 1. DO WE NEED ACCOUNTS PAYABLE (AP) AUTOMATION? We don’t know if you NEED Accounts Payable (AP) Automation, that will be up to you to recognize and decide. HOWEVER, there are probably some very good business reasons for considering or even implementing an AP Automation system or process in your organizations finance department. We’ll discuss those towards the end of this. Keep in mind, what we have found is that many corporate executives have either never been in an accounts payable role or limited experience and have a very different view of what their AP Staff actually deals with on a daily basis OR some finance executives have been far away from the day-to-day activities that they forget about all of the challenges that consumes the AP Staffs time each day. First let’s set the stage for what we’re about to discuss. 2. WHAT EXACTLY IS ACCOUNTS PAYABLE? Accounts Payable (AP) are the amounts of financial obligations you, or your business owes a supplier because you purchased goods or services on credit from the supplier. For these goods and or services you’ve agreed to pay for them within a specific period of time, this is called the “Terms”. Think about this for a moment. Think of your household monthly bills – utilities, rent, mortgage, cell phones, Netflix subscriptions, digital cable and internet – these all represent your personal “accounts payable” at home. At home you probably keep track and pay for these services each month, most likely by receiving electronic bills (invoices) via email or electronic notifications and using electronic payment methods such as credit cards. In business, Accounts Payable represents a company’s obligation to pay off a short-term debt to its suppliers. Businesses, Accountants and Finance Teams use accounting software to track when they receive invoices and when they make payments to manage cash flow and to pay their suppliers on time. For many businesses, however, the accounts payable process is a manual, paper-based process that costs the company time and money. While many professionals pay their personal bills quickly and conveniently online, their company’s finances are often very antiquated with paper invoices, manual tasks, filing cabinets, and paper checks with no visibility to any information. So why is it acceptable to use electronic processes for managing home expenses, but not at your company? 3. WHAT IS ACCOUNTS PAYABLE AUTOMATION? Over the last decade, forward-thinking companies have adopted AP Automation to automate the paper and manual elements of processing invoices and making payments. These software solutions integrate with their accounting software and enable the accounts payable department to streamline workflows and reduce processing costs. AP Automation adds significant value to Accounts Payable, including real-time visibility into performance and financial status, increased accuracy, and better compliance with tax laws and industry regulations. Simply put, if a company is still receiving paper invoices or paying bills, they’re not capitalizing on today’s best practices. They’re also missing out on the unlimited potential for savings after relieving their AP team of time-consuming tasks such as opening the mail, data entry and filing mountains of paper. These manual tasks can lead to lost invoices, human error during data entry, and duplicate invoices. 4. DOES YOUR COMPANY NEED AP AUTOMATION? You most likely have a person or two or three on your AP Staff that are more than capable of doing things like opening mail, printing out the invoices your suppliers email to your company, scanning those paper invoices and printed email invoices (which by the way you received electronically), emailing the invoices around to people for approvals, then chasing those same people down who don’t approve their invoices on time (or at all). When the vendors call to inquire about the status of the pay-ment of their invoice I would bet your AP Staff will happily talk with the vendor about where the invoices are at and when you’ll pay them. Now let’s think about two types of invoices from suppliers, “Non-PO Invoices” (needs approval) and “PO-Invoices” (needs to be matched). When it comes to Non-PO Invoices your AP Staff chases down the approvals, lots of back and forth AND now you have to assign the charges to the “chart-of-accounts” via general ledger (GL) coding. In your company who is responsible for making sure Non-PO invoices are GL coded properly? This seems like a simple step, unfortunately this step is riddled with errors mainly because no one understands the chart of accounts very well. Purchase Order Invoices on the other hand are much more complex. The price for goods are negotiated and agreed to in advance and the terms are set. The Purchase Order acts as the pre-approval to spend money on behalf of the company. When the invoice arrives your AP Staff will most likely confirm that the invoice price is consistent or matches the purchase order price. Purchase order matching usually falls into one or two categories, a 2-way match (invoice & PO) or a 3-way match (invoice, PO & goods receipt). In any case the matching process in either case if a very tedious process that usually involved dealing with things like taxes and freight charges which are not typically on a purchase order. Assuming that the matching process goes well and there are no discrepancies it may take a few minutes to an hour or so to match a PO invoice, HOWEVER it is not often that a PO invoice matches exactly. Because of discrepancies in costs and pricing companies have developed internal allowable tolerances. What this means is that as long as the invoice due amount falls within an acceptable tolerance range of a few dollars or a percent or two, then the AP Staff should just pay it. Now let’s think about what it takes to figure out if an invoice is within your allowable tolerance. Since most people aren’t very good at calculating numbers in their head your AP Staff most likely take out their calculator on every PO invoice to make sure the invoice due amount is within your allowable tolerance. So your AP Staff just spent an enormous amount of time matching the PO invoices item by item and calculating whether or not the invoice due amount is within your allowable tolerance and some invoices EXCEED your tolerance, so now what? Now the back and forth begins, your AP Staff scans the PO invoice, emails a copy of the invoice to the buyer—and waits. Maybe your AP Staff emails a copy of the invoice to your purchasing department—and waits. The back and forth continues, the chasing game is played, the vendors are waiting for payment and invoice piles are growing, invoices are falling behind, your AP Staff are being blamed for the slow process. Finally, after all of the tedious manual back and forth to get approvals, the back and forth to deal with invoice exceptions now your AP Staff can finally key the invoice data into your financial system for payment processing. Your AP Staff can file away all of the paper invoices into file drawers and bankers boxes and when a tax audit happens your AP Staff will be happy to roll up their sleeves on a weekend to rifle through all the boxes of paper invoices over the last few years to try and find the invoices.  