Accounts Payable process steps are very easy with AP Automation software
By implementing automation software to handle all your Accounts Payable process steps, you’ll be able to take advantage of the benefits, significantly improve the efficiency of your AP department, and receive thousands of data points that your business can take action on to improve your AP processes even further.
In this guide, we’re going to walk through some of the benefits of AP automation software in detail and explore how automation can be a game-changer for your business.
4 AP Automation software features to look out for
We’re going to walk through several key automation software features that you should look out for when deciding on AP automation software to improve your Accounts Payable process steps.
Accounts Payable process steps
In companies all over the world, there are dozens of different departments that are dedicated to specific tasks. One such department is the accounts payable department. The team that makes up this finance-focused office is responsible for all of the accounts payable process steps. From the possibility of incorrectly entered data to fraudulent invoices, the accounts payable department has an important role in ensuring the business runs smoothly and effective payment procedures are followed.
The accounts payable department is made up of employees whose task is to process invoices for B2B accounts. Specifically, they keep track of the debt owed by a company to its suppliers and pay the balance later. This transaction shows up in the books as both a credit and a debit. In accounts payable and receivable journal entries, the record should show a debit on the expense account and a credit in the accounts payable account. After payment has been made, the entry would show a debit in accounts payable and a credit in cash.
For the accounts payable team, the process they follow for processing invoices is of the utmost importance to a business. With seven different steps, and the risk of human error or missing data in each one, the traditional manual method of processing invoices can be highly inefficient. This is why the field of accounts payable processes is changing all the time. With so many areas of business adapting to modern technology, the accounts payable department should as well. One way the accounts payable process is changing is through the introduction of automation. With the average organization processing 3,840 invoices per employee per month, improving the way this department runs is vital to the health of any large business. With Rossum’s platform, businesses can turn their accounts payable departments into efficient machines for invoice processing.
What is the Accounts Payable process?
You might be wondering, what does the accounts payable process look like in actual steps? At a rudimentary level, these are the seven basic steps in the process:
- Receipt and sorting of invoices
- Extracting data
- Purchase order matching
- Verifying vendor details
- Approving the invoice
- Making the payment
- Auditing and reporting.
Each step involves the risk of mistakes or missing information, which makes the process take longer. Additionally, with the manual method of processing invoices, employees have to retype data constantly which not only takes time but causes burnout.
Another way the process can be delayed is through the lack of uniformity. With no way to standardize the invoices received from companies, inefficiencies abound in every step of the accounts payable end-to-end process. PDF files, Microsoft Word documents, and Excel spreadsheets are some of the many types of formats for an invoice that a business might have to work with. Each format carries its own peculiarities, and this means that your accounts payable team will have to extract the data from each invoice differently.
The accounts payable process does not have to be this way. With the introduction of computer AI technology like that provided by Rossum, businesses can reduce the risks and time involved in processing hundreds of invoices.
Full cycle accounting
In accounting, there is a term that is used to describe all of the tasks undertaken by a business in a given year. This is called full cycle accounting. For the accounts payable department, full cycle accounting includes every step of the process, from the purchase being made to the delivery of goods or services and the receipt and payment of the invoice. This is also called the accounts payable cycle formula.
At the other end of a B2B transaction is an accounts receivable team. The full cycle accounts receivable process includes the sale, delivery, sending off the invoice, and receipt of payment owed. With both of these processes, the full cycle is like an overview of the complete transaction. Both the accounts payable and accounts receivable cycles are completed in a set number of days. Starting from the day the order is placed, the number of days it takes for the payment to be made is logged. Once the business receives payment for its invoice, the cycle ends.
No step of full cycle accounting should be inefficient. Rossum’s platform can give businesses a way to process documents quickly and intelligently so that they can focus on the most important parts of full cycle accounting.
