The Essential Guide to AP Automation

Transitioning to automated accounts payable might seem like a daunting change, but it’s certainly worth the effort. Just like upgrading any tool or system, selecting the right AP automation solution can significantly impact the efficiency of your financial operations. The key is to find a system that fits your current needs and can grow with your business.

In this guide, we’ll break down everything you need to know about making the switch to AP automation. We’ll cover when it’s time to consider a new system, the best way to make the change, and how to choose a solution that will keep working for you in the long run.

 

5 Reasons to Automate Your Accounts Payable Process

• Save Time: Reduce Invoice Processing Time by Up to 70%
• Save Money: Lower AP Processing Costs by 40%
• Reduce Errors: Decrease AP Errors by 50%
• Gain Visibility: Improve Control and Insight Over Cash Flow
• Approve On-the-Go: Strengthen Vendor Relationships

 

Save Time: Reduce Invoice Processing Time by Up to 70%

Manual Invoice Processing and approval workflows are time-consuming. In fact, according to a study, companies automating AP processes observe a 70% reduction in invoice processing time. Automation just cleans up most of these tasks and saves precious hours for your team to work on strategic activities that will grow your business.

 

Save Money: Lower AP Processing Costs by 40%

Manual AP processes are considered one of the most expensive functions of finance. Automating cuts AP processing costs by as much as 40%, according to research. With fewer manual tasks at play, there will be fewer errors, faster processing, and less reason to hire temporary staff, keeping your payroll lean.

 

Reduce Errors: Decrease AP Errors by 50%

One of the major risks with manual data entry is human error. With automation, there is minimal room for errors. Companies automating their AP operations have seen a 50% decrease in errors.

 

Gain Visibility: Improve Control and Insight Over Cash Flow

Automatic AP systems let you have real-time insight into financial processes. Tools with dashboards and detailed reports can enhance transparency so that you can follow cash flow much more carefully and track expenses in a more vital way. This visibility will be supportive of better decisions and financial planning in a more successful way.

 

Approve On-the-Go: Strengthen Vendor Relationships

In today’s fast-paced environment, approvals have to be on the go. Automation allows you to approve things from anywhere. Flexibility that allows you to not have delays keeps your processes running smoothly wherever your team might be. AP automation helps in maintaining stronger relationships with your vendors by reducing the payment delays and quick approvals.

Suggested Reading: The Essential Guide to AP Automation

5 Signs It’s Time to Automate Your AP

• Your Internal Controls Are Failing
• Delayed Approvals Are Costing You
• Inefficiency Leads to High AP Processing Costs
• Your Organization Is Growing
• Your Last Audit Was a Mess

 

Your Internal Controls Are Failing

If checks and balances are proving tough to maintain with a paper-based system, or if essential functions are becoming concentrated in just a few hands, it may be time for automation. Perhaps the biggest failure of paper systems is that effective controls to provide oversight simply do not exist and can be facilitated through automation.

 

Delayed Approvals Are Costing You

Late approvals often result in penalties, poor supplier relationships, and lost discounts. If this is occurring with frequency, then the process can be automated to quicken the approval process and, in turn, enhance your vendor relationships and positively impact your bottom line.

 

Inefficiency Leads to High AP Processing Costs

Manual processes, such as data entry and invoice matching, are extremely resource-intensive and costly. According to a study automation reduces AP processing costs by as much as 40%, eradicates inefficiencies, and fortifies departmental productivity.

 

Your Organization Is Growing

As your business grows, so does the volume and complexity of your invoices. AP automation absorbs the increased workloads without placing additional stress on your staff, which allows you to scale operations seamlessly.

 

Your Last Audit Was a Mess

If your last audit was one of those chaotic, paper-chasing activities where documents were missing, now would be a very good time to automate. A digital, automated AP simplifies record-keeping and makes audits faster and less stressful because all the documents are already there; thus, much time is saved, and the risk of audit failures is at a minimum.

Suggested Reading: What is AP Automation and How Does It Work?

 

Key Features to Look for in an AP Automation Tool

When choosing an AP automation tool, here are some features that should be considered:

• Vendor Management
• Invoice Capture and Processing
• Approval Workflows
• Integrations
• Robust Reporting
• Security Measures
• Ease of Use
• 1099 Tax Compliance

Vendor Management

As we already know how vendor management plays a vital role in accounts payable process. The effective vendor management helps in maintaining strong business relationships and ensuring smooth transactions. Choose the AP automation software that simplifies vendor onboarding process, maintains accurate vendor records, and automates the collection of W-9 and W-8 forms with TIN match validation.

