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4 Expert-Approved Accounts Payable Automation Best Practices

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Key takeaways

  1. Businesses lose around $125,000 yearly due to accounts payable issues like inefficiencies and fraud.
  2. Choosing the right automation software and integrating it with existing systems is key for efficiency.
  3. Electronic invoicing saves time, reduces errors, and is eco-friendly.

In today’s fast-paced business world, every minute counts. And those minutes lost to manual data entry, misplaced invoices, and approval bottlenecks can add up quickly.

Businesses lose an average of $125,000 annually due to accounts payable issues like inefficiencies, fraud, and theft.

Association of Certified Fraud Examiners 

Accounts payable automation goes beyond simply adopting new technology. It represents a significant shift towards greater efficiency and accuracy in financial operations.

This article will equip you with the knowledge to streamline your accounts payable process, minimise errors, and liberate valuable resources for strategic endeavours. We’ll delve into four industry-recognized best practices that can revolutionise your approach to accounts payable.

Settle in, and let’s explore how to unlock a new level of operational efficiency within your organisation


Best Practice #1: Choose the Right Automation Software

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Selecting the right accounts payable automation software is crucial for optimising your processes. The right software will address your pain points, integrate with your existing systems, and offer features that streamline your workflow. Here’s how to get started.

Research and Compare Options

Selecting the optimal automation software requires meticulous research. Rushing this critical stage could lead to an ill-suited solution.

Begin by meticulously identifying your current operational bottlenecks.

What are the main challenges in your current accounts payable process? Once you know what you need, you can start looking for software that addresses those issues.

Prioritise solutions that deliver functionalities such as invoice scanning, automated approval workflows, and real-time tracking. These features demonstrably enhance operational efficiency and minimise errors.

Consult reputable software review platforms. G2, Capterra, and Trustpilot provide user-generated evaluations and ratings that can illuminate the strengths and weaknesses of each contender.

Given the critical role this software plays within your organisation, meticulously compare various options. Don’t hesitate to request product demonstrations or trial periods from vendors to ensure a well-informed decision.

Consider Integration Capabilities

Your new automation software should work seamlessly with your existing systems. 

Think about your ERP, accounting software, and any other tools you use daily. The creation of additional work through manual data transfer between systems should be avoided at all costs.

For instance, if your organisation utilises an Enterprise Resource Planning (ERP) system such as SAP or Oracle, seamless integration with the chosen automation software is necessary. This principle also applies to popular accounting software packages like QuickBooks or Xero.

Effective integration ensures the effortless flow of data between platforms, thereby streamlining operations and mitigating the risk of errors.

Best Practice #2: Standardise Your Processes

Implementing standardised processes is essential for the smooth operation of your accounts payable system. Consistency ensures that tasks are completed correctly and efficiently every time. 

Create Clear Guidelines

Standardised procedures are the backbone of an efficient accounts payable system. 

Without clear guidelines, mistakes and delays can become the norm. 

Start by documenting every step of your accounts payable process. From invoice receipt to payment, make sure every detail is covered.

Use straightforward language and avoid jargon. Visual aids like flowcharts or checklists can make the guidelines easier to follow. 

Ensure these documents are easily accessible to everyone involved in the process. Regularly review and update them to keep up with any changes in your workflow or technology.

Implementing these guidelines helps everyone stay on the same page. It reduces confusion, speeds up processing times, and minimises errors. Plus, having a standard procedure makes it easier to train new employees.

Train Your Team

The most meticulously crafted guidelines will prove ineffective without a comprehensive training programme for your team.

Effective training is key to ensuring compliance and efficiency. It is imperative that all personnel involved in the accounts payable process possess a thorough understanding of the revised procedures and the functionalities of the new software.

Plan training sessions that are hands-on and interactive. Allow employees to ask questions and practice using the new systems. 

Provide ongoing support and refresher courses to keep everyone up-to-date. Consider appointing a go-to person or team for troubleshooting and continuous learning.

By investing in training, you empower your team to work more efficiently and accurately, reducing the risk of costly mistakes.

Best Practice #3: Use Electronic Invoicing

This extends beyond the mere elimination of paper-based processes. It represents a significant shift towards enhanced efficiency, improved accuracy, and environmental responsibility.

“E-invoicing can save businesses 60-80% invoice processing costs compared to traditional paper invoicing.”

Billentis, The E-Invoicing Journey 2019-2025

Benefits of E-Invoicing

Electronic invoicing offers significant advantages over traditional paper-based methods. 

First, it speeds up the invoicing process. E-invoices can be sent and received almost instantly, reducing the time spent waiting for the mail. This can significantly improve your cash flow.

