For a data nerd like myself, this article combines some intriguing information splices and dices with perfect data sanity. What can we learn from this? Scroll down now.
Automation is not just a commonly used term, but it is also an essential element. In essence, automation technology usage has increased to whole new levels. Proper accounting is like engineering. You need a margin of safety. We can thank our lucky stars that accounting isn’t done the way bridges and airplanes are designed.
Introduction
Accounts payable (AP), a procedure that is still primarily manual for many businesses, is getting automated. According to the Institute of Financial Operations & Leadership, only 9% of AP departments are fully automated as of right now, but that number is anticipated to rise dramatically over the next several years. In fact, by 2025, two-thirds of finance professionals anticipate that their AP departments would be entirely automated.
A few errors are understandable, but if an AP department doesn’t take action to prevent them from occurring, the expenses might mount quickly. Problems with accounts payable can, in some more extreme circumstances, threaten to destroy your business.
Invoices and other critical AP operations can now be automated thanks to developments in technology like artificial intelligence (AI). By reducing the amount of duplicated manual work, these technologies can help AP departments save businesses time and money. However, the transition to automation goes beyond internal productivity. Automation that helps firms spend less time processing vendor payments is also turning into a competitive need in a world of remote labor, in-demand talent, and supply shortages.
Every day, errors occur in accounts payable departments all across the world. We all make errors, but it’s not the end of the world because we are only human. But mistakes occasionally cost money. Due to errors made in the accounts payable department, businesses lose money every day. This is because this department handles money leaving the organization.
Automation has emerged as a transformative force within fintech, powering unprecedented efficiency. For example, take the month-end close, a critical process for all finance teams. By replacing laborious manual tasks with streamlined workflows, automation minimizes errors, reduces time spent on tasks, and enhances accuracy. The close is also a great example of why repetitive tasks should be taken off employees’ plates. It enables finance professionals to focus on strategic analysis rather than tedious data entry and reconciliations. The power of automation lies in its ability to standardize procedures, enforce internal controls, and mitigate human error, all while ensuring compliance with regulatory standards. With automated algorithms and machine learning, some work can be auto completed. This not only accelerates the month-end close but also provides real-time insights for informed decision-making. Automation offers businesses a competitive edge. If you’re looking for enhanced operational efficiency, risk reduction, and improved customer experiences, it might be time to embrace automation
It’s not an obvious fact, but when you are processing your 1000 EUR invoice in many companies, you are actually spending 1050 on it. Of course, it’s a rough estimation, but you got the idea. And all because someone must receive this invoice, present it to a CFO, CEO, or Accountant, pay it, and then store and archive it in document storage. All these steps cost money and time.
Payables automation solutions focus on bringing that extra cost to cents. Instead of manually pushing invoices through all the different approval and payment steps, businesses are using special software these days. It recognizes information printed on invoices and then takes all the steps automatically. For example, if the invoice comes from the CEO, it can be paid effortlessly and sent to an accountant for reference. But if it comes from the marketing department, CMO has to approve it first. And if it’s bigger than 10 000 EUD, team members must also present it to CFO. And so on.
AP software does all these things automatically, significantly decreasing costs and increasing the speed of processing the company’s paperwork.
Accounts payable automation, as its name suggests, refers to devices or procedures that automate the manual components of accounts payable. Dedicated software is typically required for this, some examples of which we’ll look at in a moment.
Accounting is the language of business. – Warren Buffett
Instead of manually placing purchase orders and invoices in in-trays, AP automation allows for electronic submission and approval. Some solutions will read invoices and extract information on their own, eliminating the need for any team members to enter any data.
Most process automation aims to move more quickly, decrease mistakes, and facilitate easy firm scaling. Additionally, as Purchase Control says, “This removes manual tasks while also improving visibility and control over critical financial data in the case of accounts payable.”
Although AP procedures appear straightforward, the growing volume of commercial transactions makes AP teams’ resource needs more complex. Companies can automate this process to shorten cycle times, allow staff members more time for intellectually demanding activities, lower human mistake rates, and boost employee happiness.
