No matter your industry, running a business requires managing many different moving parts. Many companies find that keeping up with these things can be overwhelming and cause inefficiencies. That’s why the industry of business process outsourcing exists. With it, you can outsource any particular aspect of business management to make things run better, and it often saves money. One area where many Mid-Atlantic Region companies benefit from outsourcing is accounts payable.
Accounts Payable Invoice Data Capture Solutions
Accounts payable is an essential component of any business, big or small.
Accounts payable (or AP) can be a department in a company or one person, depending on the size. AP receives all outstanding invoices due to vendors, procurement services, and/or suppliers, whether a one-off purchase or a recurring monthly or quarterly statement for goods or services. Depending on the provider’s setup, they also receive the bills associated with goods and services.
Accounts payable is a company’s “checks and balances system.” It verifies invoices with the original purchase orders and ensures receipt of goods and services before payment is issued. A good accounts payable system means a company’s records (or books) are solid, which is key to accurate financial tracking and results.
However, the days of stacks upon stacks of paper files full of invoices and bills are over, thanks to electronic invoice capturing software. This technology also drastically reduces the risk of manual human data entry errors and saves valuable time by automating the process.
This accounts payable solution captures information from paper or digital invoices and bills via scanning software that uses optical character recognition (or OCR). It does not matter if something has been received via an email, physical copy via snail mail or FAX; it all goes through this system.
This same software houses receipts and purchase orders (PO) from a company, and through OCR, invoices and bills are matched up. If there are any errors between an invoice and a receipt or PO, the software captures discrepancies that allow for immediate investigation. This is beneficial not only for the business running AP but also for the relationship with the supplier or service provider.
In addition, by validating invoices and bills efficiently, payment structure and closing out the books are also positively affected. Ideally, the faster accounts payable solutions are, the quicker and more timely payment methods are, keeping a company in good standing with providers and vendors.
This automated validation allows accounts payable to close out the books each month or quarter with ease and peace of mind.
Invoice Processing for AP Departments
Manual invoice processing can take the accounts payable department weeks to complete and is extremely taxing. Not only that, but accounts payable backload can mean frequent late payments and frustration, not only on the buyer’s side but also with the supplier.
Automating invoice processing reduces the time from a supplier generating an invoice to a buyer paying that supplier. This process is called electronic-invoicing or e-invoicing. Time is valuable to a business and the amount of time saved by making accounts payable actions digital means an employee’s time can be maximized in other areas of the business.
By avoiding late fees and penalties, a business´s overall expenses are more exact and streamlined. E-invoicing software allows everything to be stored on a single platform, contributing to time saved and secure records storage.
Automated invoice processing also includes a massive data analysis component critical for ensuring a business’ financial model is clean and accurate. This is extremely important in the event of an audit and for tax compliance reasons. In addition, the process takes a fraction of the time compared to a manual audit.
Accounts Payable Automation
Processes become more cost-effective by automating a business’s accounts payable structure. Electronic systems are more environmentally friendly and eliminate the need for paper.
A business’s new reality could look like this:
- No more paper invoices
- No more paper checks
- No more sorting through stacks of paper receipts and bills
- No more paper storage
Automating a business’s accounts payable structure is ultimately about putting a more effective system in place. Better systems make companies run smoother and allow employees to focus on strategy over redundant, rote tasks.
A key value of technology in the workplace is that artificial intelligence can be programmed to sort documents, match documents, pull out important information from records, and organize documents through an online platform. No human interaction is needed, and no human error occurs.
The process for an invoice within an accounts payable system involves the following five steps:
- Receiving the invoice from the supplier
- Inputting the invoice data into a financial system or tracker
- Reviewing the data and validating the purchase or receipt
- Approving the invoice
- Paying the invoice
When done manually, all five of these steps could take accounts payable department weeks, if not months, to complete. Not to mention additional steps needed if an error is found in step three. Errors within accounts payable mean tedious back-and-forth confirmation and communication between buyer and supplier, interrupting the payment flow.
Accounts payable automation software systems cut this process to minutes, not weeks or days. Research from popular accounting software companies has shown that these automated systems SAVED around 80 percent of invoice processing time.
By having everything processed and stored on a single platform, financial data can be pulled and analyzed faster as well. This type of visibility is hugely beneficial for Chief Financial Officers (CFOs) and Chief Executive Officers (CEOs) and helps support decision-making. Decisions regarding growth, opportunities for risk, and spending are all connected to a solid accounts payable system.
In the ever-changing, ever-growing, and ever-competitive business world, automation lets your Philadelphia business stand out and be more productive. At the end of the day, productivity means money, and you have access to that when you work with business process outsourcing providers.
For more information about how outsourcing accounts payable can help your Philadelphia, eastern Pennsylvania, New Jersey, or Delaware business, contact IMR Digital, a KDI Office Technology company, today.