Connect with us

Banking Technology

Three steps to effectively automating accounts payable

Avatar

Published

on

Would your business be willing to pay more for an equivalent product they could get at nearly half the cost? The notion, especially to those in finance, may seem preposterous. But it is exactly what is happening in the many organisations that have ineffective accounts payable (AP) processes, writes Erin McCart,director of product marketing at ASG Technologies.

In fact, the Institute of Finance & Management (IOFM) in the United States estimates that each payment costs an organisation twice as much to process in an organisation with less effective AP functions than it does in best-in-class companies.

One of the biggest points of savings comes from the automation of AP. Automating AP can dramatically improve effectiveness and efficiency KPIs such as purchase order (PO), first match rate and invoices per full time employee (FTE). It also reduces human errors and missed payments, which in turn strengthens the supply chain and boosts satisfaction ratings thanks to faster payment processing.

Internally, automation also offers relief to AP staff who can cut down the time they spend on time-consuming manual processing, instead being freed up to manage exceptions, develop beneficial relationships with suppliers and take on different tasks.

The best automated AP solutions can integrate all kinds of information and content formats.

A successful AP automation project starts with deploying a software solution but includes much more work than just that. Companies must implement three important steps to achieve the optimal results.

Centralise content

Centralisation and organisation are key to any effective accounting process. But they don’t always exist because in many organisations, the data leveraged by AP comes from disparate sources. The company’s enterprise resource planning (ERP) system is often a primary source, but there are countless other systems that reside with sales staff, external vendors, customers or other points along the supply chain, such as transportation carriers and manufacturing and warehouse facilities. If the information needed to streamline the management of exceptions is not centralised—with data from different source systems connected via unique identifiers such as vendor ID, account code and customer name—then it cannot be leveraged seamlessly to automate payment processing.

Advertisement

In addition, content that is available only as paper, PDF, image, etc., must be scanned to have critical data elements (e.g., date, account number, amount) electronically captured and metadata created. Only then can they be indexed and stored in a content repository and database. From there, the invoice and associated supporting content can be linked and processed via workflow.

The best automated AP solutions can integrate all kinds of information and content formats with their data repository—including Microsoft Word and Excel, PDF, email, video, scanned capture documents—and use a variety of standardised methods to exchange information in electronic formats (e.g., XML, JSON and EDI). They also intelligently index, archive and organise this content so that users can easily find the information they need. An effective automated AP platform also includes auditing and reconciliation capabilities, which alert users about errors such as duplicate, short or delayed payments. On average, organisations that implement a highly automated AP process can achieve a PO first pass match rate of 90% of invoices.

 Integrate with core systems 

While centralisation entails storing all critical accounting documents related to AP in one place, in most enterprises, these documents touch several different systems. Staff outside of AP may store documents in an ERP system or a content-collaboration platform, but other crucial information may reside on paper, in sales contracts, on inspection certificates or in countless other areas.  Disparate systems that function independently and without effective integration only prolong accounting processes

To be effective, the payables software solution must be able to communicate with all of the core systems that house relevant documents, or the organisation could risk records becoming “lost in the loop.” More specifically, any AP automation solution should automate with the company’s content services platform (CSP) and ERP systems. Integrating systems and federating content can substantially reduce processing time.

Unify content across departments

The top-of-mind AP-related systems are unlikely to be the only software in the company that contain information relevant to AP processes. From marketing, the service desk, management and operations, to manufacturing and legal, all major departments within an organisation retain records that have some bottom-line impact on business operations.

AP staff spend most of their time dealing with transactions that are not PO-based or with PO exceptions like mistakes in amount, quantity, price, payment terms, etc. And in many cases, the information they need to resolve exceptions is not readily available to them but does exist in those other departments.

Advertisement

Best-of-breed automated AP solutions centralise enterprise content beyond the documentation that is typically considered central to payables processes. When evaluating solutions to automate the payables process, consider how to integrate systems using standards-based REST APIs, low-code web-hook enabled content-centric workflows and content federation to access content stored in repositories used in other parts of the organisation. This seemingly small effort will improve transparency and yield improved cost savings within AP and the broader supply chain.