 

Invoice Capture and Processing

Automated invoice capture is essential for eliminate time-consuming manual data entry and reducing errors. The ap automation solution should include the use of OCR to minimize manual data entry and ensure utmost accuracy of data.

 

Approval Workflows

Customizable approval workflows are a must for streamlining your accounts payable process. The ap automation software should have customizable workflows that are configurable to your business process needs.

 

Integrations

Your ERP and accounting systems should fit seamlessly with the ap automation tool. Integrations ensures that AP/AR data flows smoothly between your systems, reducing duplication of work and minimizing errors.

 

Robust Reporting

Comprehensive reporting is vital for keeping track of your AP performance and ensuring transparency in cash flow. Look for a accounts payable automation software that come with great reporting features through which you’ll be able to monitor KPIs for actionable insights.

 

Security Measures

Sensitive financial data involved in AP process, so security should be the top priority. The accounts payable automation tool should be strong enough in terms of security protocols to make it an impenetrable fortress for suspicious traffic of sensitive financial information. It should have the strong data encryption protocols, role-based access controls, audit trails, and compliance with industry standards like SOC 2, GDPR, or PCI DSS.

 

Ease of Use

An intuitive interface is essential in AP automation tool to ensure that your team can quickly adopt and effectively use. It reduces the learning curve a user needs to climb, hence accelerating user adoption and improve productivity across your AP team.

 

1099 Tax Compliance

If you work with independent contractors and payments, 1099 tax reporting is a crucial aspect of vendor management. The chosen AP automation software should help you manage and track payments, ensuring that you remain compliant with IRS regulations. It should have the capabilities of automatic generation of 1099 forms and submission to reduce the manual efforts and risk of penalties.

 

Things to Consider in Integration with Current Systems

• Compatibility Check: The ap automation software should easily integrate with your current ERP and accounting systems.

• Data Transfer: Transferred data should be clean and accurate.

• APIs and Connectors: A tool featuring APIs or prebuilt connectors will make integrations easier.

• Scalability: It should support scalable solutions to meet the expansion needs of your business.

• User Training: Resources and training should be available to make the transition smooth and seamless.

 

Assessing Vendors: What Questions Are the Right Ones to Ask?

• What does one ask when assessing the different AP automation vendors for selection?

Background and Experience

• How long has the vendor been in the AP automation business?

• How much relevant experience is available within your industry?

Customer Support

•  What support is provided?  Is it 24/7?

• Are there account managers specifically assigned?

Implementation Method

• How is implementation done?

• How long will it take?

Pricing Scheme

• What is the pricing model?

• Are there any additional, hidden charges?

 

Seamless Steps to Implement AP Automation

• Analyze Current AP Challenges
• Key Stakeholder Commitment and Definition of Success Metrics
• Choose the Best AP Automation Tool after Careful Evaluation
• Prepare Data for a Seamless Migration
• Train and Prepare Your Staff for a Smooth Migration
• Track Implementation Progress

 

Analyze Current AP Challenges

Review your current accounts payable process for inefficiencies. Then document these issues for a better custom fit of your AP Automation solution.

 

Key Stakeholder Commitment and Definition of Success Metrics

Get key stakeholder buy-in, including that of finance team members and executives. Clearly determine the success metrics for the AP Automation project that will drive implementation and measurement of the results.

 

Choose the Best AP Automation Tool after Careful Evaluation

Research various AP Automation tools in-depth, including the key features of invoice processing, approval workflows, and system integrations. Select the one that best fits your operational needs and growth strategies.

 

Prepare Data for a Seamless Migration

Organize your data and ensure it is accurate for correct migration. Ensure your AP Automation tool integrates well with existing ERP and accounting systems.

 

Train and Prepare Your Staff for a Smooth Migration

Provide your staff with an all-round training to get them acquainted with the new AP Automation system. Ensure appropriate resources and support are available for a smooth transition and that the system is utilized effectively.

 

Track Implementation Progress

Monitor the implementation of your AP Automation system closely. Gather feedback, measure performance by the metrics for success you have instituted and make adjustments as needed to optimize efficiency and effectiveness.

 

Conclusion 

Automate your accounts payable with a solution like Zenwork Payments to free up more time, reduce hidden costs, and refine the accuracy of your financial operations. If any of those points sound all too familiar, it’s time to explore AP automation.  

Take the leap of change today and make your AP process lean. Let the right tool and strategy optimize the financial operations that scale your business to new heights of success.