Your organization needs to achieve AP (Accounts Payable) workflow optimization if you want to maximize cost efficiency. As a result, you need a strategy that introduces techniques and technologies that streamline your AP workflow and reduce unnecessary costs. However, if you still rely on an outdated manual process or a less-than-perfect combination of paper and digital AP documents, it’s impossible to achieve your goals. Here we offer a comprehensive guide to help you realize the cost-saving potential of optimized AP by introducing faster processing times, reduced late payment penalties, improved cash flow management, and enhanced vendor relationships.
If you rely on manual data entry, even if it’s not for every invoice you receive, you are likely experiencing bottlenecks related to an outdated, inefficient process. Adding to your inefficiency is using a manual routing process to review and approve invoices. If this sounds familiar, you need to automate the steps involved in your invoice processing. There are four technologies/strategies you can leverage:
These three technologies empower your AP team to eliminate time-consuming manual processes and speed up processing times for impressive cost-savings in labour hours. It also makes your team happier, freeing up time and eliminating stress and overtime.
Outdated manual processing leads to an increased risk of vendor/supplier late payment penalties. When your goal is to reduce costs, one of the easiest ways to do this is to leverage all discounts available to financially reliable customers. Even if not all your suppliers offer a cash or early payment discount, you’re likely paying penalties for late payments or being charged interest when you go beyond the 30, 60, and 90-day payment dates.
With faster processing times in place, you get the invoices to the person who sends that payment through auto-routing, so you’re always up to date on your account. If your finances are in good health, you can also implement auto payments, allowing you to streamline the entire process from receipt and entry of the invoice to approval and payment. It makes vendors happier.
With OCR and automated invoice management, you can resolve vendor disputes instantly. You can quickly search and provide supporting documents such as POs, invoices, and packing slips to help resolve issues such as being short-shipped, being sent the wrong products, or being overcharged. As a result, you avoid ongoing disputes and grudges that ruin relationships.
Here’s where you start to see how symbiotic the relationship is between faster processing times, reductions in late payment penalties, and improved cash flow management. With your new AP software and technology, you:
Payment errors are bad whether you over or underpay. In the case of underpayment, you will face penalties because you are eating into your vendor’s cash flow. With underpayment, you eat into your own cash flow. You also damage relationships which can increase the risk of debt holders acting against you for late or missed payments. Once again, it’s document management software to the rescue, allowing you to break the cycle of bill payment errors.
The system simply won’t allow errors thanks to triggers you put in place to flag them. As a result, you ensure vendors are never paid without proper authorization. For example, with an automated approval system, the invoice can’t move forward to the payment stage. Say a department head is in dispute with their vendor due to a short shipment.
In this case, they might be sitting on the invoice until the balance of the shipment is received. Your AP team avoids paying a vendor owing you a product because the system doesn’t indicate the invoice was approved. Your AP team can also see who is holding up the process, follow up with them, and then enter a note about what’s happening.
Your system also makes correct calculations for payments. You can reconcile invoices to cheques or direct payments to avoid issues such as the incorrect number of zeros or placing the decimal point in the wrong place.
Audits are a pain in the you know what. With workflow optimization, your new system also streamlines the auditing process. You can easily reconcile invoices to payments, show the workflow of each payment from start to finish, and improve transparency and accountability through the entire AP lifecycle.
Whether it’s an internal audit or the CRA is involved, every transaction is accounted for. No more sifting through scraps of paper and receipts, as everything is scanned, stored and OCR-enabled for quick and easy searches. Your document management software keeps your accounts payable documents organized, so the word audit doesn’t send shivers of dread down your AP team’s spine.
AP workflow automation provides the technology and software you need to enjoy workflow optimization, including:
If you’re ready to learn more about AP automation using document scanning, management and OCR software, MES is ready to help. Click here to set up a free consultation.