Coupled with the consequences of the Covid-19 pandemic, the competitive and stringent market environment has compelled organizations to look for innovative ways to improve their practices. This change includes improving back-office operations, increasing profit margin, and maximizing resources. As a result, many establishments have recognized the extensive organizational inefficiencies associated with the traditional accounts payable processes.
Understanding the Account Payable Process
The accounts payable process typically involves all steps required in handling and clearing company bills and invoices. Many of these processes, from the receipt of invoices to paying suppliers, were manually accomplished in the past. However, as common with any manually-accomplished, and human-dependent processes, the traditional method is prone to errors, expensive costs, time misappropriation, and fraud.
Subsequently, it becomes expedient for an organization focusing on continuous improvement, development, and efficiency in its back-office operations to embrace automation. Ultimately, the goal is to decrease your supplier payment workload. However, there are three specific ways automation can improve your organization’s accounts payable processes.
Three Key Ways to Improve Account Payable Processes in Your Business
- Streamlines All Accounts Payable-related Activities
While the primary aim of accounts payable is to verify invoices, the detailed steps involved are not that simple. An efficient system must be in place to ensure that received invoices are timely reviewed, approved, and cleared. Simultaneously, all hands must be on deck to avoid duplicate invoices, double payment of a single vendor, fraud, and late payments. Accounts payable accomplishes these tasks using often fragmented steps with dedicated personnel focusing on one or two of such activities.
In the traditional setting, files are manually created and moved from one person to another, which can be time-consuming. The end is often late invoice clearing, payment, and subsequent strained relationships between an organization and its vendors. However, automation takes care of such fragmentation by providing a platform where all tasks can be simultaneously executed. In the same vein, communication becomes easy as it takes place electronically.
- Enhances In-depth Analysis of the Processes Overview at a Glance
It is easy to capture an organization’s account payable process at a glance using pre-programmed real-time key performance indicators (KPIs). Anyone (authorized personnel) can view bills and invoices, track the state of a process, and perform audits and compliance checks.
- Checks Fraud
Paper-based accounts payable systems are notably susceptible to fraud due to invoice duplication, fake and counterfeited invoices, and purchase orders. Although there are compliance checks procedures to identify these possibilities, many are often late due to delays and human errors. Hence, fraud may not be easily detected or may have been perpetuated over a long period, causing organizations sufficient harm.
Automation sufficiently reduces possible fraud through an efficient coding system that attaches unique identifiers to specific invoices. Furthermore, automated security checks, authorization, and regulations minimize fraud from practices such as authorization delegation and delays of invoices. Also, it is easy to identify the point of fraud using automated platforms compared to the traditional accounts payable processes.
Accounts payables processes can be cumbersome and expensive, but with automation, they are easy to manage and execute. So, if you are still depending on the traditional manual system, the time to transit is now.