As technology improves, so do business practices.
This article continues is part 2 of a discussion started in our previous post, Here Are the Four Most Tedious Tasks in Accounts Payable.
Many middle-market companies still follow the traditional methods of manual accounts payable. As described in our last article, manual AP is an incredibly tedious process. It consumes unnecessary hours, is prone to human-error, requires extreme diligence and attention to detail, and often is reliant on the presence of a CFO or Controller to finalize. In the 2019 State of Accounts Payable, the four largest pain points recognized during this process were cited as:
- Invoice coding and data entry
- Invoice approvals
- Matching invoices to corresponding purchase orders
- Getting checks signed, postmarked, and mailed
Although AP for most companies is a pain, it does not have to be. As technology improves, so do business practices. Automated accounts payable is now a more effective option; it decreases costs while increasing the efficiency of your team. One study revealed that the best-in-class businesses use an automated accounts payable method at rates nearly double their competitors – 71% vs. 38%. Here is how AP Automation address the four most tedious tasks in accounts payable.
1. AP Automation Streamlines Invoice Coding and Data Capture
Invoice coding and data entry is a vital part of the accounts payable process. It’s also one of the longest steps. As employees get knee-deep in paperwork, they tend to shift their focus to simply coding invoices in the fastest way possible. This rushed method of manual data entry increases the likelihood of having errors. This may include typos, the omission of data, duplicate entries, etc. These errors cost your business both time and money, and may take a while to reconcile. If a mistake impacts your vendor, that’s even worse. When your employees are focusing on reconciling their mistakes, they’re not completing the tasks at-hand or working towards new value-add projects. The time spent on these unnecessary errors could be put to better use.
With AP Automation, invoices are captured automatically and in bulk. Leading AP Automation solutions combine Optical Character Recognition technology with an additional layer of human review to ensure 99.5% accuracy during invoice coding and data capture. They also flag duplicate invoices before they can be entered into the accounting system. Automation increases your team’s productivity levels, as automation is about 3x faster than manual entry and gives your team time to focus on other tasks and projects. It also minimizes errors and saves your team the time that would have been spent reconciling.
2. AP Automation Streamlines Invoice approvals
The invoice approval process consists of routing the invoice to the appropriate approver(s). If the average worker receives 100 to 200 emails per day, it is very possible that the appropriate approver may lose an invoice that needs to be reviewed in the shuffle of their inbox. For this reason, manual invoice approval takes extreme diligence to keep track of the invoices’ trails and time to chase down trails when department heads don’t follow up.
The best way to combat this pressure is through automation. With AP Automation, all approvals are automatically documented and preserved in a central data repository, making any record of them easy to find, which is especially handy during audits. This completely negates the need to juggle dozens of email threads and orchestrate a system to organize and save proof of approvals. Additionally, businesses can set up customized invoice routing rules with AP Automation solutions to ensure invoices are automatically routed to the appropriate invoice approver.
3. AP Automation Simplifies Matching Invoices to Corresponding Purchase Orders
Manually matching invoices to the correct corresponding purchase order requires extreme attention to detail. This is a daunting task that also takes a lot of time. Improperly matched invoices could create costs and also negatively impact relationships with vendors. The process also slows down businesses and becomes more complicated as businesses grow.
Automated PO matching compares invoice line items with PO data that is already in your accounting system using matching algorithms. When PO data is found, the software evaluates and flags any potential issues. Automated PO matching can also be customized to set varying tolerance levels on discrepancies. This accounts for slight miscalculations on the part of your vendor; if an invoice enters with an error that is within the range of your set tolerance level, it will continue without being flagged. Ultimately, automation speeds up the PO patching process immensely.
4. AP Automation Streamlines Payments
The final step of the accounts payable process is the actual payment itself. This is a pain because most companies are reliant on having a CFO or controller in office in order to sign the checks. This can be a lengthy process if required people are out of office as well.
AP Automation simplifies payments to a process of just a few clicks. Upon approval, the payment will go out immediately on a scheduled date; no CFO or controller needs to be physically present and no further action is required. Automation also enables companies to transition away from check payments and toward more secure and beneficial electronic payments like virtual cards and ACH transfers. This reduces the costs of physical goods and lowers the risk of fraud.
The Best Path to Automation
MineralTree’s service eliminates the four most tedious tasks in accounts payable in the simplest fashion. MineralTree offers the only end-to-end AP Automation solution that automates invoice and payment processing. Businesses save 70% or more on payment processing costs and receive cash back rewards from credit card payments. Additionally, businesses increase efficiency and get clear visibility into cash flow operations. MineralTree also reduces payment risk with advanced security features like two-factor authentication, two-factor payment verification, payment limits, and integration with bank Positive Pay. With MineralTree, accounts payable is no longer long and daunting, but a cost-friendly, efficient, and simple process.
Curious to learn more? Contact MineralTree for a personalized demo.