AP automation challenges and solutions
No modern business can operate independently without availing products and services from third-party vendors. On-time payments for these products (or services) is critical to establishing working stakeholder relationships between a business and its various vendors. However, only 25% of businesses with manual accounts payable (AP) processes pay their invoices regularly. AP automation solutions can help businesses not only process and pay all the invoices on time but save — on average — $2.5 per invoice in processing costs.
AP problems and solutions
Before understanding how AP process automation can help, we must understand the problems surrounding the AP process. Some of the most common manual AP process challenges include:
- Slow invoice processing: Manual invoice processing can take hours, if not days, to receive, authenticate, approve, and pay. AP automation systems can streamline this process, centralising the data and reducing invoice processing time.
- Data entry errors: Manual processing requires physical receipt and storage of invoices and supporting documentation. This can cause data entry errors and inaccurate invoice processing. AP automation solutions, such as digital invoicing or OCR scanning, can automate the data entry process and eliminate the potential for manual error in invoice processing.
- Disappearing invoices: Physical storage of invoices can also mean one can easily misplace the receipts and invoices, or they can go missing. It becomes difficult to track such disappearing invoices. You can avoid this with AP process automation as you can digitally store (and search for) all the invoices and supporting documents.
- Potential fraud and theft: Staying vigilant against AP fraud and theft attempts is crucial for AP teams, which can be difficult in manual AP processes as they leave room for human error or malicious interference. On the other hand, AP automation solutions can address the risk of fraud or theft by programming safeguards against suspicious activity within the AP automation systems.
- Unauthorised purchases: Manual AP processing leaves room for unauthorised purchases, either as a quick fix to speed up the purchasing process or as a fraud attempt. Automating the AP processes can identify and restrict these unauthorised purchase attempts and alert the responsible parties.
- Duplicate invoices: You can receive and process duplicate invoices due to a manual error or a theft attempt. AP automation solutions can restrict duplicate invoice processing through digital filtering tools and workflow streamlining.
- Lack of scalability: As the business grows, the AP processes would also need to evolve. But manual AP processing is not scalable and can hinder business growth. AP process automation, on the other hand, can introduce scalability and flexibility in AP processing and help your business grow.
Benefits of AP process automation
In addition to helping overcome some of the most common manual AP processing challenges, AP automation solutions also offer major benefits, such as:
- Reduced invoice errors and processing costs: With AP automation solutions, OCR can capture data from invoices, eliminating the potential for manual data entry errors in payment amounts or budget categories. This saves your team’s time, and you can streamline invoice processing while reducing overall AP costs.
- Faster invoice approvals and timely payments: Invoice approval is one of the biggest bottlenecks in manual AP processing. With AP process automation, you can eliminate the paper trails or ‘missed emails’ by immediately sending the invoices to the concerned individual for approval and sending automatic reminders. You can also set up automatic payments and simplify the necessary approvals to fast-track timely payments.
- Better regulatory compliance: With OCR tools to handle invoice processing and storage, you can leverage AP process automation solutions to prevent sensitive data leakage. Additionally, you can check for suspicious activity and fraud.
- Improved transparency for better stakeholder experience: AP automation solutions also offer improved transparency and accessibility throughout the AP process through automatic invoice processing and cloud-based document storage. This contributes towards an overall lower risk and a better stakeholder experience.
However, despite its numerous benefits, adopting AP process automation has some hurdles. You can overcome these hurdles in with a few simple best practices, such as:
- Getting employee buy-in
- Prioritising supplier adoption
- Outlining the workflow rules
- Having up-to-date information
- Keeping track of and regularly communicating your KPI metrics
With these best practices, you can simplify AP automation solutions adoption and benefit from automating your accounts payable processes.
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How can Infosys BPM help?
Infosys BPM accounts payable solutions leverage AI-driven data extraction, enrichment, and workflow orchestration to ensure an enhanced stakeholder experience.