The Benefits of Accounts Payable Workflow Automation
How to Transform Your Accounts Payable Process With the Right Automation Technology
Accounts payable is vital. It is central to your business as the check and balance (no pun intended) for supplier payment processing, balance sheet and cash forecasting accuracy, and capital optimization. So why not empower your AP department with an accounts payable workflow automation solution that can bring the whole operation into modern efficiency?
What Is Workflow Automation?
Before we get into automation of accounts payable, let’s start by defining workflow automation.
As you’d guess, workflow automation is the automation of workflows. And what are workflows? Any repeatable (read: tedious) tasks that ensure information, data, documents, and other communications are able to flow throughout your organization and be accessible to everyone enterprise-wide. Rather than expending manpower on manual data entry, for examples, workflow automation automates this task, making it easier and faster.
To organize and automate those business processes, workflow automation software is designed with business process management in mind. For example, tracking money owed to suppliers.
This task requires a set of specific processes:
- Ensuring the accuracy of supplier information
- Reviewing and approving invoices and statements
- Organizing and prioritizing invoices to pay
- Making on-time payments
- Effectively communicating with suppliers to maintain good relationships
Workflow Automation: Why You Need it and What it Can Do For Your Business
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Some of the overarching benefits workflow automation offers to businesses include:
- Streamlining business operations
- Reducing the time spent on individual tasks
- Increasing productivity
- Eliminating inaccuracies caused by human error
- Improving operational efficiencies
- Effective monitoring and management of the performance of business processes
- Creating enterprise-wide visibility into all tasks and processes
- Increasing profitability with fewer errors and less time spent on manual tasks
- Elevating the customer experience with smoother processes and improved service
All organizations have business processes they are trying to streamline, and the automation of individual tasks can dramatically improve operations.
In this article, we’re focusing specifically on accounts payable workflow automation and building efficiencies into this vital function.
The Biggest Use Case for Workflow Automation in AP: Ditching Manual Processes
Workflow automation can benefit accounts payable departments across industries from manufacturing to marketing because it does one thing really well: removes tedious manual processes.
And in accounts payable, there are innumerable manual processes.
Let’s break down a typical non-automated (manual) AP process at a manufacturing facility.
- An invoice from a parts supplier comes to the AP department, where it is manually entered and checked against the initial PO.
- If the invoice matches up, it is manually routed for approval (which is another manual step).
- Once approved, payment of the invoice is manually scheduled.
- The transaction is logged manually, sometimes twice – as a debit in one account and as a credit in another – to eliminate errors.
- The company’s balance sheet must be manually updated to summarize all accounts payable.
Those are a lot of steps to execute manually, and of course manual processes introduce a greater risk for error or oversight.
Here are some specific ways accounts payable workflow automation drives efficiencies for these tedious manual processes.
Your AP workflow automation solution creates significant efficiency right at the beginning – with the reception and entry of the invoice. Maybe your business has a single approved individual within accounts payable who can receive and enter invoices, or perhaps your suppliers don’t always send their invoices to the correct individuals or departments. In these cases, rerouting the invoice to the correct people can delay the entire invoice processing and payment workflow, resulting in negative vendor experiences and internal confusion.
Accounts payable workflow automation creates a centralized, single-source-of-truth for all invoices, so they can be directed to the correct place each time, and always be quickly and easily accessed by the right individuals.
Once the invoice has been received, it often needs to be routed to a specific individual depending on predetermined conditions, such as which vendor or supplier the invoice is from, or whether the invoice exceeds a certain dollar amount and requires additional approval. Conversely, the invoice may be small and therefore should not be sent to a finance leader for approval.
Demand for Visibility Increases Across Service Organizations
Accounts payable workflow automation can help you set up those conditions to organize workflows by department to ensure the invoice goes to the right person or role right out of the gate.
When it comes to invoice approvals, manual processes can cause a host of delays and challenges – but these issues can be resolved with an automated solution. For example, processing invoices manually often involves moving a piece of paper – and paper can be lost, misplaced, damaged, or subject to human error. It is also difficult for the right people to have visibility over the invoice process when there is no centralized location to find the information.
