Accounts Payable

An Accountant’s Guide to AP Automation

December 8, 2021

Estimated Reading Time: 6 minutes

Traditionally, technology investment in accounts payable has often taken a backseat to other priorities. Five years ago, only 15% of businesses saw AP as a strategic operation, while a full one-third did not see it as strategic in any way.  However, the rise of automation tools is now empowering more accountants to free themselves from low-value and repetitive work and becoming more strategic allies in the business. Accounts payable can help ensure the financial health of an entire organization by providing strategic information and insights that help inform important decisions.

AP automation solutions, which reduce mundane tasks such as data entry, are quickly being adopted, with 39% of finance leaders planning to implement them in 2022.

What Is AP Automation?

Some companies have achieved a level of automation by eliminating physical invoices. The common misconception is that as long as they are scanning and emailing PDFs of an invoice, they have successfully escaped the problems endemic to a high-touch, manual system. Unfortunately, such a process may help reduce paper, but AP staff still spend valuable time on repetitive tasks such as chasing approvals.

Full automation of the accounts payable encompasses your entire purchase to payment process. Each invoice is automatically captured and stored on the cloud, where it is then routed to the appropriate approvers. It also allows you to pay vendors directly via virtual credit card, ACH, wire, automated check, or even paper check, without stuffing envelopes.

AP Problems are Hiding in Plain Sight

accounting problems

If your company is still using manual or partially digitized processes for accounts payable, you may wonder if it’s necessary to fully automate. After all, if it doesn’t seem broken, why fix it? The problem is, the system can be broken in ways that can often escape the notice of those who have grown accustomed to its challenges. Let’s take a look at the daily struggles your accounts payable team face that can be easily solved through AP automation.

One of the primary problems that accounts payable teams face is that they get stuck playing the waiting game when it comes to approvals. According to Levvel research, 37% of AP employees faced challenges getting invoices signed off on time due to remote work over the last year. Even if you don’t have finance employees working remotely, you may still face delays due to a convoluted approval process. In addition, paper invoices can get stuck on a desk, and scanned invoices may end up stuck in an inbox, causing delays that can be easily avoided.

According to a Beanworks survey of AP employees, as much as 20% of their time is spent chasing approvals. Not only is this an inefficient use of time, but it can also result in late fees, which affects your bottom line and damages your relationships with vendors.

Errors during the data entry process are another common problem associated with manual AP. Currently, 86% of accounting teams are entering data manually, a process that is prone to errors. In fact, 70% of global business leaders say they have made financial decisions based on inaccurate data.

Time is one of your most precious business assets, but with manual processes, you’re losing it to repetitive and mundane tasks. It means that your AP team is spending their time inputting data, and cross-checking it across multiple systems, in addition to time spent making phone calls or sending emails if an invoice happens to go missing.

According to 40% of surveyed workers, a full quarter of their workweek is consumed by repetitive, manual tasks.

Lost time is not the only cost associated with manually processing your AP, there’s a literal cost as well. A study by Levvel Research found that processing a paper invoice typically costs US$15, compared to US$5 or less through automation.

Lost In The Maze

If you haven’t moved to a cloud-based automation system for your accounts payable, you are likely operating with segregated systems. Your team is navigating a maze of programs like Excel, email, DropBox, and other programs that do not communicate well with each other. Data silos develop, making it difficult to get a complete view of your AP department’s financial health– or make well-informed decisions based on that information.

In a survey conducted by Blackline, 26% of C-level executives and financial professionals stated that they were concerned about their ability to spot financial errors due to a lack of visibility. 

This lack of transparency explains why–according to the same report–only 38% of financial professionals trust the accuracy of their data, and why 20% of finance professionals state that they don’t have regular access to accurate figures. When asked why this was the case, 28% attributed it to a lack of automated controls and checks for their data, and an additional 28% cited an over-reliance on methods such as spreadsheets and other outdated processes.

Tearing Down The Walls

tearing down the wall

All of the problems described above are walls that stand between you and healthy finances. Fortunately, you can begin breaking down these walls through cloud-based AP automation.

  • With Beanworks, your AP team no longer needs to be mired in lengthy approval processes. The system provides you with previews of all pending invoices, sends out notifications to approvers when invoices need to be signed off, and even sends out reminders. Because it operates from a cloud-based system, approvers can access it from their computer or phone, speeding up the authorization process. Want to take a deeper dive? You can read about how Beanworks helped eliminate a convoluted approvals process for the ICBA (Independent Contractors and Business Association).
  • Using AP Automation, you eliminate the time sink of manual data entry. Beanworks handles that for you, freeing up significant amounts of time for your team while mitigating the risk of costly data entry errors. No more stacks of paper crowding up desks, no more hunting through filing cabinets or emails to find the documents you need, or repetitively typing data into a spreadsheet. For more information on how Beanworks can save your team time and clean up your AP process, check out what it did for Minikhada Club in Minnesota.
  • As noted above, the typical cost of manually processing an invoice is estimated at $15. With cloud-based automation, that cost drops to $5 or less. Assuming your company processes 500 invoices a month, the manual cost totals to US$78,000 a year, as opposed to US$30,000 or less through automation. That’s savings of at least US$48,000 annually.
  • By transitioning to an automated system, you eliminate data silos and improve transparency. All of your data is centralized and easily accessible, giving you insight into every step of the AP process.

Where Do You Start?

With all of this in mind, the next logical question you’re likely asking is: “where do I start?” It can seem overwhelming, but taking the first step is actually quite simple. To begin, simply identify the biggest roadblocks in your current processes and develop a strategic case for implementing automation. Are you having issues with approvals? Late payments? Data entry errors or time wasted manually inputting data? Once you’ve identified the areas in need of help, you can then focus on the benefits you are looking to achieve through automation. Finally, make sure you involve all relevant stakeholders in the evaluation process so that you can present a holistic case for how automation will benefit your company at every level. You can also take a closer look at Beanworks’ step-by-step guide on how to begin the process of AP automation for your organization.

What Tools Do You Need?

When you start researching automation solutions, there are a few things to keep in mind. Does it integrate with your current financial system? Does it manage all four of your AP processes–purchase orders, invoices, expenses, and payments–in a single platform? And does it have web and mobile accessibility?

Beanworks integrates with and enhances your current accounting software, providing you with more transparency, less repetitive work, and substantial cost savings. Beanworks also gives you a comprehensive, 360-degree solution that manages invoices, POs, payments, and expenses in a single, user-friendly system. Because it is a cloud-based solution, you always have access to Beanworks. Just log on through your computer, laptop, or mobile phone and get the data you need at any time to take the actions required.

Learn more about how Beanworks can enhance and simplify your AP process

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