AP Automation is changing the business landscape
Many companies today still wonder about automating their invoices processes. Everything in their environment seems to be pushing them in that direction, starting with legal obligations.
UK-based regulations continue to push finance teams to embrace digital processes, including EU Directive 2014/55/EC, Making Tax Digital (MTD), and Duty to Report, particularly as HMRC’s ambition is to become the most digitally advanced tax administration.
AP Automation definition consists of
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.
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.
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.
AP Automation enables a very pragmatic approach to accounts payable digital transformation. It is a way for most finance departments to get started. Together they save time and lead to lower costs while employees are enriched by being able to perform tasks with higher added value. Combining these tools for your payables system lead to greater security for all processes, data, and compliance.
François Lacas, COO, Yooz.
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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.