Today more than ever before streamlined financial operations are crucial to success. Discover why in the fourth annual Yooz State of Automation in Finance report "How Finance Leaders Use Technology to Drive Productivity and Value".
In today's world, managing the Accounts Payable (AP) process efficiently is crucial for maintaining a healthy cash flow and ensuring smooth business operations. Failure to do so can result in the loss of vendors and suppliers, among other complications. However, the AP process - handling invoices, Purchase Orders (POs), payments, and more - can be both complex and time-consuming for businesses of any size.
Combining accounting and technology by implementing AP software can transform how businesses manage their invoice process. By automating and streaming tasks, AP software saves time, reduces errors, increases productivity, and improves cost-effectiveness. This transformation allows businesses to focus on strategic initiatives and business partnerships, without getting weighted down by manual AP tasks.
Let's Explore in Detail
Exploring the functionalities and benefits of AP automation sheds light on how it can boost business operations. From understanding invoice processing fundamentals to recognizing standout features of AP software, having detailed information empowers businesses to make informed decisions about incorporating a complete AP automation solution into their workflows.
The Basics of Invoice Processing
Invoice processing involves basically 4 key steps:
| 1. Receipt | When an invoice or purchase order is received and entered into the system | |
| 2. Verification | When the invoice data is matched with corresponding purchase orders and receipts, verified for accuracy, and then routed for approval. | |
| 3. Approval | Where pre-designated, authorized personnel review the invoice information and approve it for payment. | |
| 4. Payment | The invoice is scheduled for payment according to already agreed-upon terms. |
What is Accounts Payable (AP) Automation?
Accounts Payable (AP) automation is the use of technology to streamline and automate tasks involved in processing invoices, from receiving them to making payments. By reducing manual intervention in AP processes, automation software minimizes errors and improves overall efficiency in the AP workflow.
What are the Benefits of AP Automation
AP automation solutions offer a broad range of benefits, including reduced processing time, fewer errors, improved accuracy, and increased visibility into financial data. By automating routine tasks, businesses can free up employees to focus on other, higher-value activities of benefit to the organization.
Furthermore, AP automation fosters strong vendor relationships through timely, accurate payments. This in turn boosts efficiency and saves cots. Such relationships are critical in highly competitive markets, where reliable vendors could determine the organization's future.
What is Accounts Payable Automation Software
Accounts Payable software products or AP software is a tool used by businesses to automate and manage their accounts payable process. It reduces the amount of time and cost spent on invoice processing, helping businesses to track and process invoices, manage purchase orders, and make payments to suppliers and vendors.
- The Basics
At a basic level, AP automation software automates invoice capture, approval workflows, and payment processing. It typically integrates with existing financial or accounting systems to provide a seamless flow of financial data.
Key functions also include automated data entry, electronic invoicing, cloud storage, audit trails, and real-time tracking of payment status.
- What It Does
AP automation software simplifies the entire AP process by automating manual tasks such as invoice data entry, invoice approval routing, and even payment execution. It helps businesses to efficiently manage their payables and cash flow by ensuring that invoices are processed promptly and accurately.
The software also provides detailed reporting and analytics capability, offering insights into cash management habits such as spending patterns, cash flow, and more.
- Different Types for Different Needs
There are various types of AP automation software tailored to meet different business needs. Some solutions are designed specifically for small businesses with basic AP requirements while others cater to larger organizations with highly complex AP processes. Cloud-based solutions offer flexibility and scalability, while on-premises solutions can provide greater control and customization.
Selecting the right type of software depends on the specific needs and size of the business.
- What if I Already Have a Financial System?
Many companies ask themselves why they would need an outside AP software provider when they already have AP automation capability in their existing financial or Enterprise Resource Planning (ERP) software. The answer is fairly straightforward: ERP software has many appealing benefits but it was designed as a generalist system, one to cover a broad range. Using it alone to handle AP tasks often results in ongoing manual processes or outsourcing parts of the process that can be both slow and costly.
