In many large businesses, the AP function is often bogged down by inefficient processes and manual data entry, leading to longer payment cycles, late payments, and errors. So, how can AP departments improve their AP process and grow their bottom line? It all starts with automation.
Automating AP Invoice Processing
In the era of digital transformation, businesses must automate their AP processes to improve efficiency and keep up with the competition. However, many businesses have been slow to do so, with most having automated less than 50% of their back-office operations. Conversely, 77% of AP departments have implemented some form of automation.
The problem is that most businesses have only automated part of their AP process, leaving manual data entry and other errors to slow down the entire operation. This is where automated AP solutions come in.
Automated AP solutions verify invoice data, enforce business and audit policies, and enable a fully electronic processing environment—eliminating the need for manual data entry. In addition, automated AP solutions come with built-in Key Performance Indicators (KPIs) and dashboards that provide real-time visibility of the entire operation. This allows businesses to identify and correct errors quickly, saving time and money.
Some automated AP solutions include an artificial intelligence (AI) engine, which can more effectively manage and analyse invoices as it can handle both structured and semi-structured data. This can help further improve accuracy and efficiency in the AP process.
Implementing Effective Exception Handling via Workflows
Another way to improve the AP process is by implementing effective workflow processes. Workflows are automated, rules-based processes that route invoices to the appropriate users based on predefined criteria, speeding up the approval process and reducing errors.
For example, an invoice with a root cause of Missing Receipts can be automatically sent to the requisitioner or PO creator. As a result, organisations can save time and improve accuracy, as the invoice doesn’t have to be manually reviewed and approved.
Another common workflow, Price Difference, can be automatically routed based on the PO creator or whatever hierarchies the customer already has in place. Small differences that are within tolerance can be put in place to bypass the Price Difference workflow and post the invoice automatically. This can help to improve accuracy and prevent errors, as invoices won’t be paid for overpriced goods.
Finally, Invoices can also be rejected automatically back to suppliers e.g. Duplicate Invoice or PO fully used. And even non-PO invoices can be automated by adding the coding and routing to the correct approver via tables.
Employing E-invoicing Technology
Another way to improve the efficiency of the AP process is by implementing e–invoicing. E-invoicing is the electronic submission of invoices from the vendor to the buyer. Vendors send their invoices in whatever electronic format their ERP system allows, but the Buyer needs to bring all the invoices in to their ERP in a single file format. This means technology or a service is required to map many formats into one format in order to achieve the efficiency gains.
The Benefits of Automated AP Invoice Processing
Automated AP invoice processing and workflows for exception processing provide many benefits to businesses, including:
- Improved accuracy and compliance by eliminating manual data entry and providing built-in controls and compliance features.
- Increased efficiency by setting up workflows and approvals in advance so invoices can be processed automatically with little or no intervention.
- Reduced costs by automating manual processes and eliminating the need for expensive paper-based systems.
- Increased visibility into the AP process so organisations can identify bottlenecks and make improvements.
- Enhanced decision-making by providing real-time data and analytics on the AP process.
The Bottom Line
Investing in automation technology is a smart way to improve the efficiency of the AP process and grow your organisation’s bottom line. Automated AP solutions can help AP departments save time and money, while improving accuracy and compliance. And, in conjunction with rigorous internal controls, automated AP solutions can help businesses instil confidence and provide peace of mind for senior members of the organisation.
To find out more about AP automation and how Cogent Consulting can help, please call today on 01536 266585.