Accounts Payable Automation

What is Accounts Payable Automation?

AP Automation definition consists of replacing all or part of a given process originally based on exchanging paper documents, by automated processing that uses digital documents. The foundation of electronic processes, these digital documents may arrive from a variety of different sources. In some cases, the data to be processed already exists in electronic format, either in a structured file format such as EDI, XML, or CSV, or as unstructured files such as PDF documents.

In other cases, the documents must first be transformed into digital format by scanning the contents of paper documents using scanners in conjunction with automatic document reading (ADR) and optical character recognition (OCR) technologies. Automation with a SaaS (Software as a Service) solution enables users to process, store and classify their documents from any computer or terminal connected to the Internet.

AP Automation has truly expanded over the past several years. Many factors have contributed to this generalisation, including solution availability as Internet services, Cloud offerings, SaaS mode and use-based pricing models, which help bring digitalisation to within reach of all types of organisations, regardless of their size or the volume of documents to handle. Accountants and financial leaders are particularly well positioned to observe the benefits of AP Automation, including: drastic reductions in errors, late payments and disputes (and thus the time spent dealing with them), as well as far greater reliability and security for processing, reinforced transparency and traceability regarding exchanges, productivity gains, improved work conditions for employees, faster and easier access to documents, a more modern image for the company internally and externally, and more.

How to process invoices with AP Automation?

Growth is good news for most companies. It is both the goal and the reward for effort accomplished by their teams. But can be a downside for accounting departments: the greater the business activity, the more invoices there are to be processed, running the risk of quickly reaching the organizations limits in terms of capacity. How to process invoices in AP Automation?

You can always hire additional staff to absorb the extra work, but companies do not always want to take that route, as it can be costly and merely a short-term solution. With growing business, it is not a question of having enough people, but rather one of being efficient enough.

To keep the benefits of growth from becoming lost in the meandering inefficiency of administrative tasks, the solution is to industrialise accounting processes using ap automation. The use of technology plays a critical role in the performance and productivity of accounting departments. But what does the term automation mean exactly?

That would merely replace the complexity of paper with the complexity of a digital approach and only produce marginal benefits. In reality, AP automation enables you to automate successive processing steps and link them together: from managing procurement to processing invoices, leveraging scanning, automatic recognition, posting and allocation, electronic validation circuits, and exporting data to ERP systems and accounting packages.

The people involved are informed about process progression and have the opportunity to validate key steps based on predefined rules, such as invoice type, client or amount. Based on artificial intelligence, today’s ap automation solutions can process all documents without any prior sorting, regardless of their format, media or delivery, including mail, PDF, EDI, and more. Search engines enable users to find and look up documents easily.

Accounts payable automation for small business

With many small businesses choosing to ditch the office and work remotely or from home, the issues surrounding manual accounts payable processes, and the need for automation, were put firmly under the microscope. Paper-based invoices and processes involving manually approving vendor invoices is no longer viable with teams constantly on the move.

Many small businesses are starting to think more long-term about the future of these processes and what their business will look like, as the ‘too expensive’ or ‘too time-consuming’ excuses to invest in automation in accounts payable is no longer viable.

Artificial intelligence and machine learning have seen automated accounts payable software become a staple in a business’ finance department, especially as it becomes accessible to businesses of any size, no matter how many vendor invoices they receive per month.

Plus, those small businesses that deploy automated accounts payable software actually end up saving money in the long-term, with an average reduction in cost-per-invoice by up to 70% compared to manual processes.

So although accounts payable automation for small businesses may seem like a bit of a stretch to some, in reality it is becoming more and more popular by each passing day, helping business owners process more invoices, more accurately, and more securely.

The cost of processing an invoice: manual vs automated

For both accounting professionals and companies, the main attraction is still the highly beneficial cost of automated invoices compared to paper invoices the cost of processing an invoice manually is estimated at 9 £ to 20 £. On top of that, you also need to consider storage, archives and, as needed, document look-up, representing an average of 3.25 £ when taking into account indirect costs (such as time spent and storage space) and indirect costs (such as loss and delays).

By digitalising invoices, these costs can be lowered by 70%. Even better, with digitalisation, companies can also automate many tasks and further increase their return on investment. In the end, it is possible to improve the processing cycle by a factor of 20!

What are the benefits of accounts payable automation?

Businesses can realise significant benefits from implementing accounts payable automation in the finance department - besides from reducing the cost of manually processing a vendor invoice.

As the cost of processing a vendor invoice can lead to high overheads, automation has become more and more important. With automated accounts payable, businesses can rapidly speed up the invoice approval process by around 50% while also reducing cost-per-invoice by around £10.

Manually inputting invoice data into spreadsheets or software platforms can lead to costly errors, but automated accounts payable completely remove this unnecessary and time-intensive admin work. With most of the redundant administrative processes out of the way, accounts payable professionals can enjoy more value-added tasks within the business that require a more personal touch.

