The end of another year is an opportune time to take stock of your financial practices and position your organization for success. To support finance professionals through this endeavor, we developed a series with tips to streamline your major accounting processes. We kick off the series by sharing best practices to optimize your accounts payable (AP).
Implement an Automated and Integrated Smart AP Solution
As we continue to move further from the days of an AP process that is entirely manual (manual invoice processing, approval routing, check printing and document filing), the time is right to take stock of your AP process and consider what an automated AP solution can mean for your organization. Companies choose automated AP solutions to reduce manual workload and bottlenecks, avoid human errors and empower greater productivity for everyone involved in the process. Technology costs have decreased dramatically, which puts these solutions within the reach of most businesses, regardless of size.
An automated AP solution should include the following key features:
- Automated data entry: This feature should be at the top of your requirements list as it relieves your staff of the burden of manually entering invoice data thereby saving time and expense while cutting down on input errors.
- Matching capabilities. Consider AP automation that matches invoices to purchase orders, receiving documents or contracts for efficiency gains and fewer exceptions.
- Automated approval routing: Many smart AP solutions include the ability to set up customized approval flows based on your internal policies. Do you require two sets or special approvals on invoices above a certain amount? Do certain vendors require special approval? These approval automations improve your internal controls and can save hours of shuffling paperwork back and forth.
- Roles and access controls: An effective AP solution will allow you to establish role-based permissions for every member of your AP team. Optimizing the user management features of your AP solution to ensure that each user has access only to functions required as part of their job duties and reviewing user permissions on a regular (quarterly/annual) basis or when job duties change are best practices.
- AI capabilities: Built-in technology that supports artificial intelligence (AI) can help simplify your workflow. Some smart AP solutions use AI to read and populate invoice information into the interface. AI also functions as a “watchdog” by preventing duplicate payments and sending alert messages to administrators on errors and required action items. These features help save your team time while providing additional safeguards.
- Document management: Be sure your cloud-based AP solution offers a document management system that organizes and indexes invoices and related documents, eliminating the need for paper copies and filing cabinets.
- Mobile capabilities: Provide your team members with the ability to approve invoices and pay bills on their mobile devices.
Get on a Schedule
Establishing a regular cadence for your AP workflows and holding team members accountable for adhering to the schedule are effective ways to streamline your processes and improve internal controls. A schedule that works for your organization’s revenue cycle can also be an effective cash management strategy. Take advantage of the automatic and recurring payments options that are available in most smart AP solutions.
Consider adding AP metrics to your financial and operational reporting. AP performance can have a measurable impact on working capital, cash management and your organization’s relationship with suppliers. Tracking metrics such as discounts captured, invoice processing times, late payments and penalties and the number of discrepancies/errors over time can help you to uncover opportunities for improvement and drive operational excellence.
Keep Vendor Information Current
Always be sure to have the most recent contact information for all of your suppliers and vendors. Make it a part of your annual review to check and update this data.