What is Accounts Payable Automation

Investing in automation tools to reduce human intervention in routine tasks enhances the company’s balance sheet. As a result, the adoption of AP automation software continues to grow, in part due to the availability of solutions through cloud / SaaS solutions, and modern usage-based pricing structures.

Of all of the business processes, it’s within the AP department in which the repetitive tasks which consume human input with the lowest return on investment. Read on to learn more about the advantages of reducing fraudulent invoices, strengthening internal controls, and enhancing your cash flow.

The regulatory push for AP automation

Many businesses today are still debating whether or not it is worthwhile to automate their accounts payable processing, despite the potential to increase productivity. In the modern era, to assign human tasks to perform a function which industrial robots can complete with total accuracy is akin to using typewriters. It’s time to start paying attention to the indicators, which begin with legal requirements.

In order to achieve HMRC’s goal of being the world’s most technologically sophisticated tax administration, UK-based policies continue to encourage financial departments to adopt digital methods. There are other pieces to this puzzle, including EU Directive 2014/55/EC, Making Tax Digital (MTD), and the Duty to Report.

Your accounts payable department is at the forefront of protecting your organisation from customers and fraudsters submitting inaccurate or bogus vendor invoices. When the company pays for goods or services erroneously, it is risking its future stability.

The accounting department must use utmost caution while handling Accounts Payable transactions. Time is critical in this case, as it is a short-term debt that must be repaid within a certain time period. Additionally, precision is critical, which includes the amount that must be paid as well as the supplier’s name. Accuracy is critical since it has an effect on the cash condition of the business, and there are legal duties upon the Directors of the business to manage its financial conduct.

Humans vs. technology and the accounts payable process

The higher the advancement of technology, the larger the advantages to humans. It is indeed the case that technology is permeating a larger variety of activities, thanks to the use of smartphones, robots operating manufacturing lines, or even handling financial operations for enterprises.

It is not only possible to streamline the invoice processing workflow via intelligent automation finance and digitization, but it is also possible to deliver additional services to companies with accounts payable software as part of your business process automation initiatives.

As automation capabilities improves, the tools become more user-friendly than ever before, and they are even accessible from a number of cloud-based SaaS providers on a pay-per-utilisation basis instead of there being a fixed monthly – or annual – cost per user.

This accessibility is critical because it makes the automation process software available to companies of all sizes and allows it to expand in tandem with the company’s development. But how does it function? What exactly do these phrases mean? When we speak about the accounts payable process automation, what exactly are we referring to, and what are the essential features?

An in-depth look at AP automation

Business process automation starts with digital or paper invoices, which come from a variety of sources. This process is also known as Accounts Payment (AP), Purchase-to-Pay (P2P) automation, process automation, invoice processing approval, or even payable process, depending on who you ask.

Data conversion and the P2P process

In certain circumstances, the information to be processed already exists in an electronic format, either in a structured file format such as EDI, XML, or CSV, or in an unstructured format such as PDF files. In these cases, the information to be processed must be converted to an electronic format.

If the data is not already in digital image format, it must first be converted into digital image format by scanning the contents of paper folders utilising scanners and automated document reading (ADR) and optical character recognition (OCR) technologies. Whatever the source of the information (invoices, contracts, calls for tender, or even tax records), it is retrieved and stored for further processing and approval.

How manual is your current accounts payable process?

Invoice capture and payment automation process practises fall into three categories:

• manual,
• semi-automatic,
• automated.

The complexity of transitioning hinges upon your current processes, and those of your suppliers. The more paper-based the process, the harder for your Financial Director or CFO to predict the organisation’s cash flow. Your outstanding payments on any given day reflect a significant portion of what your business owes overall, and since everyone knows that cash flow is king, it’s time to get it under control.

Invoice exchange using digital transmission technologies such as EDI or electronic files such as PDF are two examples of basic accounts payable processing that may be done automatically. In this instance, no process or instrument is in place to verify that invoices have a monetary value in the financial system.

Automation of tax-related invoices, which consists of exchanging these similar files, but with the additional value of signing them digitally and complying with different requirements needed by tax regulations, such as archiving, maintaining message integrity, making summary lists, and other features, among others. Only via this kind of electronic capture and automation are businesses able to totally remove the need for paper invoices.

It is possible to automate invoice delivery by integrating scanning technology solutions to automate invoices that are sent in paper format.

How mature is invoice automation?

Billing and invoicing are two of the operations that are routinely automated. Invoice management is one of these activities. These procedures need the creation of several archives, which include order forms, delivery slips, invoices, and credit notes.

Additionally, processing entails several data processing (such as input and reconciliation) and approval procedures that are more prone to mistake when completed manually than when performed electronically. Not just businesses and local governments, but also a wide range of other organisations are concerned with accounts payable processing.