Shorter Cycle Times
Late payments put a company’s supplier relationships at danger. Thus, timely payments and quick cycle times are essential. AP automation shortens cycle times and stops these late payments.According to Ardent Partners, AP automation may cut the cycle time from 17 days for the majority of businesses to 4 days. Additionally, they claim that this is the primary cause of the fact that just 4% of companies pay all of their invoices on time.
Cost Savings
Automation of AP can save a business a lot of money just by reducing human procedures. Additionally, it can cut expenses by maximizing vendor portfolios, preventing double payments or other errors, and utilizing early payment discounts. According to Aberdeen Group, automating AP operations reduces the cost of processing payments for each receipt from $11 to $5.
Duplicate or inaccurate payments are always possible since invoices created by humans are prone to errors. Automation of AP can minimize these mistakes and assist businesses in keeping this procedure running effectively.
Fraud detection
Because businesses typically conduct manual accounts payable processes on paper forms, these processes are less visible. Without digitalization, it would be more difficult to monitor AP procedures, which also leaves them more vulnerable to fraud. To safeguard the business, AP automation may be able to identify false invoices and lessen the likelihood of supplier or internal fraud.
Employee satisfaction
Nobody wants to waste time at work entering data from a paper. Employees can concentrate on jobs with a higher added value thanks to automation.
Increases productivity
Because tedious, manual work can be avoided, your teams will have more time to focus on the tasks that are important to them. That naturally starts with finance, but it also involves other teams that waste time trying to figure out how accounts payable works.
Makes AP accessible from anywhere
Typically, paper processes must be completed in the proper location. Documents must be filed in the appropriate cabinet and placed in the appropriate in-tray. However, if a digital process is cloud-based, it can be carried out from any location with an internet connection.
Gives autonomy to other teams
All users not just those in finance can access these procedures if you use an excellent, user-friendly AP automation technology. With a system that guides them through each step, other teams may safely submit purchase orders promptly and effectively. This implies that they require much less hand-holding than they once did.
Believe me folks..this blog required a tremendous lot of research, and to be quite honest, even I learned something new as I was writing it.
AP automation is indeed taking a step forward and differentiating from the herd currently. But in the next couple of years, AP automation will no more be a USP rather business hubs will inherit it as a necessity.
The good news is that by implementing a best practices strategy, you can avoid numerous errors in the AP department. This article will examine seven accounts payable processing best practices that can help your business avoid costly errors like those caused by human error, murky policies, and lost data.
[To share your insights with us, please write to sghosh@martechseries.com]
Pooja Choudhary, is a former staff writer for FintechSeries, with13 years of experience in AI, ML, CIO, Fintech, and Crypto, as a journalist at FintechSeries, she engaged in media partnerships and conducted industry interviews.
Automation has emerged as a transformative force within fintech, powering unprecedented efficiency. For example, take the month-end close, a critical process for all finance teams. By replacing laborious manual tasks with streamlined workflows, automation minimizes errors, reduces time spent on tasks, and enhances accuracy. The close is also a great example of why repetitive tasks should be taken off employees’ plates. It enables finance professionals to focus on strategic analysis rather than tedious data entry and reconciliations. The power of automation lies in its ability to standardize procedures, enforce internal controls, and mitigate human error, all while ensuring compliance with regulatory standards. With automated algorithms and machine learning, some work can be auto completed. This not only accelerates the month-end close but also provides real-time insights for informed decision-making. Automation offers businesses a competitive edge. If you’re looking for enhanced operational efficiency, risk reduction, and improved customer experiences, it might be time to embrace automation
It’s not an obvious fact, but when you are processing your 1000 EUR invoice in many companies, you are actually spending 1050 on it. Of course, it’s a rough estimation, but you got the idea. And all because someone must receive this invoice, present it to a CFO, CEO, or Accountant, pay it, and then store and archive it in document storage. All these steps cost money and time.