As businesses seek to find new ways to optimize their operations, automation has found itself at the forefront of innovation and best practices. Accounts Payable departments are uniquely set up to integrate automation tools successfully into current processes and workflows with an immediate and evident impact.

Manual invoice processing has long been one of the most laborious, cumbersome tasks that AP teams must accomplish, diminishing opportunities for employees to utilize their time and efforts better. With AP automation software, this previously unavoidable drain on productivity is replaced with a cost-effective, hyper-efficient, and consistently accurate resource.

The benefits of switching to AP automation are undeniably numerous and invaluable amidst an unpredictable economy; when leadership takes the step to invest in accounts payable automation technology, this empowers their businesses to optimize cash flow, a cornerstone indicator of financial health. 

Automated Invoice Processing is One of the Many Benefits of AP Automation

When considering accounts payable operations from a broader viewpoint, it’s easy to be impressed with the significant (and time-consuming) tasks that AP automation software tackles. Automating invoice processing is one of the many benefits and features that automation software delivers.

• Invoice Capture and Coding

• Automated Purchase Order Matching

• Streamlined Approval Process

• Automatic Payment Scheduling 

• Simplified Audits

Automated invoice processing is quickly and effectively accomplished, starting with digital invoice capture and coding before shifting into a streamlined approval process and finishing with precise archiving. Although completed swiftly, the benefits and impact of automated invoice processing are layered and diverse.

Accounts Payable Automation and the Invoice Process Cycle

Operating with remarkable efficiency, accounts payable automation technology tackles many core processes and steps involved in invoice processing. The central elements of this back-end task are invoice receipt, matching, workflow, archival, and auditing. 

The process of automated invoice processing begins when AP automation software utilizes either artificial intelligence or a process called optical character recognition (OCR) to pull all necessary information from an invoice. The invoice is quickly digitized and securely stored, ready for the next steps. Once critical invoice data has been extracted, the software then matches the invoice to purchase orders and goods receipts. It can be routed for review and approval by the necessary teams and employees if applicable.

With that accomplished, the invoices are digitally archived in a central location, often a cloud-based resource. As a result, archived invoices are easily accessed, with an exceptionally navigable and accurate database. A centralized, digitized, and organized database of invoices goes a long way toward streamlining aspects of any potential auditing.

Maximizing KPIs to Improve Invoice Processing

With the integration of AP automation software, teams are given access to vast troves of data; when utilized properly, that data significantly enhances efforts to optimize processes. Without the relevant data to build off of, leaders are handcuffed by a hazy picture of operational effectiveness. Once equipped with this clarity, leaders can guide their teams toward achieving lasting improvement. 

Key performance indicators (KPI) also serve as a snapshot of departmental efficiency; many KPIs are intrinsically enhanced by AP automation software. These can include:

• Average Cost Per Invoice – many factors impact associated costs, with required labor a significant element. Any increase or decrease in labor significantly affects the overall cost. 

• Average Time to Payment – as time spent processing an invoice increases, there is a correlating and unavoidable increase with the associated cost. 

• Average Time to Approve an Invoice – with enhanced workflows, an automated process for invoice and payment approval is far simplified, benefiting all parties involved.

• Late Payments and Payment Errors

An AP team’s average invoice cycle time will reflect the improved metrics, with automation software streamlining processes to ensure timely payment distribution. This refined payment processing delivers enhanced supplier relations and a smooth cash flow for the company.

Reducing Human Error in AP Invoice Processing

An unfortunate truth of invoice processing is the potential for human error. When errors occur, the associated cost per invoice naturally increases due to the additional labor required. Further, supplier relationships are negatively impacted, potentially resulting in less desirable payment terms and hampered operations.

Specifically, AP automation software eliminates manual data entry, one of the primary pain points at risk for human error. The improved accuracy lowers the chances of duplicate or fraudulent payments, avoiding the associated labor and additional costs of addressing them. 

Potential Cost Savings Achieved with AP Automation Technology

When comprehensively integrated into accounts payable operations, the collective impact of AP automation software ensures simplified workflows and reduced processing costs. By reducing manual processing requirements, improving invoice cycling time, and cementing positive supplier relations, Accounts Payable Departments can save their companies crucial time, money, and resources, tightening overall operational efficiency.

Written By: Daniel Redding
Date: February 2023