Every day looks the same. You walk through your office and see your team sitting in front of their keyboards, handling paper and inputting data manually.
You know there has to be a better way.
And you’d be right, which is exactly why you’re reading this today. Automating your accounts payable system is fairly simple and comes with a wide array of benefits, but it’s a process that needs to be handled with care.
In order to automate accounts payable most effectively you’ll need to clearly define your need and your goals, know what to look for in a solution, and understand how to evaluate whether it meets your needs.
Furthermore, you’ll need to understand how to implement it so that your onboarding goes smoothly and your team is set up to use your solution most efficiently.
As the title of this guide implies, we’re going to share everything you need to know about automated accounts payable in the following sections. Now let’s get right to it!
Benefits of Automated Accounts Payable
We mentioned that automating your accounts payable systems delivers a wealth of benefits to your department and your organization as a whole. Here are some of the most important:
1. Dramatically Increased Efficiency
The overarching theme of this list is that AP automation increases your ability to operate more efficiently across the board. When you automate the manual entry of data and virtually eliminate paper from your department, your processes are streamlined and the risk of errors is greatly reduced.
Fewer errors means less time wasted playing catch up and more time focused on essential activities. Invoices are approved in minutes rather than days. In fact, the speed at which your team is able to accomplish nearly every task is accelerated.
Increased efficiency with AP automation also occurs when there is no exceptions or errors. In other words, if everything matches (PO Price and Quantity, Receipt Cost and Quantity, and Invoice Price and Quantity), there is no need for a human to review or create a transaction. AP automation does that systematically.
Getting more done in less time leads to decreased costs, which leads us into our next benefit…
2. Decreased Costs
The majority of your internal costs are tied to one thing—the labor required for the manual attention being paid to traditional invoicing. Automated accounts payable systems require far less manual labor, which naturally leads to decreased costs. But that’s not the only way that AP automation helps your company cut costs.
When your accounts payable process involves paper, you need to buy that paper and inevitably store it somewhere. Whether you choose to store it on- or off-site, you’re paying for that storage (and potentially transportation costs). Sure, digital storage comes with its own costs, but they’re significantly less expensive than their physical counterparts.
3. Increased Accessibility
Your company may have an award-winning filing system, but if you’re like most businesses at least a part of your records are stored in a less than optimal fashion when it comes to accessibility. This is especially true if you utilize off-site storage.
When using an automated accounts payable solution, digital document storage allows you to take advantage of a built-in search engine to locate exactly what you need in an instant. While paper files can easily be displayed, digital storage can also significantly decrease the chances of files being lost or even stolen.
With all of the financial information being processed in your department, you’re more of a target than you may think. The sheer volume being handled means paper files can be taken without anyone in your department being the wiser. Digital storage provides you with enhanced security measures, allowing you to improve varying levels of authentication protocols based on the sensitivity of your documents.
4. Increased Processing Speed and Oversight
Every step of your accounts payable process that is handled manually means more time required to process invoices. Human errors, employee absences, and the sheer amount of time required to complete tasks this way make for delays and, in turn, missed deadlines.
Automated accounts payable systems allow anyone in your department to initialize the processing of invoices. Additionally, managers are able to remotely provide approvals, which further decreases the risk of processing bottlenecks.
Furthermore, automated accounts payable systems deliver a higher level of control over your invoices. These softwares allow you to track the progress of any invoice and access information remotely during any stage of the approval process. That means the right information is accessible to the right people at the right time.
5. Eco-Friendly Operations
Eliminating paper from your accounts payable system means eliminating the environmental impact that paper production has on the planet. That means fewer trees being cut down, fewer carbon emissions, and less waste ending up in landfills. That’s something that your organization and your customers will appreciate.
How to Effectively Automate Your Accounts Payable Process
Now that you have a clear understanding of the benefits of automated accounts payable, let’s look at the step-by-step process for implementing it for your company most effectively.
Step 1: Identify Your Needs
Before you begin vetting different automated accounts payable solutions, it’s important to identify your unique business needs.
A good place to start is by reviewing the validity of your data. For example, if your PO pricing is incorrect or your materials group is not producing PO receipts on time and accurately, you will not see much benefit in AP automation.
Carefully evaluate which areas are most in need of an efficiency overhaul, and which are performing well as is.
Automating just to automate may be more costly than it is beneficial, but the real reason for this evaluation is to focus on your priority processes first. The sooner you can fix the big problems, the better. You’ll be able to get around to optimizing the performance of some smaller problems down the road, but it’s important to identify which systems represent quick wins or major priorities for increasing efficiency.