With automation in place and accounts payable time freed up, businesses no longer have to worry about unpaid vendor invoices, late payments, and subsequent supplier relationship problems. The end-to-end traceability and full transparency of accounts payable automation also make it highly secure so businesses can trust they have the right processes in place to reduce the risk of fraud.

Automation in the invoice approval process is no longer a fancible add-on for businesses. It is a vital piece of the finance puzzle, helping businesses process invoices faster, more accurately, and more securely. With accounts payable automation in place, businesses can future-proof their invoice and financial procedures while reaping the rewards of more efficient processes.

Accounts Payable software best practices

What is the most efficient way to automate? Choosing an AP automation solution represents a critical step in your company’s business activity. The risk of making mistakes can have significant impact on your operations. Given these considerations, what are the Accounts Payable software best practices?

How can you approach the project to quickly and confidently obtain the expected benefits? One of the priorities is to really understand how the people using the solution perform their jobs (purchasing, accounting, management control...) and what they expect.

AP Automation is much more than a simple transposition of people’s work methods into software. It actually helps them overcome traditional limits, such as: redundant tasks, time-consuming and error-prone data (re)entry, risks and shortcomings in processes, and more. Designing the solution with users is a way to give yourself the best chances of being able to provide them with a tool that works for them and which they will adopt willingly.

It is important to include three prerequisites in your Accounts Payable best practices. The first thing to do is to be aware of costs and processing time related to invoice management. This is the starting point for calculating ROI from the solution you choose.

This step is essential, as it highlights the fact that potential savings will be much higher than those obtained without a complete audit. Intuition must yield to deduction, and assumption must be replaced by reasoning!

All concerned parties come out ahead: upper management will see that intelligent investment was made to increase efficiency and productivity for the entire organisation; the finance department will observe ROI in the short-term; and users will benefit from an agile solution that saves them time by eliminating time-consuming tasks (clearly identified beforehand).

The second prerequisite is to understand all invoice validation circuits clearly. The level of workflow complexity and interdependence determines the digitalisation solution choice. The third prerequisite is related to the expected volume of invoices. This factor also impacts your choice of a solution and its architecture.

Accounts Payable software comparison

To maximise the benefits of AP Automation, the next question is that of choosing which ap automation software to use. Four main criteria must be considered for an accounts payable software comparison.

The first is functional: the solution must cover all the company’s needs from capturing incoming documents regardless of their format (paper, PDF, EDI...) up through secure archiving, after passing through all the phases of the accounting process.

The second criterion concerns the technology: a modern, open, Cloud-oriented solution enables the company to take advantage of new technologies, such as Artificial Intelligence and Machine Learning, as well as to interface easily with their regular ERP, management and accounting systems.

The third criterion is practical: the solution must be easy to manage, intuitive, enjoyable and benefit from accessible and professional support so that the solution is perceived by users as a real advantage for their everyday work.

The last criterion, and not the least, is price: the provider’s pricing must be clear and all-inclusive, and not hold any bad surprises. The Cloud is often the most attractive approach, as its subscription model enables companies to only pay for what they really use, without taking the risk of a long-term contractual commitment.

In conclusion, if there is one word that summarises the benefits of ap automation for companies, it would be “control”. The invoice management process, with direct impact on expenses, is vital for companies. With ap automation, that process is fully under control both with respect to associated risks (fraud, disputes and non-conformities) and intrinsic costs (productivity). By implementing the right solution, AP automation can become the cornerstone for disciplined and transparent management.

How to automate Accounts Payable in Microsoft Dynamics 365?

Microsoft Dynamics 365 Business Central, the enterprise resource planning (ERP) system, does a great job of handling and making sense of several critical business inputs. And although it does well as a general tool in the finance department, accounts payable (AP) and invoice processing is a highly complicated role which needs specialised solutions to help optimise financial performance.

It’s for this reason why Yooz offers a complete and customisable automated accounts payable with Microsoft Dynamics 365. For businesses looking to combine the two, Yooz implementation experts are able to understand each and every accounts payable process and workflow to build a customised integration and a fully automated purchase to pay process.

The benefits of matching invoice automation and accounts payable software with your ERP system can be significant. Not only can businesses reduce their manual-based invoice processing costs and time by around 80%, but they can also reduce the likelihood of late payments and strained customer relationships.

With Yooz and Microsoft Dynamics 365, accounts payable staff receive full visibility into key financial processes to help reduce the risk of fraud, lost documents, and duplicate invoices. What’s more, automation frees up staff time and resources so that accounts payable teams can focus on business-critical, value-added tasks and be liberated in their role.

AP Automation connected to Sage

With Yooz’s no-touch solution seamlessly integrated with Sage, businesses can automatically capture vendor invoices, update data in real-time, and process invoices directly in the Sage platform, providing a more accurate, more controlled, and more secure purchase to pay process.

With AP Automation connected to Sage, finance leaders no longer have to worry about paper-based documents slowing down the invoice approval process, as well as late payments.