Accounts Payable (AP) Automation and expense management are two critical functions that can help businesses streamline their financial processes, increase efficiency, and reduce costs. However, while they may seem similar, these two processes have different objectives and functions.
What is AP automation?
AP automation uses technology to automate the various tasks involved in a company’s accounts payable system. This can include invoice processing, purchase order matching, approval workflows, and payment processing. AP automation aims to reduce the time and effort required to process invoices and payments, improve accuracy, and reduce the risk of errors and fraud.
What is expense management?
Expense management refers to the process of managing and controlling employee expenses. This includes expenses such as travel, entertainment, shadow-IT expenses, and other business-related expenses. Expense management aims to ensure that expenses are within the company’s budget and policy guidelines, reduce the risk of fraud and errors, and provide visibility and control over expenses and the company’s funds.
Tallie’s 2019 Travel & Expense Management Trends Report reveals that 46% of companies do not monitor the expenses incurred during the process of processing expense reports. Additionally, 43% of companies still rely on manual expense reporting methods. The survey included nearly 600 finance professionals from various types and sizes of companies, with the majority (44%) working as controllers, managers, or accountants in the finance sector.
Differences between AP automation and expense management
One of the main differences between AP automation and expense management is that AP automation focuses on the processing and payment of invoices, while expense management focuses on the control and management of ad-hoc and subscription-based expenses.
AP automation involves automating the various tasks involved in the accounts payable process, including invoice processing, approval workflows, and payment processing.
Expense management involves setting and enforcing policies, tracking expenses, and ensuring compliance with company policies and procedures.
Another difference between AP automation and expense management is the level of control they provide. AP automation can offer high control over invoice processing and payment, ensuring that invoices are processed accurately and efficiently. Expense management offers high control over employee expenses, ensuring that expenses are within budget and policy guidelines and providing visibility and control over expenses.
Finally, AP automation and expense management also differ in the types of technology and software used. AP automation typically involves the use of specialized AP automation software that can automate the various tasks involved in the accounts payable process. Expense management, on the other hand, typically involves the use of transaction tracking software that maps expenses, enforces policies, and provides visibility and control over expenses.
Benefits of Expense Management
Better efficiency
AP automation eliminates manual tasks such as data entry, invoice matching, and payment processing, allowing staff to focus on higher-value tasks. Automated invoice processing reduces the time it takes to process invoices, resulting in faster vendor payments and improved cash flow.
Less risk for errors
Manual data entry and processing of invoices can result in errors such as duplicate payments or incorrect data entry. AP automation can significantly reduce these errors, leading to more accurate financial records and fewer vendor disputes. AP automation provides real-time visibility into invoice processing, allowing businesses to track the status of invoices and payments and identify potential issues before they become problems.
Reduced costs
AP automation can reduce the costs associated with paper-based processes, such as printing, mailing, and storing paper invoices, as well as reducing the time and resources required to process invoices manually. Once you have an AP Automated system in place, you can also reduce the manual work and have your team focus on more important tasks than managing invoices.
Better customer relationships
Faster invoice processing and payments can improve supplier relationships, leading to better terms, discounts, and improved supplier performance. The fact that vendors and suppliers can rely on payments that are timely and correctly completed will increase the level of trust, which is essential in successful B2B relationships.
Shortcomings of AP Automation and Expense Management
While accounts payable (AP) automation and expenses management offer several advantages, there are also some potential disadvantages to consider:
Training
A learning curve is associated with adopting new software, which can take time and resources to overcome. Employees may need to be trained on the new system, which can temporarily decrease productivity.
Integration
Integrating an AP automation and expenses management system with existing software can be challenging, particularly if compatibility issues exist. This can lead to delays, replacing one manual process for another, and additional costs.
Security
With AP automation and expense management, sensitive financial data is stored electronically, which can be a target for cyber-attacks. Companies need to take steps to secure their systems and protect their data.
Less interaction with vendors
With automated AP, there can be less interaction between vendors and customers, which can lead to a lack of personal touch. Some vendors may prefer to deal with a person rather than a machine.
How can Rewardworks help your company manage the AP system better
For those interested in AP Automation, consider exploring the services provided by Rewardworks‘ specialists. Our AP Automation services are safe, transparent and very easy to implement regardless of the size of your business. We can adapt exactly to your needs and are sure to overcome your highest expectations.
