How to leverage hyperautomation for the accounts payable process
In today's fast-paced business world, organisations are continually seeking innovative ways to streamline their operations and improve efficiency, and keeping track of and paying off liabilities and debts is an activity as crucial as monitoring assets and revenue, given that this is the only way to produce correct balance sheets. The organisational unit tasked with this important function is Accounts Payable (AP).
AP has come a long way since the early days of manual processing, where all transactions were processed manually and recorded in ledgers.
Subsequently, typewriters, calculators and computers made the process more streamlined and efficient.
Today, electronic invoicing, automated approval workflows, and electronic payment methods have become standard practices, making the process even faster, more accurate and less costly.
Despite technological developments, the sheer volume of transactions necessitates a significant level of employee involvement for time-consuming and repetitive processes.
So let's dive into the world of AP and see how hyperautomation can uplevel the game!
To truly appreciate the need for hyperautomation in AP, it is important to begin by understanding its workflow. So, here goes:
- Invoice receipt: AP receives an invoice, which must be reviewed for correctness and completeness.
- Invoice coding: The invoice must be recorded in the company’s books for accounting purposes.
- Invoice approval: The invoice must be routed to the relevant department for approval, where it is verified against a purchase order (PO) and the goods/services receipt (GR) documents before being authorised for payment.
- Payment: The payment is processed, either through wire transfers, digital payment services, Automated Clearing House (ACH) networks, or, by the trusty old-fashioned way of issuing cheques!
- Reconciliation: Finally, payments are reconciled with the invoices and POs to ensure that everything has been properly recorded and accounted for.
In short, the AP process is a game of financial Tetris! The goal is to fit together all the pieces — purchase orders, goods receipts, invoices and payments — while ensuring that they all add up.
A day in the life of an AP professional — manage invoices, process payments and maintain accurate records — sounds simple, but wait till you're on your third cup of coffee by midday!
Currently, the process presents three key challenges for companies: dealing with a wide variety of invoice formats, manual data entry, and obtaining necessary approvals.
Despite the buzz around process standardisation, the reality is that companies continue to receive invoices through multiple channels — email, fax, paper — with each invoice formatted differently. It is quite a task to segregate them, record them in the system and get the necessary approvals for processing.
To better understand the scope of these challenges, consider invoices in hundreds and thousands each month, each requiring careful attention and processing, keeping in mind accuracy and timeliness.
Mistakes such as overpayments, incorrect payment amounts, missed payments and delayed payments can harm supplier relationships and result in late payment charges, adding to the challenges.
Therefore, implementing efficient processes and utilising technology can help streamline the AP process and reduce the risk of errors.
How can hyperautomation help?
Despite the use of ERP software, several tasks in the AP process are repetitive and manual due to the involvement of multiple departments. Therefore, the scope for hyperautomation tools to improve the efficiency of the process is tremendous.
Consider these numbers:According to the Aberdeen Group, it typically takes companies between 4.1 and 16.3 days to complete an invoice processing cycle manually from receipt to payment approval and costs up to $23 per invoice. On the other hand, the cost can be reduced to $4 per invoice by leveraging hyperautomation tools. This represents an 80% reduction!
Tools such as Optical Character Recognition (OCR), Robotic Process Automation (RPA), Natural Language Processing (NLP), Artificial Intelligence (AI), Machine Learning (ML), and Intelligent Document Processing (IDP) have demonstrated their worth in the battle against mundanity. Here are some examples of how they can contribute their might to the AP process:
Invoice classification and sorting:Hyperautomation can be used to automatically sort the hundreds of invoices a company receives in a day based on type, vendor, or other relevant criteria.
Duplicate invoice checking:Hyperautomation tools can be used to detect and raise alerts for duplicate invoices.
PO/GR matching:Hyperautomation tools can match invoice quantities and prices against PO and GR automatically, and flag discrepancies if any.
Invoice coding:OCR and NLP can be used to capture invoice details intelligently and RPA can be used to code them into the companies’ accounts automatically.
Approval process:RPA can automatically route invoices to the concerned department for approval at the appropriate stage in the process.
Payment processing:RPA can automate payments by setting up electronic payments triggered by approved invoices and flagging the rejected ones.
Reporting and analytics:AI and ML can provide real-time data analytics and reports on invoice processing times, payment delays and other metrics. This can help identify areas for improvement and optimise the AP process.
Overall, hyperautomation can help streamline and automate many aspects of the AP process, resulting in improved efficiency, accuracy, and cost savings.
Leveraging hyperautomation tools to create a digital workflow for the AP process, right from the start (invoice receipt) to the finish (reconciliation), is an excellent way to streamline it.
Validating data with respect to ERP, generating reports and performing analytics, setting up automated payment reminders, ensuring a smooth flow of information between different systems, organising data into different categories, and verifying the absence of duplicate entries are among the various AP activities in which hyperautomation makes a significant difference.
Above all, with hyperautomation in AP processes, organisations can focus on more strategic initiatives, driving overall business success.
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