AP automation, short for accounts payable automation, is a transformative technology-driven approach to managing and processing invoices in business operations. This innovation has completely revolutionized how companies handle their financial transactions and is a game-changer in boosting efficiency.
Key aspects of AP automation
When delving into the world of AP automation, there are three primary aspects to consider:
Invoices: AP automation can allow for the receipt of online invoices or the conversion of paper invoices into electronic formats. This encompasses various methods, such as B2B/EDI connections, PDF invoicing, or receipt through service portals. For paper invoices, advanced technologies like AI or OCR scanning and process them to extract data, which is then securely stored in the cloud.
Coordinating and Workflow: Once invoice data is collected, the system automatically routes invoices for inspection and approval, or matches them with corresponding purchase orders and goods receipts. These approved invoices are then seamlessly integrated into the company’s ERP or accounting system for further processing.
Audit and Archive: AP automation ensures all invoices are securely archived, allowing financial auditing authorities to access audit trails, a valuable feature for compliance. Moreover, electronic invoice archiving facilitates easy retrieval from any location at any time.
How AP automation works
AP automation can often transform paper invoices into standardized digital formats and routes them through an electronic workflow that culminates in supplier payments. Optical character recognition (OCR) is utilized by AP automation software to digitally extract invoice data at the outset.
Advanced systems use machine learning to enhance accuracy and identify patterns over time, which, in turn, informs artificial intelligence recommendations for ledger coding and approval routing.
This minimizes the need for manual intervention, including approval hierarchies, purchase order matching, and data discrepancies, which are all streamlined within the digital process controlled by the accounting system.
Benefits of AP automation for organizations
AP automation offers significant benefits to businesses, enhancing their growth and workflow efficiency. A study found that 36% of businesses employing business process management software already use workflow automation, and 50% of business leaders predict that more routine tasks will be automated in organizations of all sizes.
Cost Savings and Increased ROI: AP automation streamlines payment processes, reducing costs associated with manual tasks like check printing and approval gathering. It enables quicker payment methods and significantly decreases processing times. The greater the degree of automation, the higher the return on investment. The majority of ROI is attributed to payment automation, making it essential for businesses to adopt a more strategic approach.
More Accurate Invoices: Manual data entry in a traditional accounts payable workflow often results in data inaccuracies due to human errors. AP automation often utilizes advanced OCR to automate data entry, ensuring only exceptional invoices require human intervention. The process simplifies electronic validation of invoices against purchase orders, contracts, and delivered products, enhancing accuracy.
Reduced Errors and Time Efficiency: The high volume of invoices maintained by AP departments makes them prone to errors. The time-intensive manual processes and errors make it challenging to focus on strategic tasks. The invoice processing timeline can take up to two weeks without automation, making automation a crucial time-saver.
Enhanced Data Visibility: AP automation allows only authorized personnel to access relevant data, increasing visibility. Reports can be automated to swiftly identify overdue payments, aging invoices, approval times, and more. This comprehensive view of AP statistics helps identify the root causes of issues, and solutions can be implemented more effectively.
Reduced Fraud: AP automation enforces strict procedural controls and access limitations, reducing the likelihood of unauthorized payments. It ensures adherence to compliance rules, generates traceable audit trails, and prevents fraudulent activities.
Who benefits from AP automation
Businesses of all sizes and industries stand to benefit from AP automation. Whether a microenterprise with fewer than ten employees or a large enterprise with over 250 employees, both can leverage AP automation to optimize their operations. While their approaches may vary due to differing needs, the benefits are universal.
AP automation with Rewardworks
Rewardworks collaborates with American Express to streamline B2B card payments for businesses. Their system offers transparency in payment statuses and AP task management without adding extra burdens to employees’ to-do lists. With Rewardworks, vendor management becomes hassle-free.
The setup of American Express, Corpay and Wex Virtual Credit Cards is simplified, and first-time users are expertly guided through their initial payment run, making automated B2B payments straightforward.