With approval workflows through automation software, invoices are automatically sent to one location where they can be accessed, viewed, and approved electronically. All necessary parties can see where the invoice is in the approval process at all times, which is especially helpful if an invoice needs multiple approvers. Automated approval processes cut down on the time between invoice reception and approval, meaning your vendors or suppliers get paid faster, and your team can function more efficiently.
Invoice Issue Resolution
On occasion, a dispute over an invoice may arise between your organization and the vendor. On the vendor side, they may request additional compensation for work that may not have been cleared with your company ahead of time. On the business side, you may have paid out an invoice incorrectly. While manual invoicing processes do increase the likelihood of errors or oversights that can lead to disputes, the flip side is that handling disputes manually also causes additional issues. For example, an invoice could be mistakenly approved and paid out despite an existing dispute because the information was not accessible to the approver.
With AP automation, your finance teams can better control and manage invoices to ensure disputes are handled effectively and no invoicing errors are made as a result. Another benefit? When disputes are handled quickly and efficiently, your vendor or supplier has a more positive experience despite the invoicing issue.
Project Management Tools Vs. Workflow Automation Tools
Automation can help expedite invoice approvals to get your vendors and suppliers paid more quickly. With manual invoicing processes, it’s easier to lose track of where an invoice stands and not uncommon to erroneously exceed a set time period for payment such as 30 days.
AP workflow automation allows you to set up approval reminders so the right individuals know they have invoices in need of approval. Based on their action (approving and sending the invoice or failing to address the invoice) you can automate additional reminders to ensure the invoice is approved within the required time period.
Mitigating Security Risks With AP Automation
Everyone in business today is well aware of the mounting security risks – from serious breaching like ransomware attacks to email phishing, companies are increasingly focusing on tightening security controls to keep internal and external data secure.
An automated workflow is far more secure than paper processes – hands down. Paper records make it easier for fraudsters to steal sensitive data and information about your company or your customers, resulting in theft or other actions that can cost your business both financially and reputationally.
Additionally, automated workflows are designed with tight security controls. Professional Services Automation from FinancialForce is hosted on the Salesforce cloud, which utilizes some of the most advanced technology for internet security available today. Your data will be completely inaccessible to outside parties through encryption and secure storage, so all payment data is kept safe and in the right hands.
Is Accounts Payable Workflow Automation Right for My Company?
We would argue that workflow automation is a wise move for any company’s accounts payable operation. However, to ensure you get the most out of your workflow automation software, you should have answers to these questions before you even adopt the solution:
- Are our accounts payable employees willing to change the way they complete tasks from traditional/manual methods to more technological and collaborative?
- Is our organization in the right position to fully support AP in this change?
- Will accounts payable and our organization as a whole be able to maintain and/or elevate AP functions after adopting new technology?
In its 2021 report, the Institute of Financial Management stated that 77% of all AP departments have at least some form of automation.
As business continues to move at an increasingly rapid pace, now is a good time to review your accounts payable processes and determine if your current automation solution is sufficient – or to make the switch to an automated solution for the first time.
Adopt an AP Workflow Automation Solution That Can Scale
One of the most important considerations for adopting accounts payable workflow automation software is the future growth of your business. You want to choose a solution that will support your organization into the future and scale with changes to invoice workflows.
Before selecting an AP workflow solution, think about who your vendors are, what their needs are, how you currently operate, and how you want to streamline operations for smoother processes going forward. Your goals for three years down the road – or even one year – are likely very different from how you’re operating today.
How Your Organization Can Benefit From Professional Services Automation
Investing in your accounts payable department by providing workflow automation is just smart. You’ll be supporting the processes that manage and oversee your company’s bottom line and help build the supplier and vendor relationships that keep business moving.
Contact us today to schedule a demo and learn more about our Professional Services Automation solution, which runs on the Salesforce cloud platform, and see how it can streamline your operations and put your customers at the center of everything you do.