Best practices in Accounts Payable process
If a business finds that its accounts payable department is taking too long to process invoices, it is time to start looking for the best practices in accounts payable process steps. They say that time is money, and this is no less true in the accounts payable department. When it could take up to 25 days to process an invoice, a vendor might end up charging your business for late payment or complaining about the delay, resulting in rising costs and damage to your brand image. One area where the process should be the best it can be is in invoice approval. Best practices, such as detecting fraudulent invoices early in the process, can save your business money and hassle.
A best-in-class accounts payable process ensures that every step of those seven levels is efficient and designed to enhance the overall business goals. An accounts payable procedures flowchart can be a helpful tool for knowing where to start with improving your business’s processes. This kind of chart will show every step in the process and can be designed for your company’s needs so that you can get a full picture of the ways you can improve each step.
Businesses are starting to realize that a manual accounts payable process is not the best practice. Some choose to outsource the data entry process instead, but this can be risky. Another option is to use a P2P portal. A P2P portal can help improve some of the processes, but this option lacks the ability to process invoices that are not PO based. EDI is another way businesses are choosing to change the traditional accounts payable process. Unfortunately, EDI is considered critically flawed and using EDI software can actually increase costs. The best practice to implement for invoice processing is automation. An automated process for extracting data, like Rossum’s platform, can reduce human error and cut the amount of time it takes to process each invoice.
Accounts Payable examples
Sometimes it is best to look at examples to get an idea of how to implement new practices in your organization’s departments. Accounts payable examples can be simple or complex, depending on what you are looking for exactly. For instance, an example of an accounts payable expenditure could be something as simple as purchasing raw materials that will be used by a business to develop a product. On the other hand, you might want to look at examples of accounts payable invoices or balance sheets.
Accounts payable and receivable examples on balance sheets can be an excellent way to understand the process and see how other businesses keep their sheets. Another way to learn more about the tasks in an accounts payable department is to look for an accounts payable procedures manual. A document like this would include key information on some of the best practices for running an accounts payable department in a business.
However, with several different options for changing the traditional accounts payable process available, it is best to look for examples of specific businesses that have improved their processes and what tools they are using to do this. As an example, Morton Salt is a company that uses the Rossum platform to automate data entry and they serve as an excellent case study of an organization that changed its accounts payable process for the better.
Accounts Payable Automation best practices
One of the best ways a business can improve its accounts payable process is to automate it. Now, accounts payable automation best practices do not include firing all of the employees in the department. Instead, it means that those employees can focus on tasks that require the human touch instead of working on the endless and thankless task of manual data entry and retyping. Automation also makes communication duties straightforward. By automating the accounts payable process, less time is lost in inefficient work.
The entire payment procedure in a company can be improved through automation. Here is how that could work. Firstly, the business chooses to use technology to automate invoice processing. This means that there is no more retyping and analyzing because all of this is done through software. Then, with the invoice automatically sorted, matched, verified, and approved, the task of making the payment is simple and fast.
Additionally, the best automation software for accounts payable processes will include internal controls that are automated as well. All the business needs to do is to have an accounts payable internal controls checklist to ensure that the automation is working correctly. Accounts payable automation also should include document communication so that the process is always smooth. Finally, with automation that is based in the cloud, communication between departments and access to the data is easier and more secure.
Companies that choose to implement tools into their processes that follow these accounts payable automation best practices can buy time for important tasks and lower overall costs. An example of this is Peipsco, a company that uses Rossum for their accounts payable automation needs, which reported 95% straight-through-processing automation on incoming invoices. Rossum is an end-to-end solution that many companies have chosen for their accounts payable departments, and it can help your business through a unique Intelligent Document Processing platform.
- AP Automation
- AP Automation software
- Automation in insurance
- Best OCR software
- Data entry process
- Data entry tools
- Extract data from images
- Extract tables from an image
- Get text from PDF
- OCR accuracy
- OCR deep learning
- OCR engine
- OCR invoice
- OCR solutions
- Optical Character Recognition software
- PDF OCR software
- Table OCR
- What is OCR software?