How Automation is Transforming Accounts Payable in Modern Business

Finance departments are loaded with heavy duties that require a combination of hard work and concentration. The constant changes in the payment status, the liabilities and where the approval reaches, all can become your nightmares. So if you are someone who is looking for a better way to deal with the APS, you have arrived at the right place. 

This article will take you down from exploring the concept of AP to how automation in AP can be beneficial.

What is an Accounts Payable (AP)? 

This term might seem daunting to the non-finance background person. But it is not that difficult to understand. In simple words, accounts payable is the amount that a company owes to their suppliers and vendors for the received goods or products.

Moreover, these are the short-term liabilities that are expected to be settled in a short period that lasts from 30 to 90 days only. For your convenience, we have quoted some examples that can help you in easy understanding. 

• Utility bills: Suppose a company has received a bill for electricity or water that they have used in the past month but haven’t paid yet, it will be counted under accounts payable. 

• Rent Payment: If you or your business rent a space for living or working, it is obvious to receive a monthly rent bill. If the bill remains uncleared for the whole month, then it is classified as accounts payable until it is settled.

What is an Accounts Payable Process? 

The Accounts Payable process is pretty straightforward. AP departments are responsible for handling the incoming bills and invoices and managing the other financial operations as per the demands of the company.

However, the process of the Accounts Payable considers various stages. But remember, it can differ from company to company. 

• Receiving Purchase Order: First things first, the purchasing department creates and approves a purchase order for requesting goods and services from the company.

• Receive Invoice: The company receives the designed order from the vendor to prepare the quoted items or services, and dispatch in the timeframe. 

• Validation of the Details: Now it’s time to cross-check the invoices and bills generated by the party. This stage helps them to confirm the dates, timeframe, and missing orders to avoid any misinterpretation between both parties.

• Approval: After cross-checking all the information, the file goes ahead with the approval process. It can take time as all the concerned managers need to check and pass the bill from their end. 

• Data Entry: Data is said to be the biggest asset of any company. After the approvals, the next stage is to preserve the data and record it in the accounting systems. Overall, it creates a formal record of the transactions. 

• Payment: This stage differs from company to company. It involves including how the payment is to be done. It merely depends on the supplier to take the payment in cash, bank transfer, or another desired method. 

• Recording: Once the payments are made, it is time to record the invoices to keep the record for future reference.

The Challenges of the Manual Accounts Payable Process

Managing the accounts payable of the company can bring you an unwavering battle. Although the experts in the field may find this process familiar, but may come across some challenges and implications. 

A few common noted below: 

• Too Much Paperwork 

  AP consists of a heavy amount of paperwork. Sorting, organizing, and completing the paperwork can take most of your employee’s time, which can be leveraged in other important tasks.

• Lengthy Approval Process 

  Approval is not a simple process like signing a single paper. No, it goes from department to department and stretches the process for an undefined period. 

• Time-Consuming Data Entry 

  Maintaining the data sheets and financial records can be a tedious task. Updating the bills, and duplicate invoices and changing them as per the approval process can be time-consuming. Conversely, frequent changes and edits can be immune to human error. 

The Difference Between Manual and Automated AP Process 

To help you understand and compare the difference between manual and automated AP processes, we have made a comparison table below. 

Manual	Automated
Time-consuming process due to the data entry work.	Faster processing of the work with built-in automated tools.
Human errors can be expected due to the manual calculations and paperwork.	Ensures accurate handling of the data, reducing silly errors and calculation mistakes.
The approvals from different departments may delay the dispatch and payment status.	All-in-one approval from the different departments to ensure timely payments and supplies.

How can you Automate your AP?

You are living in the digital world, where online platforms and the internet have taken centre stage to conduct your day-to-day routine tasks with ease, automating your AP can be a simple chore. By leveraging a reliable and compatible AP automation software, you can get all your processes done without any errors and delays. 

Have a look at some prominent features coming your way: 

• All-in-one AP automation software will bring a complete package that contains all the built-in tools and features required to handle your accounts payable, from generating invoices to settling down the payment status.

• Invoice scanning and OCR tools can help you reduce manual errors by analysing the documents automatically and fixing the loopholes to bring you the best-edited version in just a matter of seconds. Invoice scanning software can save you time, assisting you to participate in complex decisions.

• Accounting automation software is the last but the most hectic process. Managing the accounts of a company needs all your concentration and mind modules in the centre. But with the help of the accounting automation software, you can ease down yourself and rely on it for more detailed outcomes.

Conclusively, automation can bring you numerous benefits. From better productivity to more accurate task performance, you can get everything without any hassle.

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