How to improve AP efficiency with Intelligent Document Processing
Accounts payable is a critical and often underutilized department within most companies. Utilizing a modern Intelligent Document Processing solution, AP can move from a necessary chore to a productive and valued aspect of your business.
Is AP Automation the right step for you?
Let’s investigate invoice processing inefficiencies. You’ll learn how to identify their causes and effects, helping you determine how to streamline your AP operation and choose a solution that is for you.
Accounts Payable Automation solutions
The Accounts Payable (AP) department is one of the most critical areas in a business as well as one of the areas where many automatable tasks are still performed manually. When invoices arrive, whether in physical or digital formats, the data from them must be extracted and analyzed so that the payment can be made. Data entry clerks have to spend countless hours on these manual processes that, while vital for the company, may be performed more efficiently.
For instance, in the case of a single invoice, it must first be matched with a purchase order. Second, all the information must be entered into the corresponding fields in the business platform. That information must then be verified for accuracy. Lastly, the invoice can be paid. These steps are required for every invoice. With the average employee having to process 3,840 invoices per month, the manual method for invoice processing can take up valuable time. On average, it takes 10.3 days for a company to process one invoice.
To put that into perspective, if an ordinary business only has one invoice processing employee for all of the invoices they receive, it would take over 108 years for one month’s worth of invoices to be paid. This is why businesses are looking into Accounts Payable automation solutions.
The technological trends in accounting, like Artificial Intelligence (AI), have been demonstrating how accounting departments can use technology to become more efficient. One way that companies have been using technology to improve the AP department is with the best Accounts Payable automation software. A software tool can give companies the ability to automate different steps in the AP process, such as data capture, data entry, and validation.
The best Accounts Payable software also possesses AI capabilities so that it can “learn” over time and capture data like a human would. Rossum is an example of an AI-powered software that can vastly improve the efficiency of the AP department. Other AP automation solutions may not actually be automated. For example, companies could choose to outsource AP processes, utilize a P2P portal, or implement an EDI system. These non-software options may improve efficiency slightly but cannot compete with the efficiency of Artificial Intelligence software.
Invoice automation software
One method to improve the efficiency of the Accounts Payable process is to implement invoice automation software in the department. Invoice automation can take many different forms, but it most commonly consists of automated data extraction, data entry, and issuing of payments. This automation is usually in the form of software that can be downloaded and used on a business’ computers. For this kind of software to be effective, it must be able to extract all of the data from an invoice and enter it into the correct fields in the business system for both recording purposes and payment. Even the most basic invoice will contain several pieces of vital data, such as the invoice number, product description, number of goods, date of both supply and the invoice itself, company information, and more.
A simple invoice software will not have Artificial Intelligence or machine learning capabilities. Instead, it will be based on programming and will usually require the use of templates. There are a few issues with a simple software solution like this. Most importantly, it would require templates for all invoices received by your company.
If your business receives an invoice that does not match a template, it will need to be processed manually. Additionally, most simple template-based invoice automation software options can only process invoices that are scanned perfectly and are in the proper format. Due to these limitations, simple invoice automation software may or may not be helpful to your business.
When considering invoice automation benefits, it is essential to consider the difference between simple and smart automation software. A simple invoice software can be useful to businesses that face little variability in the invoices they receive and that are only interested in a helpful tool as opposed to a more robust platform. A smart automation software with Artificial Intelligence capabilities is a better choice for companies that need to process large numbers of invoices that come from multiple suppliers and arrive in different formats. Rossum is a smart solution that can accurately read and extract data from all document formats.
Accounts Payable systems
Another option for automating the Accounts Payable process is to use a system. Accounts Payable systems are different from AP and AR automation software. Rather than focusing on invoices and data extraction, Accounts Payable systems are designed to simplify and automate the payment process. At the most basic level, an AP system uses the information from the invoices that employees input into it and pays the suppliers automatically. These systems make it easier to pay vendors quickly and accurately. Unfortunately, Accounts Payable systems are not the best choice for automating AP processes or improving efficiency.
The primary problem of AP systems is the lack of document processing capabilities. Since these systems are only meant for automating payment, all of the data that is required to perform that task must be inputted manually into the system. This means that all of the other AP processes, from sorting through invoices to purchase order matching and approval, must be performed manually. Otherwise, companies would have to implement two different software systems. One would be a document processing OCR software, and the other would be the AP system. Additionally, even the best Accounts Payable system will require manual tasks such as signing checks.
While an AP system might appear like an effective platform for improving efficiency in the AP department, it might not significantly reduce manual effort or time. The benefits of this solution are that payments can be completed and recorded on one platform and that the payment process is standardized. Weighing the benefits of an AP system versus the drawbacks can help businesses decide whether they should implement a system or look for a more comprehensive solution. If a company chooses to use an AP system without automated Document Processing software, this will not save a great deal of time or money. On the other hand, companies can use a platform like Rossum that automates the most time-consuming manual tasks of the AP process, including data extraction, data entry, validation, matching, and more.
AP Automation workflow
The best place to start when looking for the right Accounts Payable automation solution for your business is to understand the AP automation workflow. An AP workflow is simply all of the steps in invoice processing, from receipt of the goods and invoice to the payment of that invoice. The more of these steps that a company can automate, the more efficient the Accounts Payable department becomes. While an AP system can be helpful, it only makes one step of invoice processing more efficient. In order to automate as many stages of the process as possible, businesses need a robust software solution.
Some large organizations utilize Enterprise Resource Planning (ERP) software to automate different areas of their business processes. These software solutions are complex and are designed to work with several departments, including Accounts Payable. For businesses that are interested in automating several business processes, implementing an ERP software in the company can be the most efficient tool. Depending on the needs of the business, however, an ERP invoice processing software might be too complex. An organization might not need a complete ERP software and may only want to automate the processes in the Accounts Payable department. In this case, a different solution would be required.
An Accounts Payable approval software is designed to automate invoice processing and enable the company to keep all invoices and records on one centralized platform. Rossum is a cloud-native solution that can automate pre-processing of invoices, data capture, validation, and post-processing. Additionally, Rossum is not part of an ERP system, which means that it can be used in any business and does not require an entire re-organization of the company’s processes.
Accounts Payable Automation process
The Accounts Payable automation process can look different for every company. Some businesses may find that their manual processes are working effectively for them, and they may only be interested in finding a simple solution for making payments. Other companies might find that they not only want to automate their AP processes but all of their business processes. The first group would benefit from an Accounts Payable system, while the second group should look for an ERP system. Another automation process that businesses may be interested in is a single, comprehensive AP software.
Implementing an Accounts Payable automation software can be the best choice for companies that want to improve the efficiency and accuracy of their invoice processing. The best Accounts Payable automation solution will have AI capabilities and be able to automate manual tasks. Rossum is an AI-powered software that can be implemented in a business in less than one day and is designed to reduce human involvement over time. Unlike an AP system, Rossum can process invoices automatically. In addition, since Rossum is not part of an ERP system, it can be used on its own and is a single, proven solution to the problem of manual AP tasks.
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