Difficulties for finance departments without accounts payable automation

Several studies have shown the difficulties that accounting departments encounter when they do not use accounts payable automation process software to streamline their operations.

High operating expenses, a lack of visibility, missing invoices, an increase in payment mistakes, inadequate traceability, the absence of a solid audit trail, delayed approvals and payments, and other issues are all examples of what may go wrong in business. Additionally, there is a cost associated with using a manual procedure.

Consider the fact that the cost of manually processing a paper invoice has been demonstrated to vary from £9.40 to £20.8, with a per-document storage cost estimated at £3.25 per invoice! Consider the ramifications if a company is required to keep thousands of papers! The costs of searching for and recreating lost, or improperly categorised archives, are similarly staggering: £110 to look for an archive and £200 to reconstruct it.

Consider the impact of an accounts payable team with manual processes. The amount of all outstanding payments the company owes to its suppliers is shown as the balance of accounts payable on the balance sheet, whereas the cash flow statement shows the rise or reduction in total AP from the preceding quarter. It is critical to monitor your accounts payable expenses closely and establish internal controls to safeguard your cash and assets and prevent paying for erroneous invoices.

The indirect costs of manual finance processes

It is necessary to take into consideration indirect expenses associated with manually driven accounts payable systems in addition to direct costs. While indirect costs are more difficult to measure, they are just as significant and equally destructive to accounts payable operations and teams. Some of the key costs include:

• Accounting time spent dealing with supplier calls and processing late invoice payments, which account for 41 percent and 31 percent of an accountant’s total time,
• Lost or misplaced invoices leading to unpaid invoices. Did you know that approximately 7.5 percent of all invoices are lost in the process, almost no matter the size of the organisation,
• Some workers may not be very motivated to devote their time and attention to merely administrative chores that might easily be automated which causes errors which must be rectified later,
• There is also the intangible cost of a poorly managed process on the business; for example, a late or missing invoice will delay approval, which will delay payment, which will delay the vendor/supplier relationship, and so on and so forth.

Using a cloud-based accounts payable automation platform

Cloud-based SaaS process automation, as opposed to on-premises invoicing process automation software, allows for significant cost reductions without sacrificing performance, functionality, or security in the process.

SaaS does not need the purchase of any software or the installation of any software. When using a per-use payment method, invoices are generated in accordance with the company’s real processing activity. Users also benefit instantly and without incurring any additional costs’ from product enhancements and updates, such as those necessary for regulatory compliance reasons.

Furthermore, current software that is in sync with today’s use habits is both quick and simple to learn, resulting in increased productivity for accounts payable staff members from the very first day on the job, according to the company.

Finally, this sort of accounts payable automation platform allows for access at any time of day or night, from any location, and from any device. With this capability, the approval process is significantly streamlined, since there are no delays caused by employees working outside of the office or from many locations.

Why SaaS is key to accounts payable automation

As previously noted, as invoice processing and approval have progressed, so has the automation of the accounts payable process, which has significantly increased over the last many years as well.

A variety of reasons have contributed to this generalisation, including the availability of solutions as internet services, SaaS mode, and usage-based pricing structures, among others.

This has all contributed to making digitization a reality for a wide variety of companies, regardless of their size or the number of invoices they manage on a daily basis. Then, once implemented, accounts payable provides advantages to teams and departments across the organisation. In reality, automation provides advantages to the whole organisation.

What is the best place to begin?

Choosing an automated accounts payable solution begins with an in-depth understanding of the organisation’s current situation as well as the problems that need to be solved. This goes beyond critical basic criteria such as solution performance, infrastructure security, resulting automation level, scalability, and others. The following are the measures to take:

Recognising and meeting functional requirements

The involvement of all project participants (that is, everyone involved in any stage of the approval process) is critical from the outset, including the CFO, accountants, buyers, approvers, and other stakeholders to identify pain points and frequently encountered challenges, while also quantifying costs to the greatest extent possible.

Performing an audit of your existing accounts payable approval process is also a good place to start since it allows you to get acquainted with the sorts of documents to process and the quantities of documents to process, as well as the procedures and the different individuals engaged in the process.

Define your qualitative and quantitative goals

Once you have established relevant indicators, such as invoice processing costs and time; the average processing time of an invoice from reception to approval to archive; the number of invoices handled by each accountant; and the number of supplier disputes and the time spent resolving them, quantifying quantitative objectives becomes relatively simple. For example, qualitative goals are often dependent on the pain areas that have been discovered.

Drafting an accounts payable automation project plan

In order to begin, it is necessary to develop an ideal plan that takes a variety of factors into consideration, such as: when is the most appropriate time for the accounting team to implement an organisational change?

If so, does the project need integration into an existing change management process or a new accounting package? When is it that the organisation receives the biggest quantity of invoices on a regular basis?

