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 software is making inroads to becoming an indispensable part of fast-scaling businesses. In doing so, it is gradually edging out archaic manual processes.
In the simplest terms, accounts payable automation software not only processes large volumes of data with extremely high accuracy but also automates and improves the associated processes, like approvals, supplier communication, due date reminders, and archiving.
If you still haven’t switched out your manual procedures, here are 7 reasons to convince you to adopt an account payable software to improve your efficiency and the staff’s productivity.
Why should you automate AP processes in the first place? Right from reducing processing time and operational costs to improving accuracy, compliance, and visibility, let’s look at the benefits of automating accounts payable in detail.
Manual accounts payable processing involves several repetitive and redundant tasks for collecting data from different sources and departments, validating the information, extracting relevant data, and storing it.
With accounts payable automation, the organization can streamline its invoice processing. For starters, accounts payable automation, like Docsumo, can reduce the invoice processing time from a few days to 30-60 seconds.
Shorter processing times help the accounting department speed up the payment approval process. Accounts payable automation routes the invoices to the relevant departments for authorizations. The software can be calibrated to send notifications and reminder emails for timely approval of the invoices.
Furthermore, the AP team can set additional parameters within the AP automation software, such as pre-approved payment limits, due dates, role-based hierarchy, and any other custom approval rules. These parameters reduce human labor and boost productivity across the organization.
Moving away from paper documentation helps the employees better organize the documents without cluttering their workspace. And, with a cloud-based document storage system, the accounts department does not have to worry about lost or misplaced invoices.
As an added benefit of cloud storage, accountants can access and modify these documents from anywhere. Again, AP software allows you to set role-based access for increased security.
Manual data entry for invoices is monotonous and leaves a lot of room for human error. Even a small error in the processing of the invoice or copy-pasting data from spreadsheets can be detrimental to the company's reputation and financial situation.
For instance, underpaying vendors damage their relationship with the organization. Some vendors even levy penalties for such incorrect payments.
Invoice data capture software extracts data from the invoices, and directly inputs it into the accounting system. Docsumo, an advanced AP software, does so with 99% accuracy, while manual invoice processing has an error margin of 10%.
The extracted data is automatically cross-checked with the information available in the ERP and account management platform. Advanced AP software reduces the human touch points to facilitate seamless and error-free processing of invoices.
The software can be trained to spot errors. In the case of manual invoice processing, the accounting teams have to create multiple copies and get all the relevant approvals from the different departments.
On the other hand, an accounts payable automation system simply highlights the mistake and notifies the relevant employees to make the necessary changes.
The applications of automated accounts payable systems go beyond just improved accuracy and optimizing processes. The software offers a holistic approach to accounts payable that is extremely difficult to replicate with manual systems.
Here’s how the AP software revolutionizes invoice processing:
Automated accounts payable software offers greater visibility that helps the management cover all the bases. The management can promptly track the approval status of the invoices with a few clicks. The software also stores both digital and physical invoices to help the accounts easily monitor all the pending transactions. Stakeholders can get a better view of where the process gets stalled.
AP automation software also offers better control over your invoices. For example, the invoices can be easily tagged and segregated into different groups during the upload process. Consequently, authorized personnel can find effortlessly pull up the necessary documents. Constant monitoring and tracking of invoices also increase fraud detection capabilities.
Thanks to a centralized digital repository, the AP software manages to vastly increase accessibility. Finance, FP&A, and accounting teams can easily find and refer to old invoices while budgeting for the company. They can also identify financial trends and adjust their risk appetite accordingly.
Anyone with access privileges can access invoices from the central hub. They can also use different search parameters and tags to make the search process even simpler. Finally, internal and external auditors can use this feature to access invoices while conducting their investigation.
Governments are continuously changing and improving the laws surrounding data storage. Manually tracking compliance is time-consuming and erroneous.
Whereas advanced AP automation systems are capable of checking the compliance status of the invoices. In addition, the central document hub is designed to comply with GDPR, SOC-2, HIPPA Act, and other industry-specific regulations.
Apart from government compliances, the accounts payable automation software helps review invoices from third-party suppliers and agencies who might be unfamiliar with your invoice procedures. Accounting professionals can instantly flag potential issues and concerns with the compliance in these invoices.
Consistently keeping your invoices compliant also helps the auditors efficiently dispatch their duties. Lastly, the management can make informed decisions while introducing new policy changes and enforcing reformed policy controls.
According to Adobe’s report, the average cost of manually processing a single invoice is around $14. However, the price can go up to $40 after including the cost of rectifying the errors. Now, when companies are processing thousands of invoices every month, it becomes financially unfeasible to continue with manual processing.
Human errors and inefficient processes can cause delays in payments and attract heavy penalties from your vendors. Late payments are also common in organizations that are rapidly scaling their business operations without modifying their internal processes.
So, how does accounts payable automation help reduce the operational cost of the company?
To begin with, introducing automated workflows drastically reduces human errors. And, with a processing time of 30-60 seconds, the cost per invoice significantly decreases to just $12.98.
Next, straight-through processing (STP) reduces the time taken to complete the payment cycle. Docsumo assures an STP rate of 95%, thus reducing labor and other associated costs with payment processing.
Accounts payable software also allows the AP teams to set payment dates and reminders for timely payments. This reduces the risk of making late payments and incurring any unnecessary penalties.
Accounts payable software offers a smooth onboarding process for vendors. The platform helps the supplier update their payment information in the system with ease. It prevents the accounting department from wasting time running around loops to collect the necessary data. Additionally, the suppliers can directly check the status of their invoices through the platform and raise any queries there.
According to 92% of businesses, poor and outdated accounts payable processes is the leading reason for making late payments to suppliers. Accounts payable automation adds much-needed efficiency to this process. Faster approval of invoices, payments, loan repayments, and bills helps the organization maintain cordial relationships with its vendors and banks.
Vendors can use the AP platform to communicate their concerns to the accountants. Similarly, accountants can keep their suppliers informed by posting updates on the platform. Constant communication between the two parties ensures that there are no misunderstandings.
Using pre-defined automated workflows frees up the accountants to focus on the more high-value tasks. Increased visibility and control offer a bird’s eye view of financial transactions. Finance professionals can use the insights gained from the AP automation software platform, and utilize them to create accurate financial forecasts.
Now, instead of focusing on removing the errors from the invoices, they can focus their talent to scale the business. In other words, the AP software processes invoices at scale, 24/7 from a variety of sources and across formats.
Cloud storage removes paper clutter and helps with the expansion of business. What’s more, authorized employees can access important financial documents irrespective of their location.
While we’ve already covered the key features that make Docsumo the best account payable software, let’s look at a case study to prove our point.
Australian managed service provider Valtatech automates invoice processing using Docsumo, bringing down the processing time from a few hours to less than 30 seconds with 99% accuracy.
Their team used to struggle extracting unstructured data from 20,000+ invoices manually.
They implemented Docsumo’s AP automation software to extract accurate data from documents with varying fonts, image quality, and resolution. The NLP-based classification framework was trained to categorize key value pairs such as invoice number, date, and vendor details.
The result of implementing accounts payable automation was:-
What makes Docsumo the best accounts payable software across a wide range of industries are the key features: