Accounts payable invoice automation is a way to minimize human intervention and eliminate the tasks that are more prone to error in the accounts payable process. After automation, the processes are handled digitally with technology rather than manual handling. This automation of accounts payable has revolutionized business processes and the way business pay out their invoices.
How Accounts Payable Automation Works?
Accounts payable automation is done by using a software which is integrated with the online business network. The software allows organization which is the buyer, to receive invoices, manage all approvals and process the requisite payment automatically, on a single platform.
There are three major components of accounts payable automation:
- Invoice receipt: Invoices can be either received digitally or converted from a paper to electronic form. Electronic invoices include B2B/EDI connections, PDF invoices or invoices from a supplier portal. Paper invoices need to be scanned and processed to extract the data.
- Invoice matching and workflow: After the data is captured, invoices are matched to purchase orders or good receipt or are routed to concerned team or individual for approval. Once the invoice is approved, it goes to the accounting system for the payment to be processed.
- Archival and audit: All the invoices are archived securely and all audit trails are available for future reference for audit purposes. As the invoices are electronically archived, finding them is much easier when needed.
Benefits Of Automation Accounts Payable Invoices
There are multitude of benefits that a business can gain when they automate their accounts payable processes. The benefits range from cost saving, efficient processes to reduction in error and optimization of manpower.
Some of the key benefits of automating accounts payable are listed below:
- Time saved: The invoice processing and approval process becomes much faster and lot more efficient. Once you eliminate, manual stages of invoice processing, you are able to eliminate a number of human touch points thus achieving savings in terms of time.
- Efficiency: Automating the process, leads to a streamlined process for invoicing and payment. Approval times are reduced and thus productivity is increased. The automation software like Monite can be integrated with the existing financial systems, thus ensuring a seamless flow of information.
- Accuracy: As the risk of human error is reduced, accuracy of the process is enhanced. Automation helps reduce payment errors like fraudulent or duplicate payments. As the system validated invoice data against the ERP data very early in the process, erroneous payments are easily flagged off before they are processed.
- Reduction in cost: Automation of accounts payable can help businesses save cost. It helps reduce manpower involved in the accounts payable process as well as eliminates resource need for storage of documents, postage and invoice production.
- Compliance: When the accounts payable process is automated, compliance rules are fed into the system. These rules help mitigate common risks and prevent frauds.
What Is The ROI Of Automating Accounts Payable?
Calculating the ROI for automation of accounts payable invoices is not a straightforward calculation as many different areas of business are impacted the savings get compounded as the volume increases.
However, it is logical for a business to think about the ROI before implementing systems to automate the process. Here are some financial and non-financial benefits to consider while projecting the ROI.
- Reduction in invoice processing cost
- Reduction in losses due to errors
- Lesser supplier inquiries on payment status
- More on-time payments
- Increased chances of availing early payment discounts
- Reduction in staffing costs
- Better control over the process
- A more streamlined process
- Easy auditing, full archival and seamless audit trail
- Better business relationships
- Higher employee satisfaction
Considering all the above benefits you can calculate the ROI for your business. The specific numbers aligned to each pointer will depend on the industry of business, number of invoices processed every month and the current spend on accounts payable process.
If you are considering automating your organization’s accounts payable process, the first step will be to get the buy-in from all key stakeholders. Accounts payable automation’s impact will not be limited to the accounts payable team only, but it will also be felt by the IT team, procurement team and the company management. To allay all concerns, you must identify the potential issues and risks and the mitigation steps. Also explain how the automation will benefit their respective areas and the business.