5. WE SPENT A SMALL FORTUNE ON OUR ERP SYSTEM. CAN’T WE JUST USE THAT SYSTEM? The vast majority of companies run some sort of enterprise resource planning (ERP) system. ERP systems are very expensive and are touted as all-inclusive business solutions, and we all want one system to handle everything. The fact is, ERP systems, while extremely valuable business tools that work well for collecting, storing, managing and interpreting data from various business activities, fall woefully short when it comes to AP invoice capture via optical character recognition (OCR), data-validation, invoice approval routing, and PO matching and exception-handling. This is because ERP’s don’t have the ability to support the multiple processes (receipt, review, approval, etc.) that are prevalent with each invoice transaction. ERP’s are simply not specialized enough in any one area to provide the best AP automation solution you can get. While the ERP seems like a good idea on the surface, a company’s AP staff is still burdened by all of the manual aspects of processing the supplier invoices BEFORE an AP invoice even makes it to the ERP system. The AP Staff would be consumed with opening envelopes and mail, managing an email inbox where some suppliers send PDF invoices, printing out the PDF invoices to paper and then eventually scanning all of the invoices one-by-one into the ERP system (if that is even possible to do). After the invoices are scanned your AP Staff would be responsible for OCR’ing the data from each and every invoice AND making sure all of the invoice detail data is correct. This includes the vendors names, the invoice date, the purchase order number, any taxes that might be on an invoices, any freight charges or extra fees that your company might be responsible for as well as the full amount due of the invoice. Now keep in mind that OCR Software is not part of or included with any ERP package, so this would require your IT Director or IT Manager to investigate OCR tools, purchase the software, get trained on the software, train your AP Staff how to use the soft-ware and how to troubleshoot issues of misreads, incorrectly interpreted data and bad transactional data that may make it into your payables process and ultimately into your ERP system. It’s important to understand that the design of most modern ERP systems is based upon the premise that a person (the AP Staff) is going to manually handle all data entry and, as such, the developers of these ERP systems do not focus on a technology which replaces that data entry. This fundamental design assumption also leads to poor exception handling, because the assumption is that humans (the AP Staff) have already corrected the data as they entered it. In reality, error rates through manual human intervention are fairly high while visibility and productivity remain low and expensive.
It’s worth pointing out that, while upgrading an ERP to continue to handle ever-changing exceptions and business rules is difficult (lots of time required, expertise needed, and expenses incurred). It’s made even more difficult when you consider some companies, because of acquisitions and mergers, have multiple ERP systems in use across a global enterprise, a situation that makes streamlined workflow in an AP process almost impossible to achieve. These are just some of the pitfalls that can be avoided by going outside your ERP for AP automation. 6. WHAT’S IN AP AUTOMATION FOR OUR COMPANY AND STAFF? CFO's & Finance Executives: By leveraging AP Automation finance execs are able to reduce overall costs while taking advantage of freed up staff and resources that can affect the bottom-line and assist in strategic and corporate growth. Corporate Controllers: Will gain better visibility and control to the payables process that they otherwise would not have. Controllers can also leverage real-time KPI's and analytics via AP Dashboards to measure AP performance and monitor cash flow. Accounts Payable Teams: AP is able to eliminate paper invoices and the manual back and forth caused by printing and emailing invoices between the parties involved in obtaining approvals. The AP department will now have "ultimate control" over the processing of supplier invoices. The AP process is streamlined by electronically routing, coding, matching supplier invoices through a pre-defined set of accounting rules. Because we connect payables with your ERP there is no more manual data entry or keying of invoices. This will allow AP Staff to spend time on more important financial functions rather than chasing approvals on invoices and being consumed by data entry. In today's world of AP Staff working offsite, remote or from home online AP Automation systems such as Vision360 Enterprise allow AP Staff to manage the entire payables process from just about anywhere. Invoice Approvers: The rest of your company is busy, they have responsibilities and tasks to get done. By allowing approvers to simply "click a button" to approve invoices, and from anywhere, helps to free them from scribbling on paper and scanning, emailing or interoffice mailing invoices back to accounts payable. Accountants & Research Staff: Instant access to view and research supplier invoices from any computer by authorized staff helps to streamline monthly, quarterly closes as well as year-end. Internal, external and tax audits are much more efficient with greater efficiency and less headaches for finance executives. 7. WHAT CAN YOUR COMPANY ACHIEVE WITH AP AUTOMATION?
8. A FEW DIFFERENT WAYS TO APPROACH AP AUTOMATION Accounts Payable Automation can take on several looks and depending on a company’s goals and objectives each approach has varying degrees of results. The end result however is improved efficiencies and lower overall costs to process supplier invoices.
9. WHAT ARE THE STEPS FOR FULL AP AUTOMATION
 10. WHAT ARE THE STEPS TO GETTING STARTED WITH AP AUTOMATION?
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AuthorVision360 Enterprise Accounts Payable Automation Solution by BlueCreek Software reduces time wasted chasing down paper invoices by automating invoice approvals, eliminating manual data entry, eliminating paper invoices and reducing processing costs. Categories
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