Accounts payable automation best practices are a set of guidelines that organizations should follow to effectively streamline their financial transactions. These recommendations along with the best ap automation software can help you increase efficiency, reduce delays, improve productivity, increase trust with suppliers, vendors, and service providers.
Automating accounts payable processes is no doubt a challenging task to implement. However, following the latest AP automation trends and applying these techniques will allow companies to achieve maximum benefits of automation.
The accounts payable automation best practices are:
1- Get Key Stakeholders Buy In
Whenever a new change is needed to be introduced in any organizations, the first thing to do is to identify key stakeholders and plan for the change management phase. Moving away from traditional invoice processing to a fully automated one requires the evolvement from senior executives and managers from the first day.
From my 15 years’ experience of helping organizations transition to digital operations, I can surely recognize that the number one reason for automation failure is employee’s resistance to change.
This best practice should help you identify the key stakeholders in the project, including AP staff, IT staff, and vendors.
2- Exception Handling Protocols
In any automated system, occasional discrepancies or missing information can arise which might disrupt the smooth flow of the approval process. To address such exceptions effectively, organizations need predefined and well-documented procedures.
These protocols should outline how to identify, communicate, and resolve discrepancies or missing information in a timely manner. By having a clear framework for managing exceptions, organizations can prevent bottlenecks in the approval workflow to ensure that discrepancies are promptly addressed.
3- Electronic Invoicing
Electronic invoicing involves the submission of invoices in digital formats to eliminate the need for traditional paper-based invoices. By encouraging or mandating vendors to submit electronic invoices, organizations can significantly reduce manual data entry efforts.
It streamlines the receipt and processing of invoices, facilitating a more efficient and error-resistant workflow. This practice not only accelerates the overall accounts payable cycle but also enhances data accuracy by minimizing the potential for transcription errors associated with manual entry.
4- Workflow Automation
In a manual work process, the approval of invoices can be a time-consuming and error-prone task. By incorporating automated approval workflows, organizations can design and enforce a systematic and efficient process for reviewing and approving invoices.
This practice has the ability to accelerate the approval cycle and enhance transparency and accountability within the financial workflow. Automated approval workflows can be customized to match the specific hierarchy and rules of an organization, ensuring that invoices are routed to the appropriate individuals for approval in a timely manner.
5- OCR Technology
OCR plays a pivotal role in transforming physical documents into digital formats by recognizing and translating text characters. In the context of accounts payable, this technology is instrumental in automating the extraction of key information such as invoice numbers, amounts, and vendor details from paper-based documents.
By implementing this practice, organizations can significantly reduce manual data entry efforts, mitigate the risk of human errors, and expedite the overall processing time for invoices.
6- Audit Trails and Reporting
Audit trails are detailed records of transactions, activities, and changes made within the system. By consistently documenting each step of the accounts payable process, organizations can enhance transparency, traceability, and accountability.
These audit trails serve as a valuable tool during internal audits or compliance reviews, providing a clear and detailed history of financial transactions. Regularly generated reports offer insights into key performance indicators and potential areas for improvement.
7- Use Agile Methodologies
There are lots of tasks to be implemented for automation AP related processes. However, taking the approach of gradual automation will surely help finalize this project in phases where you can automate for instance the import of new invoices to the system, measure performance, collect feedback, and later move to the next phase.
Agile methodologies are most common in the software development field where for the iteration of 1 month a set of tasks are prioritized and focused on to be developed. The same approach can be applied to the automation of AP tasks.
8- Integration with ERP and Accounting Systems
The full automation for the financial transactions within an organization can’t be implemented without the integration with the current ERP and accounting systems available in place.
The integration should allow to pull data from the ERP which is used for financial management and inventory management such as vendor information, purchase orders (POs), and inventory data and push data back to the ERP system related to payment information and updated vendor records.
Achieving this integration helps companies gain real time visibility of all financial transactions and streamline the complete process with very little human intervention. This all will help aligning with the initial business goal and vision created.
9- Centralize Accounts Payable
Implementing best practices policies in accounts payable automation involves consolidating all related tasks into a single portal which has the ability to reduce delays and standardize processes. It is very critical to provide a one single application that allows for all invoices to be processes, paid, and tracked which result in increasing efficiency and user experience.
Centralizations of accounts payable processes will make sure that all departments submit and process invoices in the same manner, providing consistent and accurate outcomes.
The main benefit from this step is to increase efficiency which can happen by providing a faster way to process invoices and a reduction in manual data entry.
10- Train Employees
It is not enough to manage the resistance to change effectively as described in the first step, you need to make sure that employees, vendors, and suppliers are confident of the solution and feel empowered to use the automation tools that will help them operate faster and with very little down time.
Training should include giving an overview of the whole process from invoice submission to reports generation and a providing a complete tour of the application with detailed documentation that will help them resolve any issue without getting back to the team assigned in phase 2.
In addition, whenever a chance is introduced that might impact the productivity of these employees, you should introduce it by either an in-person training or/and updating the documentation.
11- Monitor and Measure Performance
The last recommendation in the list of the top accounts payable automation best practices is to keep on monitoring and measuring the performance of AP processes to ensure they remain effective and efficient. This can include identifying areas of improvements, measure the time to complete a process before and after, and identify new bottlenecks (if any).
Remember, the number one indicator of the success of this initiative is speed of an automated AP process. That is why, you should make sure to always maintain the steps and address changing business needs.