AP software solutions are dedicated platforms, offering much more comprehensive AP capabilities which, when properly combined with ERP or other internal software, provides full visibility across company operations (including the entire invoice-to-payment process). And, thanks to the cloud, AP software is agile and can scale easily according to company needs.
Top Features of Accounts Payable Software
Top features of AP software include automated invoice capture, workflow rules, approval workflows, and payment processing. Advanced solutions offer additional features such as AI powered data extraction, real-time analytics, and integration with other financial systems.
Additional notable features including vendor management, fraud protection - including duplicate invoices - and customizable dashboard
Benefits of using AP Software for Businesses
Implementing AP software offers numerous advantages to business operations that can lead to notable operations improvements, costs savings, and improved financial management. These include:
- Increased Efficiency
AP software automates many tasks involved in the AP process such as data entry, invoice processing, and payment approvals. This automation streamlines the invoice and payment workflow, reducing approval times and increasing productivity. Advanced automation software can also be integrated with existing financial systems, allowing seamless exchange of accounting data regardless of the current accounting software in use.
For instance, Yooz integrates with over 250 financial packages and ERP systems worldwide, ensuring efficient and seamless real-time information flow between systems.
- Improved Accuracy and Reduced Risk
AP software significantly increases accuracy by eliminating human errors such as data entry mistakes or payment discrepancies. This significantly reduces costly and time-consuming invoice mistakes, typically at the beginning of the invoice process.
In addition, software features such as 2-way or 3-way matching automatically read and cross-check invoice data, helping businesses to identify potential fraudulent activities such as duplicate invoices or unauthorized payments, reducing the risk of financial loss.
- Reduced Costs
Digitizing the invoice process reduces costs in the accounts payable system in several ways. First, AP software minimizes the need for manual tasks, potentially reducing the number of employees required to manage the Accounts Payable process and freeing them to work on other more strategic tasks. Second, automating the AP process eliminates costs associated with paper-based processing such as expenses for paper, printing, mailing, and storage.
- Improved Cash Flow Management
Cloud-based AP software improves cash flow and expense management by allowing businesses to track invoices throughout each stage of the payment process and access data records in a centralized storage location. This helps identify potential cost savings and ensures timely invoice payments, avoiding late fees and identifying opportunities for early payment discounts.
- Built-in Compliance
Concerned with legislation and taxes? Cloud-based AP software creates a digital audit trail and centralizes storage in the cloud, simplifying audits, closings, and tax payments. This built-in compliance feature ensures that businesses stay up to date with regulatory requirements.
How to Pick the Best AP Software for You
As automation becomes increasingly popular as a way to streamline and improve operations, how do you choose the best AP software for your team's needs? The right AP software can significantly enhance efficiency and accuracy, while the wrong one can lead to delays or increased costs. Here is a guide to help you make the best choice.
Steps to onsider
1. Assess Business Needs
- Understand Your Requirements: Consider your company's size, industry, and existing processes.
- Gather Input from Stakeholders: Involve a broad range of stakeholders to identify current pain points and prioritize features that are needed or desired.
2. Determine Software Capabilities
- Evaluate Key Features: Look for capabilities like invoice processing, payment automation, and reporting.
- Use of Advanced Technologies: Look for AI-powered data extraction, Machine Learning (ML) capabilities, seamless ERP integration, and customizable workflows.
3. Plan and Execute Implementation
- Develop a Clear Plan: Involve IT, finance, and end-users in the planning process.
- Functional Testing: Ensure the software is tested before full deployment to avoid fast and potentially faulty rollouts.
4. Train Employees
- Comprehensive Testing: Provide detailed training to ensure users understand the software's features and benefits.
5. Change Management Strategies
- Effective Communication: Clearly communicate the transition to the new software.
- Address Concerns: Offer ongoing support and reassure employees that the software is designed to supplement their contributions, not replace them.
Remember, the right AP software will align with your specific needs and increase efficiency while reducing manual tasks and other pain points.
Factors to Consider
Here are some key factors to keep in mind when700 choosing the best software for your organization.
