Many startups and SMEs still follow the traditional accounts payable (AP) processes which are tedious for employees to manage. Manually entering data, Printing paper checks, and stuffing envelopes requires extreme attention to detail and is prone to errors.
The increasing number of invoices makes it more difficult for CFOs to manage their day-to-day operations. Allowing, automated AP software to be the ideal solution to manage accounts payable processes more effectively. Here we’ve discussed how AP software helps businesses to manage the tedious tasks involved in business payments.
Manual Invoice Coding and Data Entry
Manually entering financial data into an accounting system requires hours of dedication and still may lead to various errors such as typos, data omission, or duplicate entries. If such errors exist, AP managers need to spend more time tracking down errors in the bundles of documents to reconcile the data. In the worst case, it may negatively impact business relations and the company’s reputation.
AP software automatically scans each invoice with its Optical Character Recognition (OCR) technology which identifies these errors and streamlines the account payable processes. It also identifies and flags any duplicate records, minimizing errors and enabling your finance team to pay invoices accurately and without delay.
Invoice Verification & Approval
In order to verify company bills with their corresponding invoices, the accounts payable department needs to send the invoices to the department head to verify them. While juggling dozens of invoice email threads to check the accuracy of records, there is a possibility to lose some invoices that require attention. For this reason, the paper-based approval process requires extreme diligence and time to track and manage the invoices’ trails effectively.
Although the invoice approvals are crucial in the AP process, its success rate is entirely hinging on the staff’s attention to detail and their ability to handle tedious tasks. The AP software stores all the crucial business records in a central platform, making it easy for the authorized people to access anytime. Hence, there is no need to track dozens of email threads to find documents for approval. Some of the advanced AP systems also provide the flexibility to customize the invoice routing rules to automate the entire process.
Matching Invoices to Purchase Orders
Manually verifying the invoice amount with the corresponding Purchase Order (PO) sent by a vendor is a daunting task. Unmatched bills could even deter vendors/suppliers from continuing the partnership with your business. As the business grows, the invoice volume will grow and slow down the business processes.
AP systems automatically validate the invoice amount with the PO data using the matching algorithms and flag any potential issues. Customization options are also available to set varying tolerance levels based on your company policies and speed up the PO matching process. It automatically analyzes and eliminates the overpayments and duplicate payments to make budgeting, auditing, and reporting more accurate and efficient.
Getting checks signed by the CFO
Finally, the CFO or manager are required to sign and release funds for the invoices. As CFOs are often busy interacting with employees, clients, etc. It is impossible for them to sign hundreds of checks. This may result in delayed payments which lead to unhappy vendors and/or customers. Adding to this issue, paper checks increase the risk of fraud which can create a huge financial burden on the company.
AP software enables the CFO to sign and approve the invoices in just a few clicks. So, there is no need for the CFOs to be available in-person to review and approve the invoices, which means a quicker process. It also allows businesses to transmit the more secured electronic payments like an Automatic Cleaning House (ACH) transfers and virtual cards to reduce the risk of fraud.
The Bottom Line
Accounts Payable software now automates 75% of the processes involved in managing an AP system and helps businesses save more than 70% of payment processing costs. It automates invoice and payment processing tasks and enhances the enterprises overall efficiency. With various advanced features and capabilities like two-factor payment verification, authentication, and payment limits the AP software eliminates the possibility of financial fraud and helps you to save time and money.
Marissa Levin is a marketing consultant, freelance writer at SutiAP, who regularly writes articles on Business, Finance, ERP, and Cloud/SaaS trends.