Effective financial operations require managing a high volume of invoices for all goods and services. Whether it is an invoice for products, utility services, supplier payments, etc., there is no shortage of invoiced transactions requiring payment and data input to properly maintain the operations of a business. Traditional invoice processing methods are time-consuming and prone to errors that can clog up accounts payable (AP) workflows and cash flow. Thankfully, modern solutions like AP automation revolutionize invoice management by fast-tracking AP operations, reducing errors, and saving valuable time and resources.
What is AP Automation?
AP automation refers to using software solutions to automate the accounts payable process. This involves digitizing invoices (otherwise referred to as e-invoicing), automating data entry, and facilitating electronic payments. The goal is to eliminate manual tasks, reduce paperwork, and enhance efficiency.
How AP Automation Works
There is a structured workflow to automation, with each step a crucial component of effectively managing invoices. The first part involves capturing the invoice data. This can be done in multiple ways, most commonly with electronic data interchange (EDI), which seamlessly transmits line-item invoice data directly into a back-office or accounting system. Another common method is optical character recognition (OCR), which works by pulling invoice data from a scanned or photographed paper invoice. All pertinent invoice data, like vendor details, invoice number, date, and amount, are extracted and stored in the business’s invoice management system for easier bookkeeping and reconciliation.
All invoices are routed to the appropriate party for approval. This reduces operational bottlenecks and allows businesses to accelerate the AP cycle. Once approved, AP automation systems facilitate the payment of invoices via electronic funds transfer (EFT), a much faster payment method compared to traditional payment methods like checks or money orders.
Benefits of AP Automation
Implementing AP automation brings numerous advantages to businesses of all sizes.
Increased Efficiency
Automating the AP process eliminates time-consuming manual tasks. Data entry, invoice matching, and approval processes are expedited, allowing AP teams to focus on more strategic activities. This increased efficiency can lead to faster invoice processing times and improved cash flow management.
Reduced Errors
Manual data entry is prone to errors, leading to payment delays, duplicate payments, or other discrepancies. AP automation significantly reduces these risks by ensuring accurate data capture and validation. Invoice data is GL-coded to match organizational naming conventions.
Cost Savings
By reducing the need for manual intervention, businesses can reduce labor costs associated with invoice processing. AP automation utilizes EFT for faster digital payments, which also saves costs associated with other payment methods, such as envelopes or postage for checks.
Enhanced Visibility and Control
AP automation provides real-time visibility into the status of invoices and payments. This transparency allows for better cash flow management and financial planning. Automated workflows ensure that all invoices go through the proper approval channels, enhancing control over the AP process.
Compliance and Security
Automated AP systems offer robust security features, protecting sensitive financial data from unauthorized access. Additionally, they help businesses comply with regulatory requirements by maintaining accurate and accessible records. Audit trails provided by AP automation software ensure transparency and accountability.
Utilize PaymentSource® Premium for AP Automation Needs
AP automation is a transformative solution that greatly improves the invoice management process. Fintech has expanded its AP automation capabilities beyond just alcohol to encompass all invoice transactions. With PaymentSource Premium, businesses can leverage the same tried-and-true Fintech expertise and apply it to all goods, services, and operating supplies. Take advantage of the increased efficiency, cost savings, reduced errors, and more by automating the accounts payable process with Fintech for sustainable growth and success.
