Ask a dozen companies how they deal with handling, approving and paying their invoices and you will most likely get a dozen different definitions of accounts payable automation. That’s because there is no one, generally accepted definition of this process, with companies often relying on workflows they cobbled together as they grew, expanded their geographical footprint, built out a more complex vendor network and began embracing digital transformation.
There is, however, agreement on one thing among experts watching the space: true process automation requires several components and should follow a set of proven best practices to deserve the label “automation” and generate tangible benefits.
Before we get into the details of what those best practices are, let’s take a look at the state of affairs. Ardent Partners found in their “State of ePayables 2020” report that “a majority of today’s AP teams are not fully automated, but instead have taken more of a piecemeal approach… full automation is the exception, not the rule.” According to Ardent
- Only 41% of businesses have complete procure-to-pay automation in place.
- Fewer than half of all AP teams use e-invoicing, and
- an equally small number (43%) of companies have adopted electronic B2B payments.
Accounts Payable Automation Starts with Exploring the Best Available Options
It’s not for lack of trying. After all, accounts payable automation has been around for more than 20 years and it has markedly improved as new technologies have come along to deal with invoices. But while it’s easy to be dazzled by innovations such as robotic process automation and artificial intelligence that promise to make a big impact, the basic questions underlying accounts payable automation are often overlooked. Such as the steps any business ought to take well in advance to make sure it gets the best return on investment.
Levvel Research summed up the prevailing mood at finance departments it surveyed for its 2020 Payables Insight Report:
“One thing that stood out in this year’s study is that back-office professionals lack sufficient education on AP automation… Organizations—both automated and manual—are doing themselves a disservice by not conducting deeper exploration into the AP software marketplace.”
That’s why they recommend organizations do their homework long before embarking on any accounts payable automation project. It includes compiling the main pain points, spelling out their key questions, and then doing a vendor survey. The focus should be on vendors with whom they can enter a partnership, including a lively information feedback loop with software providers that use their customers as a valuable resource to continuously improve their product.
Accounts Payable Automation Best Practices from Receiving to Paying Invoices
So what are the accounts payable automation best practices for 2020? When trying to streamline your purchase-to-pay workflow, you need to focus on three key areas
- How invoices are received.
- How invoices are validated and approved.
- And, finally, how payments are scheduled and executed.
Manual and paper-based processes are often the root cause for process delays in approving invoices and payments for a business. As AP clerks have to open envelopes, collect emailed and faxed invoices and then enter all the information into their system, including GL coding, existing errors can either go unnoticed or new ones occur -- think of a duplicate invoice or an incorrect amount on an invoice.
Rigorously adopting automation best practices can help a business avoid such errors and bottlenecks. A solid process to achieve true accounts payable automation lives in the cloud and gives its users, no matter what size the business, access to a constantly updated set of powerful tools. Yooz is the rare platform that gets the highest grades from both Ardent Partners and Levvel Research for embodying all accounts payable automation best practices.
Agile and Affordable: Accounts Payable Automation Works Best in the Cloud
Levvel concludes in its most recent report that “cloud-based tools are dynamic, affordable, and flexible, offering technology that enables business agility.” A system such as Yooz enables an organization to reliably and safely process and store all types of invoices in the cloud, regardless of their format. Companies who embark on this path can successfully get rid of paper -- from paper invoices all the way to paper checks, and in return cut their processing costs and cycle time by 80%.
Take a moment and think about how many invoices you send. And how many thousands of dollars would AP automation save you? Yooz offers a handy savings calculator to get down to dollars and cents per invoice processed.
Here’s how Levvel summarizes accounts payable automation best practices when it comes to receiving and processing invoices:
“Invoice management solutions affect all levels of an organization. Invoice workflows that were once manual, sometimes requiring authorization via hand, email, or even stamp-to-paper approvals, are now managed by automated software. Instead of AP team members spending time tracking down the correct approver(s) for each invoice, an IWA solution automatically routes invoices to appropriate managers electronically, as well as sends notifications and reminders to prevent delays. These alerts and custom controls reduce the time necessary for middle and upper management to oversee approvals. Invoice management solutions also record entire workflow histories, which helps with auditing and identifying errors. Those at the C-suite level will see the cost savings resulting from reduced invoice approval times and increased early payment discount capture.”
Yooz has taken invoice automation processing and approval to the next level because it is powered by machine learning algorithms and optical character recognition (OCR) technology that can read and understand every invoice, word for word, amount for amount, quickly learning to tell each vendor’s documents apart and even automatically splitting invoices submitted in a large batch. It achieves an outstanding degree of accuracy right out of the box and gets better as it sees more documents, adding to a company’s body of knowledge about its finances and its even growing the vendor network through a dedicated portal.
E-payments and Dashboards make Accounts Payable Automation a Winner
As a result of these accounts payable automation best practices, the AP team is no longer tied up with manual data entry and chasing approval signatures for individual invoices. Instead, they can focus on high-value tasks such as submissions that Yooz has flagged for review, for instance duplicates, incomplete or fraudulent invoices.
The next step in getting accounts payable automation right deals with approving and initiating payments. Or, according to the Levvel report:
“ePayments solutions directly impact employees at the staff level by reducing the need for time-consuming tasks such as paper check processing. These solutions can handle payment reconciliation and data maintenance tasks, freeing up staff for other tasks. Mid-level and upper management staff see a great reduction in maverick spend, fraudulent payments, and security concerns that result from less controlled payment methods like checks. C-suite professionals can strategically manage payments and optimize cash flow, and see bottom-line improvements from reduced costs and from higher rebate capture through commercial card use.”
Since Yooz includes a full suite of analytical tools, the entire organization can now see a real-time dashboard customized for their roles and permissions that goes beyond just tracking invoices. Such financial intelligence benefits not just the AP department but the entire business as it boosts efficiency and productivity along the entire value chain.
ROI comes in many forms: no more time and money spent on filing and storing invoices, hunting for a specific document for review or an audit. Instead, a simple keyword search can bring up any entry from any invoice, much like performing a browser search. The same level of granularity handling payable invoices also works on a mobile device.
Once again, here is Levvel’s take of what’s achievable with a platform such as Yooz:
“Reporting and analytics tools benefit users at all levels in an organization, but are particularly useful for administrators and decision-makers with more strategic tasks and goals. Reports summarize spend activity and help managers and the C-suite to identify spending trends, optimize spend policies, and improve efficiency… The insights generated by advanced reporting and analytics tools aid C-suite professionals in targeting trouble spots and provide a holistic overview of the organization’s cash flow.”
Accounts Payable Automation needs to Integrate with ERP Systems and Payment Providers
Accounts payable automation best practices go beyond receiving, routing and approving invoices and paying them. A company should well in advance research its prospective choice of automation software and check if it will play nicely with its other, existing tools. Yooz, for instance, seamlessly integrates with more than 250 types of financial and ERP software, from sage Intacct and Intuit QuickBooks to Microsoft Dynamics GP and SAP, making the transition process as painless and quick as possible. That makes it possible for the system to automatically match an invoice to a purchase order and mark an entry as paid as soon as payment has been initiated.
Playing well with payment providers is another key service that can be considered as an accounts payable automation process best practice. Whether a company chooses to issue electronic checks, use a virtual card or rely on electronic transfers -- Yooz offers the right automation process method for each user that suits their needs and payment habits through a handful of payment partners.
It’s that strong and growing network of partnerships that makes the Yooz platform so powerful. Handling invoices faster and cheaper than anybody else is one big plus. But it’s the holistic approach of an end-to-end cloud platform will put it on the shortlist for anybody researching accounts payable automation best practices.