefit from the following advantages of account payable automation.
Working capital management is a continuous operation and accounting teams crunch numbers to keep the books updated. However, manually processing the invoices requires multiple approvals and it unnecessarily lengthens the process.
For instance, manually processing an invoice takes anywhere between three days to two weeks. Consequently, accounts payable (AP) teams work with outdated data which impairs their decision-making while budgeting. Enabling AP automation solves this issue with its faster processing time. AP automation software process vendor invoices within 30-60 seconds.
Apart from that, faster processing times help the organization streamline its payment cycle. Clearing vendor invoices on time improves vendor and supplier relationships.
Faster payment cycles also prevent the company from incurring late discount fees and undue interest charges. Thus, decreasing your current liabilities and increasing the working capital of the company.
Faster processing times due to automated workflows reduce human labor costs. Again, it increases the current assets through savings, further improving working capital.
Budgeting and working capital management are highly sensitive accounting areas. Even minor inaccuracies can leave a tremendous impact on the balance sheet of the company. As a result, the improved accuracy offered by accounts payable automation software is greatly appreciated by the stakeholders.
What happens when the invoice has inaccurate data? Firstly, it has the wrong due amount. Now, the accounting department cannot simply scrap the invoice. They have to mark the invoice as an exception. What follows is checking with their in-house departments to see if the mistakes were committed due to internal factors. If not, the respective vendors are notified about the errors and informed of the fixes they have to do.
Accounts payable automation significantly lowers the exception rate due to internal miscommunications. It empowers the accountants to take proactive measures and notify the vendors about stricter invoice guidelines to lower invoice rejection rates.
Lower exception and rejection rates translate to higher straight-through processing. In fact, with its robust invoice processing automation framework, many AP automation platforms give a high STP rate of 95% and more than 99% accurate data.
Accounts payable automation eliminates the challenges of duplicate payments and inaccurate invoices leading to improved working capital performance. The AP automation system is a single source of truth where teams can view spend analysis and track historical reports, monthly accruals, and other outstanding payable metrics.
Working capital management involves handling liquid assets. The C-Suite leadership and accounting, FP&A, and finance teams get a holistic view of the company’s spending pattern on the AP automation software. Gather all your accounting data in one place, run more accurate forecasts, and spot risks and opportunities to make more accurate financial decisions.
Advanced AP automation software features like tracking the status of invoice payments, spend-to-supplier ratio, on-time payment percentage, and the total number of early payments make the accounting departments extremely efficient.
One school of thought is paying invoices only when they are due slightly improves the short-term performance of working capital. However, by doing this, the company misses out on opportunities, like early-payment discount incentives. An AP automation software keeps track of such revenue-saving incentives and alerts the company about the best time to make invoice payments.
Everything combined, the accountants and the management gain the ability to choose the invoices term that provides them the upper hand in financial dealings. While choosing an AP automation software, opt for the one that has real-time reporting capabilities over the one that provides periodic updates about invoices.
Better financial transparency achieved through the implementation of account payable automation lets the company resolve disagreements with the vendors.
Docsumo is an intuitive and user-friendly accounts payable automation software that directly addresses the concerns of accounting teams dealing with working capital management. Docsumo increases the efficiency of established workflows by 10X through its lightning-fast processing speeds.
What makes Docsumo the AP automation software of choice for companies processing high volumes of data and invoices is that it processes structured and unstructured documents across multiple formats within 30-60 seconds with more than 99% accuracy.
The direct impact of improved efficiency is a reduction in operating costs. Docsumo reduces operating expenses by 68-70% with its automation. Improved accuracy and tighter security protocols make Docsumo an attractive choice for high-value accounting teams.
To see Docsumo in action, sign up for a 14-day trial.