INTRODUCTION

Irrespective of the number of hours or quality of manual labour put in, the task of Accounts Payable Process is huge. There will always be a high percentage of error, up-to about 40%-60%.

What is the solution to this, you wonder? Well. Look no further, because we have just the tool you need to cope with this: Accounts Payable Automation

WHAT IS ACCOUNTS PAYABLE AUTOMATION?

Accounts Payable Automation, in simple terms, means, digitalisation of the entire process of Accounts Payable Process, using a software that integrates the entire workflow into a single platform.

Here, however, you must understand that, we are not talking about “digitization” only, i.e., manual conversion of paper records into data entry and processes. Accounts Payable Automation comprises of automated approach to the entire process of workflow of Accounts Payable.

WHY NOT OPT FOR AP AUTOMATION?

Yes, you heard us right!

Well, if you are looking for a crew that is constantly bogged down by manual labour of data processing, data conversion, invoice processing, you DEFINITELY SHOULDN’T opt for Accounts Payable Automation!

There are also a few more reasons why you shouldn’t opt for it.

But, how about we let you know WHY YOU SHOULD, instead? Maybe then, you can compare for yourself and decide?

WHY IS ACCOUNTS PAYABLE AUTOMATION IMPORTANT?

As we all know, Accounts Payable Process is the most fundamental and crucial aspect for any business or company. For decades, corporates have managed the workflow completely manually, ranging from printing out a Purchase Order (PO), to collecting goods from the supplier and thoroughly checking through the Review Report, and finally, approving the Seller Invoice to final payment to the seller.

This all sounds so simple, right? If approached methodically? Well, now, here comes the twist!

Let’s say you own a business, and, a small-scale one. And you have to process at least 50 invoices per day. Also, since it’s a small-scale industry, let us assume, the workforce is not more than 100. Imagine going through the entire process of Accounts Payable for at least 50 orders per day, and 1500 per month, with a team of 100 members, along with taking care of the proper distribution, proper quality of your products.

Doesn’t sound so easy anymore, does it?

HOW CAN ACCOUNTS PAYABLE AUTOMATION BE MADE MORE EFFICIENT?

Here is where Accounts Payable Automation comes to your rescue!

Still not convinced why you should opt for it? No problem! We have listed out for you a comprehensive list as to why Accounts Payable Automation is the buzzword in today’s marketing world, and why any business, irrespective of scale, should utilise it.

WHAT ARE THE BENEFITS OF ACCOUNTS PAYABLE AUTOMATION?

• ACCURACY: According to a report published by the Institute of Financial Management (IOFL), more than two-thirds of businesses (67.3 %) report an average payment error rate of more than 1 % (a payment error rate of more than 0.5 % indicates weak processing). This is quite natural, given the endless amount of workload, which is almost never-ending.
  A much higher degree of accuracy is seen in automated Accounts Payable process, since no manual data entry is required.
  Accounts Payable process forms the foundation of the growth of any company. Therefore, recurrent and unscrutinised errors will chip away the profit of the company, and in the long run, expose it to insurmountable losses.

• COST EFFECTIVE: Accounts Payable Automation is both, cost saving and cost effective. Look through the subcategories to understand why and how.
• Two major factors of manual process involve direct costs and indirect costs, both of which merely categorise to overall waste generation.  Direct costs involve tonnes of paper wastage, wastage of pen, ink, plastic. Indirect cost involves loss of time.
• During manual Accounts Payable processing, many invoices get lost in the long chain, or simply lie idle on desks, often overlooked. This delays vendor payments. Accounts Payable Automation ensures timely processing of invoices and timely payment. This allows the company to avail early payment discounts by suppliers. These discounts are often missed by most brands because of their late payments. Also, this helps in building confidence and trust between the company and its suppliers.
• Automated AP processing helps preserve bulk data and data quality for many years, at much reduced cost, without occupying (or rather, messing up) any physical office space
• TIME SAVING: This accounts for a major benefit of Accounts Payable Automation. Proper evaluation of Enterprise Resource Planning (ERP) will give a major boost to the work productivity of your company.
  A large chunk of manpower is concentrated in accounts payable processing, which is a laborious and futile task. By using Accounts Payable Automation, you can utilise the most industrious and dedicated staff to critical areas of your brand that can increase your brand value. Segments such as, ideation, content creation, creativity, product research, market research, etc. are often understaffed, yet, require most nurturing in order to create a position in the market.

• INCREASED TRANSPARENCY: Since Accounts Payable Automation involves digitalisation of the entire AP process, everyone involved in the company has a better understanding of the cashflow, since the information is accessible by them.
• Finance department personnel are well aware of the total expenditure being incurred from a centralised source. Hence, they can plan well ahead the budget accordingly. This can give a better insight on the ROI and revenue generated by the company. They can thus, compare it with their other plans, and accordingly, make changes in the budget distribution.
• An increased transparency means reduced chances of fraud or mistakes. Duplicate invoices are not paid. If there is any discrepancy noticed in the automated invoice processing, it is put on hold and rerouted for thorough checking, before any suspicious or extra payment is made. The cherry on the top? All of this is done in minimum time, without hampering any other work, or any other payment.
• All data is maintained in a single dashboard which allows suppliers to become self-efficient too. This means, instead of regular calls or visits to the company, they can check the processing status of their invoice online, at any time. Saving a supplier their time and harassment means building a good relation with them, ensuring timely delivery and standard quality of products.
• EFFECTIVE CASH OUTFLOW: An increased transparency of all systems into an integrated automated workflow means, increased trust among employees and their employers. However, an automated approach ensures that no invoice payment is completed before supply of materials. Also, due to the cash-flow being governed by Artificial Intelligence, no unnecessary, unaccountable expense can be made. Hence, liquidity is maintained which secures the stability of the company.
• SIMPLIFIED AUDITING: Remember the last time, you couldn’t provide so many paper invoices related to your company’s expenditure? And it was not because your records were fabricated. But they were simply lost in the entire magnanimous process!

Automated Accounts Payable records all data in a single dashboard, including receipts of payment, purchase orders, and invoices. It also integrates data from all accounts into a centralised one. This reduces the hassle of scouring through records and databases and different dashboards, thereby ensuring, easy, fast, and worry-free auditing.

CONCLUSION:

A dogmatic mentality of working hard, instead of working smart, is calculated to be the most important reason for companies still not shifting to Accounts Payable Automation. For many business owners, however, digitized data recording feels enough for a more effective Accounts Payable Workflow.

If you are not sure how to proceed with it, don’t worry. We, at ARM IT, are here to help you out. We have been providing digitalisation transformation solutions for more than 20 years now, with the help of our specialised, highly qualified team.