E-invoicing also reduces errors. Automated systems can catch mistakes that might be missed in manual processes. According to a study by the Institute of Finance and Management, companies that switch to e-invoicing see error reductions of up to 37%.

Furthermore, electronic invoicing presents an environmentally friendly advantage. By reducing paper consumption, your organisation can demonstrably minimise its carbon footprint. This shift translates to a win-win scenario, fostering both financial savings and environmental responsibility.

Implementation Tips

Start by choosing a reliable e-invoicing platform. Look for features like automated data entry, secure data transmission, and integration with your existing systems.

Communicate with your vendors about the switch. Provide them with clear instructions and support during the transition. Some vendors might be resistant to change, so be prepared to address their concerns and offer assistance.

A period of familiarisation with the new system should be anticipated. To ensure a smooth transition, consider piloting the system with a select group before full implementation.  Close monitoring of the process is recommended, with a willingness to make adjustments as necessary.

Best Practice #4: Foster Vendor Relationships

Building strong relationships with your vendors is crucial for a smooth accounts payable process. Good relationships lead to better terms, smoother negotiations, and more reliable service. 

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Clear Communication

Clear and consistent communication with your vendors is the foundation of a strong relationship. When both parties understand expectations, processes run more smoothly, and issues are resolved quickly. 

Establish a routine of routinely updating your vendors regarding your organisation’s requirements and any procedural modifications.

Best practices for maintaining effective communication encompass the implementation of regular check-ins, facilitated through email, telephone calls, or formal meetings.

Use these touchpoints to discuss performance, address any issues, and provide feedback. Being proactive in communication shows your vendors that you value the relationship and are committed to mutual success.

For example, if you foresee a delay in payments or a change in order quantities, inform your vendors as soon as possible. This transparency helps them plan better and reduces the potential for friction. 

Additionally, establishing a dedicated point of contact for vendor communications can streamline interactions and ensure consistency.

Prompt Payments

Prompt settlement of your vendors’ invoices is one of the most straightforward yet impactful methods for cultivating positive relationships.  Timely payments demonstrate your organisation’s reliability and respect for the vendor’s operations, potentially leading to more favourable terms and prioritised service.

To ensure timely payments, implement automated reminders and scheduling within your accounts payable software. 

Set up alerts for upcoming due dates and review your payment schedule regularly. Automating the payment process can help eliminate human error and delays.

If cash flow is an issue, communicate this to your vendors and negotiate extended terms when necessary. Most vendors appreciate transparency and are willing to work with you if they understand the situation. 

Why Accounts Payable Automation Matters

Manual accounts payable processes can be a significant bottleneck for many businesses. Handling invoices manually is not only time-consuming but also prone to errors. 

Think about the piles of paper, the endless back-and-forth emails, and the constant need for follow-ups. It’s a labour-intensive process that can lead to delays and mistakes.

Errors in manual data entry are common and can be costly. A single misplaced digit can result in overpayments, underpayments, or duplicate payments. 

These mistakes can damage your relationships with vendors and impact your company’s financial health. Additionally, manual processes often lack transparency, making it difficult to track the status of invoices and payments.

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Automating your AP processes can save your company a significant amount of time. Instead of spending hours on data entry, your team can focus on more strategic tasks. Automated systems can process invoices quickly and accurately, reducing the risk of errors.

Furthermore, automation enhances operational efficiency. Automated workflows guarantee the timely routing of invoices to the designated personnel for approval, thereby eliminating unnecessary delays. This streamlining of processes not only expedites payments but also fosters improved visibility. 

By leveraging automation, you can effortlessly track the real-time status of any invoice, granting you greater control over your organisation’s cash flow.

Embrace the Power of Automation

The implementation of these recommended practices within your accounts payable processes can generate significant enhancements in efficiency, accuracy, and overall organisational health.

By selecting the most appropriate automation software, standardising your procedures, utilising electronic invoicing, and cultivating strong relationships with your vendors, you can transform a traditionally cumbersome task into a streamlined and strategic advantage.

It is important to acknowledge that change is rarely instantaneous. 

Begin by taking incremental steps, gradually integrating these practices into your daily operations. The rewards — time efficiencies, minimised errors, and strengthened vendor relationships — demonstrably justify the effort invested.

Embrace the transformative power of automation and witness the evolution of your accounts payable process into a seamless and efficient system that underpins your company’s growth trajectory. 

Take the initial step today and pave the way for a more productive and prosperous future.

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4 Expert-Approved Accounts Payable Automation Best Practices
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