Why is Accounts Payable Workflow Automation a must?
What is the primary goal in automating our accounting workflows, particularly accounts payable?
Automation is a top priority of finance and accounting professionals these days. And the reasons are clear: Highly automated accounting — particularly in Accounts Payable — departments process invoices faster, more accurately, with better control, and at a lower cost than their peers that have little or no automation — a completely manual, paper-laden workflow. It becomes even more useful for multi-unit franchises with a central accounting office. But many organizations miss out on the full benefits of automation because they pick the wrong technology, or they take the wrong approach to deploying an automation solution. ‘Procurement automation,’ ‘payments automation,’ and ‘invoice payment or Accounts Payable automation’ are sometimes used interchangeably among solution providers, causing confusion about the differences between the three and what the use applications are for each.
Let’s see if we can shed some light.
Before starting your automation journey ask yourselves and gain alignment on, “What is the primary goal in automating our accounting workflows, particularly accounts payable?” And from there, determine what the best solution would look like for your organization. You may discover that what you actually need is different than what you originally thought.
For example, you may think you need to automate your payments only and discover that you need to include a complete end-to-end solution is really what will help you achieve your business goals and gain the most efficiency. And sometimes you might actually need a payments only automation solution.
So, what is the difference between the three types of automation solutions?
Procurement (P.O./P.R.) is the first step in the procure-to-pay (P2P) process. Automated solutions guide employees across the buying process. Another way to refer to it is “spend management”. It is a portal where all vendors and their products are listed in one place, so it is easy to compare prices and any promotional or volume discounts. It also provides comprehensive insight into spending and prevents rogue purchases. This is where this type of automation ends. A dedicated procurement automation solution might require a several months long implementation and considerable IT involvement. It also requires heavy lifting from the vendor, such as entering the purchase order and generating the invoice.
Procurement Automation tends to make sense for large, decentralized companies.
While Procurement Automation — the first step in the (P2P) workflow — automates the buying steps, Payments Automation — the final step in the P2P process — solves for signing and mailing physical checks. It is an integrated solution that allows organizations to make check, ACH, virtual card, and wire payments, taking automation a step further than “okay-to-pay” once invoices are received, processed, and approved.
Seems simple, right? Not necessarily. In many cases, the payments automation solution is integrated with the P2P or Accounts Payable automation solution. But in many cases, data capture (powered by optical character recognition, or OCR) and invoice processing is outsourced to a third party using templates which causes a longer cycle time for the turnaround of the data and more room for error.
There is also the matter of logging in and out of different platforms that are not seamlessly integrated. It can get tricky when, for example, a client uses an outsourcer to enter an invoice into its Payment Automation system. From there, the payment is made by a different system and the user must manually download the remittance information and upload it to their ERP (enterprise resource planning). Consequently, the user has to log in and out of three different systems!
Accounts Payable Automation
We reviewed procurement automation — the first step in the P2P process, and payments automation — the final step in the P2P process. What about all the invoice processing steps in between? That’s where Accounts Payable workflow automation comes in. There are solution providers, like Yooz, that offer a complete end-to-end automation solution and seamlessly integrate with most ERPs. With that type of sophisticated tool or platform there is one solution and one login.
An example of how the workflow looks with some Accounts Payable automation software providers that offer a complete end-to-end process is: When documents and invoices are received, the system will read (leveraging OCR technology) and code them and decide which workflow they need to follow for approvals by your team. Once the invoice is approved it is automatically synced into the ERP or accounting system. The system completely simplifies the payment and export steps (in comparison to the complicated scenario we reviewed in the Payments Automation section above). All of the information is stored in the system and also in the ERP. One login. One set of master data held in the ERP or accounting system. All seamless to the user.
Remember, before jumping right in to talking about the features and benefits from any Accounts Payable automation provider you are considering, know what your primary goal is in automating your Accounts Payable process. A good place to start might be to ask yourselves, “What part of my process costs the most time and/or direct expense?” From there, you can guide the conversations with potential providers and make the smartest decision to achieve your business goals.
Learn more about AP automation for your company: https://www.getyooz.com/en-gb/