- Automation
The software should streamline your AP process with features like automatic invoice processing, Optical Character Recognition (OCR), auto-scan, Electronic Data Interchange (EDI), payment matching, and duplicate detection.
- Data Integration
Ensure that the software integrates with your existing accounting and financial systems, providing real-time information flow, analytics, and reporting capabilities.
- Flexibility
The accounts payable solution software should be flexible enough to meet evolving organizational needs, offering scalability, pricing options, customizable workflows, variable payment methods, and fluid approval capabilities. A centralized cloud-based accounts payable systems whose platform will also offer 24/7 access from anywhere is ideal.
- Data Security
AP software should enhance security by cross-checking information. Choose reputable providers that offer features such as 2-or 3-way matching, 2-factor authentication, access control, and audit logging to ensure financial security.
- Customer Support
Look for a provider that offers a detailed onboarding process, continuous product education, and reliable customer service. For example, Yooz provides a "user university" offering ongoing product training and webinars.
Considering the above factors will help you select the AP software that best meets the organization's needs.
Potential Challenges and Solutions
There are several common hurdles that companies face. These include:
1. Pricing
Problem: Many AP software options come with hefty price tags that can be prohibitive for smaller businesses.
Solution: Look for scalable, cloud-based, Software-as-a-Solution (SaaS) pricing models. Many vendors offer tiered pricing or subscriptions based on the number or users, locations, or transactions.
2. Integrations
Problem: Integrating AP software with existing accounting systems and other business tools can be complex and time consuming.
Solution: Choose software with existing integrations for popular accounting platforms. Vendors that offer dedicated support for integrations can significantly ease this process. For example, Yooz offers over 250 existing integrations - more than any other provider on the market today.
3. Customer Support
Problem: Inadequate customer support can lead to extended downtimes and frustrations.
Solution: Look for providers known for excellent customer service. Look for 24/7 support and a dedicated support team.
4. Target Market
Problem: Make sure that you have software that is suitable for your business size. There are some that are completely scalable but others are tailored specifically for either small to medium sized businesses or large organizations.
Solution: Clearly define your business needs and growth plan. Choose software that caters to your current size but can scale as your grow.
5. Payment Processing Capability
Problem: Not all AP software can handle the range of payment methods needed by diverse businesses and some can't handle payments at all.
Solution: Ensure that the software supports various payment methods, including the most common ACH, wire transfers, and credit cards. Check for capabilities like automated payment reminders, scheduling, and processing.
6. Ability to Handle Complex Workflows
Problem: Understand your workflow and workflow requirements.
Solution: Look for software with customizable workflows and advanced approval processes.
7. Capture Accuracy
Problem: Inaccurate invoice data capture can lead to errors and inefficiencies.
Solution: Invest in software that uses a minimum of advanced OCR technology and AI to improve capture accuracy right from the start of the invoice process.
8. Comprehensive Workflows
Problem: Incomplete workflow management can result in bottlenecks and missed approvals.
Solution: Ensure that the software offers end-to-end workflow management, from invoice receipt to payment processing.
9. Overcoming Resistance to Change
Problem: Introducing new software can be challenging, as resistance to change often stem from fear of the unknown or simply being accustomed to the current system.
Solution: Implement a change management strategy that include comprehensive training, clear communication about the new software benefits. Involve key stakeholders in the decision-making process to get early buy-in.
10. Integration with Existing Systems
Problem: Integrating new AP software with existing systems is crucial for maintaining workflow continuity and data integrity.
Solution: Conduct a thorough assessment of your current systems and data flows. Choose AP software with proven integration capabilities and plan a gradual rollout to mitigate any risks associate with integration.
Yooz: The Everything Solution
Yooz's software stands out in the market thanks to advanced automation capabilities, seamless integration with existing systems, and user-friendly interface. The platform utilizes AI, ML, and Deep Learning-based technology to automate manual AP tasks including invoice processing and approval workflows. This results in improved efficiency, industry-leading accuracy, and notable cost savings for organizations.
Whether streamlining your current operations, expanding your footprint or implementing new workflows, Yooz provides the flexibility and scalability needed to support organizations throughout their growth journey!
