How the Accounts Payable process works
The accounts payable process is absolutely essential to the revenue cycle of any modern business today and can be described as a subset of the broader purchasing and expenditure cycle. There are many processes that fall under accounts payable, and introducing AP automation to your department can help streamline important tasks.
Below, discover a step-by-step process of what the typical accounts payable process looks like from start to finish. This includes everything from the initial accounting steps that must be completed all the way through to the final delivery of the requested product or service.
By stepping into each step of the process, you can understand the AP process in a much deeper way and find ways to improve your team’s workflow.
Analyzing the Accounts Payable process from start to finish
While the typical AP workflow for your standard enterprise may seem complicated in the beginning, understanding each step of the process is essential if you want to dive into AP firsthand and help improve your company’s current AP process in the best way possible.
Invoice data capture
The first step of the accounts payable process is often referred to as “invoice data capture”, where you manage the invoices of your suppliers from their invoice receipt and ensure all of the data is validated and properly extracted. Once all of the data has been interpreted and checked for accuracy, you can move on to the invoice coding process. By using AP automation and incorporating optical character recognition (OCR), your business can eliminate some of the manual work from invoice data capture and reduce human error.
Coding invoices to cost centers and accounts
To ensure that all of your business expenses are classified properly, it’s crucial that your accounts payable department codes invoices to the correct accounts and cost centers. This is the “core” of AP that allows your business and its various accounting departments to analyze your invoice data in the future in an attempt to optimize and promote efficiency.
Properly approving invoices
After your invoices have gone through data capture and have been properly coded, it’s time to send them off to approvals. Depending on the structure of your AP team within the enterprise or business you work in, this approval process may vary. To improve the efficiency of your approval process, consider implementing a cloud-based accounts payable solution and moving your invoices to the cloud to allow quick, flexible, and remote approval. Every business that implements a cloud-based invoicing solution has the potential to significantly improve its invoicing process.
Matching invoices to purchase orders
When a vendor invoice has been preceded by any particular purchase order (PO) from the organization that is classified as the buyer, invoice matching is used to reconcile the data. This step makes sure that all payments made are verified against an original purchase order, and any incorrect data is quickly corrected.
Posting your invoice for payments
The final step of the AP process is to post your invoice for payments. This can be done by sending your invoice to the appropriate parties, requesting timely payment, and informing the buyer of the payment methods they can use to pay for the goods or services they have purchased.
How Rossum can help your business with AP Automation
You should now have a much better grasp of the accounts payable process and understand how the process moves from invoice data capture and invoice coding into invoice approvals, invoice matching, and ultimately a request for payment from the buyer.
To make the AP process even more efficient for your company, contact the Rossum.ai team today to learn how automated data capture can play a major role in making your accounts payable department more efficient and eliminating any unnecessary manual paperwork from your processes.
By using AP automation, your business will be able to leverage modern technology, save time, reduce your expense, and increase the efficiency and flexibility of your employees allowing them to get more done in less time.