For example, is your invoice processing exceptionally costly? Do approvals often take longer than necessary and create bottlenecks? Are you experiencing a high rate of human error that requires revisions and extra time spent on these issues?
Only when you know why you’re automating should you proceed with actually doing so. To get a comprehensive view of your company’s needs, open lines of communications with your team to better understand their views on what could be improved.
Furthermore, identify how employees will makes better use of the extra time that automated accounts payable systems deliver. How will they further optimize the performance of your department?
Work to identify just how much money automated AP will save your company based on those insights so you’ll be able to compare them to the costs of the automated account payable solutions you’ll be vetting.
Step 2: Set Clear Goals
Once you’ve been able to clearly identify your needs), get more specific about what you want out of your automated accounts payable solution. Instead of setting vague goals like “improving departmental efficiency,” get clear on exactly what you want out of your solution.
Do you want to increase the number of invoices you process each month? By how many? While doing so, do you want to increase, maintain, or decrease the number of employees in the department?
Think of this as a part of your accounts payable strategy. The more specific you can be now, the better you’ll be able to determine how your AP automation solution is performing and which areas need to be optimized.
Determine who will be responsible for the achievement of these goals and how long they should take to accomplish.
Step 3: Get Your Team Involved
Another critical component of effective AP automation implementation is getting buy-in. You’ll need it from your leadership, sure, but you’ll also need it from your team.
Automating your accounts payable means shaking up a system that your people are likely vary familiar with and, more importantly, very comfortable with as well. The more support you have when implementing your new system, the easier the process will be.
Involve your team as much as possible, as early as possible. Prepare them for the change. Explain the benefits of automation, involve them in identifying your needs, and have them support your goal-setting process. Work with them to identify how AP automation will help to support each person’s specific role in the company.
Once they’ve had a chance to contribute to the preparation phase, have them help identify potential solutions and vet them. Allow them to contribute as much as possible and you’ll find that the actual roll out of the new automated system will go more smoothly.
Furthermore, clue your vendors in early to avoid hiccups upon the official launch of your new automated accounts payable system. Explain how submitting paperless invoices will help them get paid more quickly and that they will save on the resources required by paper invoicing.
FInally, don’t forget to prep your IT team for the change as well. Your AP automation provider will undoubtedly provide their own customer service, but your IT department may be involved in managing the in-house operations.They’ll enjoy the opportunity to work with your solution provider along the way to optimize the roll out of your new automated accounts payable solution.
Step 4: Evaluate Provider Options
At this point you’ve identified your need(s), set goals, and gotten all of the important parties on board. Now it’s time to start vetting solution providers to see which fits your needs, goals, and business objectives.
When it comes down to choosing the most effective solution, look for a process-specific automation system rather than an all-in-one solution. These providers are more likely to deliver the optimum performance for the specific process they were created for.
These softwares are designed around the specific needs of the industry they service and are more likely to give you the detailed tools that allow you to get the most out of your automation. You’ll find process-specific tools like workflow templates that simply make your job easier and your automated accounts payable system more efficient.
Look for solutions with specific features that address your predetermined needs. Furthermore, make sure they integrate well with the business tools you already know and love. If your automated accounts payable solution doesn’t play well with your ERP or office productivity software, for example, you’ll be better served to look elsewhere rather than deal with the frustration of incompatibility.
Step 5: Ask the Right Questions
When you find a solution that you like, be sure to ask the important questions to identify if it’s the right long-term system for your organization.
Here are some key questions that you’ll want the answers to before making the investment in your automated accounts payable solution.
Does the solution…
- Meet all of your needs?
- Require significant compromises to do so?
- Automate invoice approval process with workflow and business rules?
- Streamline exception processing with email-driven workflows?
- Make use of OCR (optical character recognition) from your paper records?
- Integrate with your existing ERP and office productivity software?
- Capture and store paper invoices and packing lists?
- Eliminate human intervention and error?
- Easily access digital copies of purchase orders, packing lists, receivers, and invoices?
- Incorporate existing hardware?
- Scale to implement additional business processes if you choose to do so?
- Reduce costs associated with accounts payable?
- Gain advanced control over your year-end accounting audits?
Step 7: Deploy Your New System
Once you’ve selected your automated accounts payable solution, it’s time to start rolling it out within your organization.
Having done your due diligence and properly prepared for this day, launching your new software will likely go quite smoothly. However, you’ll still need to give your department (and everyone affected by the change) time to adjust and learn the new processes.
