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Accounts payable (AP) is an area notorious for being costly, error prone and time consuming, which is why so many businesses are now choosing to automate their AP processes.
When you consider a traditional AP department, it may look something like this: an invoice is sent to multiple people within an organisation rather than being centralised, one of the recipients will email it to AP (sometimes they will have to scan it in first if it’s a paper invoice which takes more time), and maybe more than one recipient will forward the invoice so there could be duplicate copies arriving in the inbox of AP. It is then manually coded, where errors could occur, and someone then manually enters the details, often into a different system altogether, where again more errors could occur. There will often be a lengthy wait at this point for the invoice to be approved, and more waiting for the invoice to be paid. It is then filed somewhere, never to be found again.
It comes as no surprise that research by the Institute of Finance and Management found that AP professionals spend a staggering 84% of their time locked in manual and semi-automated processes.
Research has found that automating your AP function can save up to 78% of labour processing time and up to 66% of costs.
When it comes to automating your AP, you may be questioning where to start, and what to do. Within this blog post we are going to examine best practices when automating your AP function which can ensure successful processes are put into place right from the beginning.
Ultimately the success or failure of any automated processes is determined by your employee’s willingness to engage with it, which is why it’s crucial to involve your employees with the implementation of any AP automation software and provide thorough training. Why not consider involving your AP team by asking if there are areas they feel could be improved, or areas which aren’t working well in current processes, so they are invested in the process from the very start.
To get the most out of your AP automation software you first need to consider what you are hoping to achieve by looking at your goals and examining where your previous challenges have occurred. For example, are you hoping to save time, reduce costs, improve your data visibility, or cut back on manual data entry and errors? Prioritising your main goals will help you implement processes that work best for your business.
We like to think of the future here at Pegasus, which is why all our software is designed to be future-proof and grow with your business. What happens if your AP Automation software works for your business now, but in a couple of years’ time you need to process double the number of invoices? Will it cope and can grow with your business?
It can be easy for documents and information to get lost which is why centralising your data is a good idea. A quality AP Automation solution will make this straight-forward as all invoices are directed to a central location via an email address, and you can quickly see the status of each invoice and manage them appropriately.
It is vital to have clear workflows in place so every employee in your Accounts Payable team knows what they are responsible for, and concise processes are followed with regards to authorisers. This will ensure invoices are paid promptly and not missed and will keep processes running efficiently.
Implementing your AP Automation is one thing, but how do you know it’s actually working? Monitoring your KPI’s will give you a clear indication of what it is going well, and what could be improved. Run AP audits regularly so you can identify where improvements can be made. Common KPI’s for AP could include:
When you begin to automate processes there can be an urge to automate everything at once but strategically automating processes in order of importance is a safer, and less risky, way to introduce new processes. It gives chance for employees to learn the new processes and to iron out any technicalities one step at a time.
Accounts Payable is well known for being a time consuming, error prone and costly business function, but with good quality AP Automation software that is about to change. By automating your AP function, and ensuring you have best practices in place to maximise success, you can save time, money, reduce errors and drive efficiency and growth. Pegasus are with you every step of the way. To find out exactly how AP Automation can help your organisation, contact us today to discuss your requirements and to receive a free bespoke demo.
Posted On: April 26, 2023
