An in-depth look at FP&A-related topics that are developed via interviews with finance professionals. Presented as quarterly case studies with practical applications and tools to help you make informed decisions about key FP&A methods.

Automating Accounts Payable Processing

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Accounts payable (AP) processing is often manual, time-consuming, error-prone and paper-based, but automation offers a solution.

The Financial Operations Guide: Automating Accounts Payable Processing highlights the benefits of AP automation, including increased efficiency, lower processing costs and improved liquidity risk management. Despite the availability of automation solutions, many businesses have yet to fully implement them.

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AP AUTOMATION: WHAT IT IS AND HOW IT WORKS

Automated accounts payable (AP) streamlines the entire invoice-to-payment process by converting invoices into a digital format and integrating them into a workflow that automates tasks like invoice receipt, coding, approval, payment and reconciliation. This eliminates manual data entry and allows for approvals with just a click. 

THE BENEFITS OF AUTOMATION

AP automation has a long list of benefits. First are the processing benefits: improved efficiency, cost savings, reporting and analytics, more effective fraud tracking and mitigation, and easier compliance. But the benefits go beyond process — automated AP can enable a business to optimize its working capital and liquidity management. 

BEYOND THE PROCESS: WORKING CAPITAL MANAGEMENT

When companies think about automating AP, they tend to focus on improving the process. But AP automation can have what is arguably a much bigger benefit: optimized working capital management.  

CHOOSING A SOLUTION

Before selecting an AP automation solution, companies should first identify the specific problems they aim to solve. The solution should manage purchase orders, invoices, and payments, or seamlessly integrate with financial platforms and other essential business tools. Key features to consider include:

  • Scalable and flexible to accommodate growth and changing needs.
  • Easy to use to ensure employee adoption, with a relatively short learning curve.
  • Cost-effective, including the total cost of ownership as well as the cost of the initial set-up, licensing, maintenance and potential upgrades.

WINNING BUY-IN

To implement automated AP successfully, businesses need to win support from both senior management and employees. All advantages must be clearly communicated to employees and other stakeholders. Everyone in the organization should understand how the move to automated AP will benefit the business overall.

ADVANCED CAPABILITIES THROUGH AI

Future improvements in AP will be driven by AI, machine learning and enhanced ERP systems. AI's role in AP is expected to expand with companies like Billentis predicting significant advancements. AI can:

  • Detect cash flow issues.
  • Identify early payment opportunities.
  • Suggest optimal payment schedules.

A CASE FOR ADOPTION

Automating AP makes the process more efficient, reduces costs, prevents fraud and provides valuable insights into business operations and customers. It also optimizes cash flow and working capital management, with further improvements expected through AI integration. 
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Published October 15, 2024