By deploying in stages, you’ll be able to get everyone up to speed on specific processes one by one. Rather than trying to deploy the entire automated workflow right off the bat, automate a single process and give everyone time to learn it well before deploying the next.
Investing in training your team will help to smooth out the process and decrease the learning curve. The faster you can get your people up to speed on each AP automation process, the sooner you’ll be able to realize the full benefits of your investment.
Step 8: Optimize
An often overlooked step, optimization will help you get the most out of your automated accounts payable solution.
Initial automation projects are rarely (if ever) deployed without the need for immediate optimizations. Even in the rare case where this occurs, your organization evolves and your system will need to evolve to keep up.
Carefully evaluate your processes after automating them in order to determine which areas could be improved and how to best go about doing so. Identify any bottlenecks and work to resolve the problems that are causing them.
For example, implement a standard solution (such as DocLib standard workflow) as much as possible before implementing optimizations. We find that some people are adamant about implementing an optimization immediately only to discover it is not as important as they thought due to the new system/process.
Furthermore, work to determine if you’re accomplishing your automation goals. Track the important metrics to determine where you stand in relation to your predetermined goals and what needs to be adjusted in order to accomplish all of them.
Best Practices for Effective Automated Accounts Payable
You’re almost ready to get started with your own accounts payable automation solution, but before you start the process let’s take a look at some best practices that will help you get the most out of your new system.
1. Make Someone Accountable
Implementing your new automated accounts payable solution can be executed more smoothly if you have someone responsible for the oversight of the entire process. Make a single person the accountable party that is in charge of each of the aforementioned steps.
They’ll be charged with organizing the preparation steps, vetting the product, deploying it, and optimizing its performance. Sure, you’ll want as many of your team involved as possible but you’ll need a single person to organize the process.
This person will preferably already have a leadership role on your team so that your people are used to looking to them for direction. They’ll be in charge of working with the solution provider and ensuring that things go as planned. Your team will also be able to turn to them with questions or when problems arise.
2. Process Invoices When They Are Received
By scanning and processing invoices on the day they are received you’ll be able to dramatically cut down the turnaround time for each. This makes for a significant savings of both cost and time and provides immediate insights and monitoring of cash flow. It also maximizes opportunities for early payment discounts from your vendors.
3. Get Buy-In from Your Team in Advance
We touched on this in the previous section, but it’s so important to the successful implementation of your automated accounts payable solution that we’re reinforcing it here. The more of your team that you can involve and the sooner you can do so, the smoother your deployment will be and the sooner you’ll be able to realize the full benefits of your new software.
Everyone needs to be on the same page about what to expect, as well as fully understand their contribution to the overall plan. Get everyone involved in learning the new system before you deploy so that you can hit the ground running when launch day comes along.
You may have to get into resolving issues on a person-by-person basis, but that’s maybe what’s required to help your people make the transition most effectively. The more feedback you can get early on, the better it will be for the long-term success of your AP automation project.
4. Start Small and Slow
We also touched on this best practice above but, once again, it’s so important that it needs repeating. Too many businesses try to automate everything at once, just to get overwhelmed by the process.
First of all, accounts payable automation should be deployed process by process. Taking it slow will allow your team to learn the software and use it most effectively, but that’s not always the biggest issue that we see businesses facing.
Automation can be an enticing proposition. The long list of pros is rarely met with a con, but the one that you may inevitably face is that your team can only learn so many new tools quickly. Focus on AP automation before you move onto automating other processes to ensure your team has a solid grip on how to make the most of their new tool.
Rather than trying to run before you walk, take baby steps and ensure that each process automation tool that you inevitably implement is operating efficiently before moving onto the next.
5. Align Your Solution With Existing Tools
The tools that you already use aren’t likely to be going anywhere. For that reason, make the most of your integration potential. Explore the different ways to maximize your performance by integrating your automated accounts payable system with your existing technology.
You’re likely to find that they work together to complement one another in performing various tasks and optimizing processes. You’ll also find that the more your AP automation tool integrates with other tools, the quicker your team will be able to get up to speed with the new introduction.
You’re now far better prepared to begin the process of implementing an automated accounts payable solution. Remember, proper preparation is vital to the successful implementation of your automated AP system.
While you’re evaluating solution providers, be sure to determine whether DocLib is the right solution to meet your needs. If you have questions or you’re ready to learn more, be sure to contact us today. We’ll help you evaluate your needs and identify the right solution to meet them.