Accounts Payable Departments are a critical component to the long-term success of companies in our new “new economy.” With overhead costs being analyzed for every possible savings, Accounts Payable, or AP, is one of the first places that companies can look. Many times, the process is submerged in inefficiencies, and the application of some simple technologies and proven best practices can deliver tremendous results.
Typical AP Processes feature a staff of trained professionals who manage the company’s expenses and invoice processing. Often, this is accomplished using accounting software, such as Quickbooks, SAP, Oracle Financials, Microsoft Dynamics, or any of the hundreds of software packages designed to help manage a companies finances. These software packages, typically referred to as ERP Systems, provide a great level of detail and fantastic functionality to help companies manage the data associated with their transactions, whether they be payables, or receivables.
The real challenge, however, is entering data from paper or PDF-based invoices and managing the three-way match and approval process associated with the AP Lifecycle. Many companies rely on significant human resources to provide manual data entry of invoice data into the ERP System, and this can often result in significant expense for the business. In addition, Manual Data Entry is often followed or preceeded by a detailed approval cycle, where physical paper invoices are passed throughout an organization for review and approval.
These manual steps for AP Processing will often result in overpayments, duplicate payments, and sometimes missed payments, which result in penalty charges imposed by vendors for not meeting the agreed upon terms. In addition, Invoices are often lost or misplaced while being routed through the approval cycle, and hours of time are spent by staff reviewing and approving invoices from paper.
With the addition of some additional technologies and proven best practices, however, organizations can begin to quickly drive down the cost of Accounts Payable. In fact, most companies who invest in an Automated Accounts Payable Solution realize a return on their investment within the first three to six months of use.
Automated Accounts Payable Solutions enable organizations to eliminate the need for manual data entry of information from invoices. Instead, they rely on advanced OCR, or Optical Character Recognition, technologies to accurately identify the key data elements from invoice documents and deliver this information to an ERP System. This eliminates incorrect keying of information, and these systems can even be configured to automatically apply GL Coding for Invoices based on some predefined rules.
In addition to the elimination of Manual Data Entry and reduction of errors, an Automated Accounts Payable Solution provides companies with the tools to electronically route invoices through the approval cycle. This means that instead of receiving a stack of invoices to approve, manager and staff will receive an email notification and use their browser to click to approve or reject the invoices that they need to review. This eliminates lost or misfiled invoices, and also helps to ensure timely response from all participants in the approval lifecycle.
It is critical for senior management to understand that Accounts Payable Automation is not a replacement for an existing ERP or Accounting Software System, but rather a key tool to help enhance the value and reduce the costs of the Accounts Payable Process. AP Automation Solutions also provide the flexibility to work with multiple ERP or Accounting Systems, so they will continue to pay dividends if and when the organization chooses to switch from one software package to another.
In addition to the costs savings derived from an Automated Accounts Payable System during the Invoice Lifecycle, there is another inherent benefit to leveraging this type of system – Compliance. When an organization experiences an audit, these systems will provide a clear trail of approvals, including date and time stamps, to indicate who approved or rejected certain invoices. In addition, copies of these invoices can be retrieved with a few mouse clicks, as opposed to manually poring over stacks of physical files.
Whether your company is faced with challenging economic conditions or not, further exploration of AP Automation may be a key factor in the overall health and profitability of your operation. If you’re not sure where to begin, Many companies who offer these solutions can work with you to provide a detailed Return on Investment (ROI) analysis to target specific costs savings and metrics that can help improve the health of your business.
Michael Thomas is the Director of Solution Development for Digital Storage Solutions, Inc. Digital Solutions, Inc., a privately held company headquartered in Long Island, NY and was founded in 2001. The company provides professional document and content management solutions for small business through enterprise level businesses. For more information, visit http://www.digitalstorageinc.com/accounts-payable.htm
