How do you automate an AP process?
WHAT DOES AP AUTOMATION MEAN?
AP automation, or accounts payable automation, is the process whereby accounts payable processes are handled digitally using technology, rather than manually. This can create faster, leaner, more cost-effective AP workflows.
AP automation solutions can intelligently capture and analyse the information that’s on your invoices, speeding up the process and helping reduce errors.
HOW DOES AP AUTOMATION WORK?
AP automation uses optical character recognition (OCR) to extract any relevant information from invoices and purchase orders (POs). OCR then translates text from the document into a code that is then used for data processing. The data is then placed into a digital workflow which will then automatically pay suppliers as long as everything is correct.
How do you automate an AP process?
1 – E-invoicing
The first step in the AP payment process is receiving and recording supplier invoices. A small mistake due to human error could lead to significant issues further down the line. By automating this stage staff will only need to handle invoices by exception, instead of handling them all.
2 – Streamline the Approval Process
Invoices are sometimes held up within approval workflows, slowing down the process. By automating this stage, you can have full visibility, to see where or why invoices are stuck. This can result in a reduced processing time as well as allow you to track who approved an item and when.
3 – Remove Manual Data Entry
Typically, finance teams will manually key in data. By automating this stage the OCR technology within an AP automation software allows for efficient document digitisation, resulting in an immediate decrease in manually intensive tasks. The cloud-based technology then stores all of the data for easy access and compliance.
4 – Protect yourself from fraud
During just the past few years, the number of breaches, phishing attacks, fraud, ransomware, and overreach has seen a significant increase. To protect your business from fraud, most teams follow the correct approval process and only pay legitimate invoices. Automated systems track every action that takes place on an invoice, from who handled it to what steps have been taken.
5- Matching and verification
Typically, the AP team will three-way match invoices to verify that it is legitimate and ready to be paid. The process compares what was ordered (the purchase order), what was delivered (receipt) and the supplier’s invoice. By automating this stage the OCR technology scans invoices and supporting documents such as the PO and receipts. It will then match total amounts, keywords, and categories. Allowing easy identification of any inconsistencies in quantities or prices.
Do you want to find out more about how automating AP could benefit your business? Get in touch.