Automation brings content in focus

Ultimately, when a company tightens its AP processes, it eliminates the processing delays that result in inaccurate reporting, poor financial visibility, delayed business decisions, costly reruns and wasted money. And that leads to money flowing into and out of an organisation faster—which is good for business. In fact, IOFM has found that by applying best AP automation practises, organisations can pay their non-PO invoices on time 96% of the time, compared to only 13% of those that are less automated.

When an entire organisation is aligned to capture, manage, federate and audit content—and when the systems work in concert across different departments and applications—the company enhances its opportunity to make more-informed business decisions and improve cash flow. It all starts with centralisation, organisation and automation to see benefits and yield paybacks in months, not years.

By Erin McCart, director of product marketing, ASG Technologies

Advertisement
Advertisement Submit

TechAnnouncer On Facebook

Advertisement
A Review of the Shure SM7B Microphone A Review of the Shure SM7B Microphone
Tech Reviews1 week ago

Unleashing the Power of Sound: A Review of the Shure SM7B Microphone

The Shure SM7B microphone has made waves in the audio world, becoming a favorite among podcasters, musicians, and broadcasters alike....

Pocket Cinema Camera 6K Pro Pocket Cinema Camera 6K Pro
Tech Gadgets1 week ago

Capturing Magic: A Review of the Blackmagic Pocket Cinema Camera 6K Pro

The Blackmagic Pocket Cinema Camera 6K Pro is a game-changer for filmmakers and content creators. With its impressive features and...

Apple 2023 MacBook Air Apple 2023 MacBook Air
Tech Reviews1 week ago

Unleashing Power: A Review of the Apple 2023 MacBook Air with M2 Chip

The Apple 2023 MacBook Air with M2 chip is a sleek and powerful laptop that has captured the attention of...

BTC staking campaign BTC staking campaign
Bitcoin1 week ago

Exploring pSTAKE’s edge within Binance’s latest BTC staking campaign

Recently, Binance launched its latest BTC Staking on Babylon Campaign, inviting users to participate in an exciting opportunity to earn...

The 2022 Apple MacBook Air with M2 chip The 2022 Apple MacBook Air with M2 chip
Electronics2 weeks ago

Apple MacBook Air: A Student’s Best Friend

The 2022 Apple MacBook Air with M2 chip has quickly become a favorite among students and professionals alike. With its...

DJI Avata 2 DJI Avata 2
Drones Technology2 weeks ago

Experience the Sky Like Never Before with the DJI Avata 2

Flying the DJI Avata 2 Fly More Combo is an exhilarating experience that takes you to new heights. This FPV...

Sony Alpha 7 IV: A Comprehensive Review Sony Alpha 7 IV: A Comprehensive Review
Tech Reviews2 weeks ago

Unleashing Creativity with the Sony Alpha 7 IV: A Comprehensive Review

The Sony Alpha 7 IV is a remarkable camera that has captured the attention of both amateur and professional photographers...

Market Turmoil: Iran's Missile Attack on Israel Sends Stocks Down Market Turmoil: Iran's Missile Attack on Israel Sends Stocks Down
Trending Technology2 weeks ago

Market Turmoil: Iran’s Missile Attack on Israel Sends Stocks Down

U.S. stock markets experienced a significant downturn on October 1, 2024, following Iran’s missile strikes on Israel, which escalated geopolitical...

Tesla Stock Tesla Stock
Trending Technology2 weeks ago

Tesla Stock Slips After EV Maker Misses Estimates on Deliveries

Tesla Inc. faced a significant setback as its stock price dropped over 6% following the announcement of its third-quarter vehicle...

Chinese Stocks Surge Over 7% in Hong Kong Amid Stimulus Optimism Chinese Stocks Surge Over 7% in Hong Kong Amid Stimulus Optimism
Trending Technology2 weeks ago

Chinese Stocks Surge Over 7% in Hong Kong Amid Stimulus Optimism

Chinese stocks listed in Hong Kong experienced a remarkable surge, climbing more than 7% as traders returned from the National...

Advertisement
Advertisement Submit

Trending

Pin It on Pinterest

Share This