Why Accounts Payable Automation Could Be Right for Your Business

APA can transform your internal financial operations

Managing cash flow is a vital part of running a business. It can also be one of the most challenging. Accurate data on how much money a business is bringing in (accounts receivable or AR) and how much it owes (accounts payable or AP) is essential for maintaining business operations. If not managed appropriately, a company could find itself without enough working capital to pursue its future goals or cash on hand to meet its immediate obligations.

What Is Accounts Payable Automation?

Countless businesses still have employees manually entering invoices into their accounting software. While a sole proprietor or small business might be able to justify entering bills into a spreadsheet, most small to medium businesses (SMB) need something that can handle a larger workload expediently and with greater efficiency.

Accounts payable automation (APA) software offers businesses a way to keep accurate records, make timely payments, and minimize the risks of fraud or regulatory noncompliance. Automating accounts payable tasks helps businesses avoid many of the problems that come with doing everything manually.

How Does Accounts Payable Automation Work?

With APA, businesses can systematize routine steps in the accounts payable process, such as:

• Creating and recording purchase orders (POs);
• Issuing receipts upon delivery;
• Receiving and reconciling invoices;
• Coding expenses;
• Obtaining expense approvals;
• Issuing payments; and
• Making final reconciliations.

The accounts payable automation software generates POs in a standard digital format that can be sent to vendors in a common format like PDF. It converts invoices into the same standard format through optical character recognition (OCR) or e-invoicing. It can compare the data on the invoices to the data of the PO to confirm that they match.

This type of workflow allows APA software to manage most of the process requiring human input only at certain stages, such as approving expenses or dealing with discrepancies between POs and invoices.

APA software manages accounts payable through digital technology hosted in the Cloud and should provide an executive dashboard that allows businesses to manage the process, review transactions, and troubleshoot any issue that arises. Its analytic tools can help with tasks like assessing data, evaluating performance, and diagnosing problems.

What Are the Benefits of Accounts Payable Automation?

An APA system can offer numerous benefits to businesses of any size, including:

Increased Accuracy

Manual data entry and repetitive tasks are highly error-prone. APA software uses sophisticated OCR algorithms and other processes to maintain the accuracy and integrity of all the information it receives. An automated approval workflow ensures better governance and a stronger internal control environment.

Files Invoices in the Cloud

An APA process eliminates paper and the need to manually file or maintain hard copies of records after a pay run. The cloud-based system also has better reliability, timeliness, accessibility, and security.

Reduction in Work Hours

Entering data by hand is time-consuming because employees must type in all of the necessary information and then review entries for errors, like inconsistent coding. Entering data into an APA system only takes as long as is needed to scan documents or transfer files. Many of the software options accept and input invoices via email, which saves time by opening the e-invoices via OCR. APA systems integrate with general ledger (GL) systems and push information back and forth to avoid double entry.

Additionally, businesses typically “hold” invoices until they are ready to pay. They may be approved timely but will still sit in queue until payment. A customized APA system is created to enable more timely financial reporting of the expenses.

Improved Cash Management

In addition to data entry mistakes, manual accounts payable management can lead to errors like double payments and missed due dates. APA allows businesses to manage their cash flow more efficiently and accurately by maintaining schedules and tracking payments more effectively.

Business owners and managers are also in a better position to make decisions about how to allocate funds with the help of APA. They have access to cash flow data that helps them pinpoint the best times to make expenditures or investments.

Greater Access to Real-Time Financial Data

Businesses can visualize their cash flow in real time with the data that APA software provides. They can spot problems that could be delaying revenue or restricting growth opportunities and they can make informed decisions about which expenses might not be necessary and where they might need to be spending more.

Streamlined Risk Management and Compliance Reviews

The data that APA systems provide can also be an invaluable tool for compliance. Auditors have access to a complete trail for every transaction. This can allow them to spot irregularities and determine causes, such as errors or fraud. Businesses can address problems before they become large and expensive. And annual 1099 reporting is simplified with accounts payable automation, which ensures a smaller margin of error and requires less time for corrections and updates. More precise data is recorded, payments are tracked, transactions are verified, and accurate payouts extracted for a seamless, complaint process.

Learn More About Accounts Payable Automation Solutions

MAXIS® by Freed Maxick is a high-tech outsourced accounting solution that provides full outsourced services, stand-alone AP outsourced services, or one time project assistance with requirements, vendor selection, and implementing AP automation in your organization’s environment. Our team of professionals is adept at meeting you where you are on your journey.

Schedule a complimentary discussion to determine how MAXIS can address, streamline, and support your accounts payable automation needs. Please contact Alexis Becker at directly at 716-332-2667 or alexis.becker@freedmaxick.com.