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What Is Accounts Payable Automation?

  • Category: Blog
  • AP Automation
ap automation
Navigating the world of accounts payable can be complex and time-consuming, but accounts payable automation makes it easy, providing efficiency, accuracy, and cost savings.
This article delves into the mechanics of AP automation, highlighting its benefits and importance in today’s competitive business landscape. It also explains what to look out for when assessing potential solutions.
Read on to learn the core benefits of accounts payable automation software for Microsoft Dynamics GP users and delve into real-life case studies showcasing the impressive capabilities of this integration in action.

What Is Accounts Payable Automation?

Accounts payable automation is a technology that simplifies the accounts payable process. It eliminates the need for manual data entry, saving employees countless hours of mundane financial operations. It also records every action–approval, dispute, or payment—enhancing transparency and compliance.
Accounts payable automation encompasses multiple technologies such as Optical Character Recognition (OCR) for data extraction, machine learning for invoice matching and anomaly detection, document management solutions for storage, and data analytics tools for performance analysis.
A best-in-class accounts payable tool like DocStar combines all these technologies in a comprehensive solution that automates every aspect of the accounts payable process, from purchase orders to receiving reports, invoice receipts, matching, invoice approval, payment processing, payment submission, transaction recording, and all the routing that underpins everything.

Some Quick Definitions

Before we explore the advantages of accounts payable automation in today’s businesses, let’s quickly answer some common related questions we often get at DocStar.

What is a workflow in accounts payable?

A workflow in accounts payable is a sequence of tasks involved in managing invoices, approvals, and payments.

What is payment automation?

Payment automation is a technology that automates making and receiving payments. This includes invoicing, paying suppliers, processing customer payments, and reconciling payments with bank statements.

What is invoice automation?

Invoice automation means using technology like DocStar to automate every process involved in receiving, processing, and paying invoices. It’s a vital component of the AP process.

What is AP automation software?

Accounts Payable (AP) automation software is designed to streamline and automate the AP process with features like invoice capture, workflow automation, integration with existing systems, fraud detection, real-time reporting, and vendor management.

Why is Accounts Payable Automation Important?

Time is money. And if you’re spending countless hours processing invoices manually, chances are, you’re losing both. Accounts payable automation streamlines and accelerates your financial operations, offering a more efficient, error-free, and timely process.
Here are some of the key advantages:
Increased Accuracy
We all make mistakes (some more than others), and when it comes to accounts payable, mistakes can be disastrous. A single “0” omitted from an invoice can lead to complications, damaged customer relationships, and reputational damage.
Automation strips away the risk of human error, ensuring information is captured, recorded, processed, routed, stored, and retrieved correctly.
Improved Efficiency
The traditional accounts payable process is time-consuming and tedious. Automation dramatically accelerates it, allowing crucial documents to be processed in a fraction of the time. With automation, your team can handle a high volume of invoices without buckling under pressure and devote their time to higher-value tasks.
Cost Savings
Efficiency and cost-savings go hand in hand, and accounts payable automation is no exception. Research suggests that, once the cost of employee time is factored in, processing a single invoice costs between $15 and $40. Effective accounts payable automation can slash this to a mere fraction.
Better Visibility and Control
The accounts payable process is often disjointed and opaque. People take ownership of their chunk of the workflow, but nobody takes control of it end-to-end, resulting in a lack of clarity and oversight.
An automated accounts payable process lets stakeholders track POs and invoices, access payment statuses, monitor approvals, and view detailed reports, all from a single, centralized location. An intuitive dashboard adds transparency and accountability and enhances better strategic decision-making.
Stronger Vendor Relationships
Few things strain a business relationship more than the untimely payment of an invoice or a delay in submitting requested documents. These occurrences erode trust and cast a negative light on your entire business.
With an automated accounts payable system, you can guarantee timely payment of invoices and other AP-related actions without fail. This fosters stronger relationships and lets you take advantage of early payment discounts while avoiding unnecessary charges.
Scalability
Streamlining manual tasks through automation is crucial for enhancing scalability, especially in light of the current economic conditions that make hiring both challenging and costly. By automating your accounts payable, your business gains the capability to process an increasing volume of invoices effortlessly without the need for added complexity, disruption, or headcount.
Compliance and Fraud Prevention
Accounts payable automation software preserves a thorough and precise audit trail, becoming an invaluable resource during audit procedures. Its embedded machine-learning technology can detect irregular activities instantly, minimizing the chances of fraudulent transactions going unnoticed.

How Do You Automate Accounts Payable?

Accounts payable automation sounds great in theory, but what about in practice? How difficult is automating entrenched processes that companies have performed manually for decades?
The reality is that while it might seem daunting, it can be a breeze with the right software and guidance. Below are some features to look out for in a best-in-class accounts payable automation solution like DocStar.
Easy to Implement and Use
To ensure widespread adoption and rapid time-to-value, you need a solution that’s easy to implement, navigate, learn, and use for non-technical stakeholders. Look for intuitive dashboards and the ability to customize your solution to suit individual preferences.
2 and 3-Way Matching
Your software should be able to perform 2-way and 3-way matching. This means it can cross-verify the invoice, the purchase order, and (in the case of 3-way matching) the goods receipt before making a payment. By doing this, the system can identify discrepancies and prevent payment errors without the need for manual checking.
Insight Into Early Payment Discounts
A robust accounts payable automation solution will help you take advantage of early payment terms. It will track payment deadlines and notify you of potential discounts, helping you save time and money.
Reduce Costs (Paperless)
To bring your accounts payable process up to date, your software should help you transition to a paperless system. This not only lessens your environmental impact but also eliminates the necessity for physical storage, mailing, and other costs.
Furthermore, electronic files offer a more efficient, secure, and accessible alternative to rummaging through piles of paper documents in dusty filing cabinets.
Secure, Global Access
With a cloud-based solution like DocStar (also available on-premises), you have secure access to your accounts payable system from anywhere at any time. Your team remains connected in the office, at home, or on the go.
Powerful Integration Capabilities
For optimal utilization of your accounts payable solution and to avoid repetitive data entry, it’s vital to integrate it with your ERP, accounting, and HR systems. This integration enables a smooth data flow and automated workflows throughout your organization. The best AP solutions integrate effortlessly with APIs.

In short

Accounts payable automation is vital for any business seeking to streamline financial operations. By adopting an AP automation solution like DocStar, companies can reap benefits like improved vendor relationships, enhanced compliance, and increased visibility of transactions. Take a tour of DocStar today or better yet contact us to get a customized demo.

Bonus

Watch the replay “ECM Essentials Part 2: AP Automation.”  Our experts dive deeper into the world of AP automation and demonstrate how DocStar ECM can revolutionize your accounts payable workflows. Learn about the latest features, best practices, and practical tips for maximizing efficiency and accuracy in your AP processes. Learn more today!

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