It’s also important to remember that project implementation durations may vary depending on the kind of process automation solution selected, the amount of complexity, and the level of customisation necessary.

Evaluation and research

In the same way that no two businesses are alike, no two service providers are same. When looking for a payable automation provider, you should have a list of questions prepared, including how much experience the provider has, whether the software platform is cloud-based (which is recommended), whether the accounts payable automation platform “talks” with other systems, and what the customer care structure is for the provider. Having this knowledge in advance will help to lessen the likelihood of future conflict in the workplace.

Before you start with accounts payable automation

Okay, so you’ve completed your research and you’ve established the cost/benefit analysis, so what else must you consider before you get started?

Selecting the most appropriate accounts payable automation solution demands understanding the optimal features offered by the industry leaders. Read on to discover what you should expect from the leading solutions.

Essential AP automation software features

Certainly, you will want to insist upon real-time Cloud-based P2P automation because you need the highest ROI from a P2P Automation solution. Therefore, you should insist upon:

• A truly intuitive and modern user experience,
• Intelligent real-time automation technologies, ideally blending Artificial deep learning and Big Data technologies with proven large data sets of at least 1m records,
• A total solution which encompasses purchase requisition through to invoice payment, with traceability which can satisfy even government auditors.
• AP solutions should leverage artificial intelligence to deliver fraud detection and prevention.

AP purchase capabilities

One of the great benefits of Purchase-to-Pay / accounts payable department automation is the opportunity to create digital purchase workflows. Does the system you are evaluating enable your users to:

• Create purchase requests,
• Automate approval workflows,
• Automatically generate purchase orders,
• Manage deliveries and monitor budget.

Is the software touchless and scalable?

There’s no doubt about it: any viable accounts payable automation suite should offer your ap team straight through processing, that is, fully touchless document handling, with fully scalable, intelligent, workflows which can be tailored to automate your all aspect of data capture, the approval process, and lead through to a secure payment process.

Common examples of essential features include:

• AI, Machine Learning, RPA and Big Data (1M+ vendors) automate real-time GL coding and PO matching with no prior settings,
• Can you approve or reject any stage with embedded and customisable smart workflows, and is there an inbuilt mailbox?
• Are your tasks as to which business to pay, their account details, the details of the goods and services invoiced for, the payment due date, and other key data instantly available?
• Prepare and release payment, stamp, and split documents.

Capture

Capture all your documents in one place:

• Multi-channel: 100% of your invoices, PR, PO, credit notes, goods receipt and more, captured via e-mail, drag & drop, mobile, scan, sFTP for multiple formats: PDF, FacturX, UBL, CII, EDIFACT …
• Artificial intelligence based smart data extraction which incorporate machine learning to eliminate human input.

Plug & Play Export ERP Integration

Invoice capture and automation seamlessly integrated with your accounting software:

• Automatic import and update of master data: vendors, chart of accounts, purchase orders, tax profiles, users using Active Directory, purchasing catalogue, budgeting,
• Natively integration with 250+ ERPs worldwide: accounting lines, payment order,
• Integration with Document Management Systems: images and indexes,
• Can you see at a glance who you have paid, your current liabilities, outstanding amounts, etc., and can you link every invoice to a matching purchase order?
• Are there ample examples of the connectors you might need?

Search Lookup Monitoring KPIs

All documents stored securely in the Cloud:

• Gain instant visibility into your accounts payable process and stop losing documents,
• Easily capture, index, search and archive all types of documents and classify them in dynamic folders and assembling supporting documents with digital stapling,
• Easy to search and find thanks to a unique combination of keywords-based search and multi-criteria search,
• Monitor your suppliers and negotiate discounts with a robust reporting dashboard,
• When your business supplier calls with a query, can you recall their purchase order instantly, view the goods or services provided, see when they are scheduled to be paid, and confirm what your company owes?
• Get instant visibility and improve your automation performance.

Security Compliance

Benefit from the highest level of security and compliance:

• YoozFakeDetection: automatic detection of document fraud and forged documents (invoice, order…) and authentication of the original document,
• Automatic detection of duplicates and inconsistent data (bank reference, amount, date …) based on usage data,
• Systematic and automatic application of internal control rules using Robotic Process Automation (RPA),
• Traceability of interventions allowing the identification of the fraudster and their actions,
• “Checksum” signature calculation for original document authentication
• Cloud-hosted platform with highest level of security,
• Regulatory compliance with a trusted partner (audit trail, legal archiving, timestamp.

Services

Benefit from a dedicated Project Support and a personalised User Support:

• Consulting, Configuration, Training and Remote or On-Site Assistance services to support the implementation of your project
• Multi-channel User Support: chat, customer portal, e-mail, telephone to contact a Yooz engineer at any time and know the status of your requests
• A knowledge base (videos, contextual help, articles) to help you use Yooz better
• A Yooz Insider Webinar training for continuous training of your users.