Financial Services

Leveraging technology for effective AP audit trails

Dreading missed payments? Take control! Punctual payments are not just about pleasing suppliers – they are about taking control of your finances. After all, a steady flow of cash is a fundamental need for any successful business, and a clear picture of your accounts payable (AP) with a robust audit trail facilitates this.

An AP audit trail maintains a detailed chronological record of all your AP transactions, tracking the journey of an invoice from the moment it arrives from a supplier to the final payment made.

Here's a breakdown of the key aspects of an AP audit trail:

• Everything is documented: An audit trail includes all documentation. This includes purchase orders, receiving reports, supplier invoices, etc.
  
• A chronological order is followed: Events are meticulously recorded in the order they occur, providing a clear picture of the entire payment cycle and allowing easy traceability of every transaction step – from receiving a supplier’s invoice to making the final payment.
  
• All approvals are captured: The audit trail logs all approvals and authorisations throughout the process, including who approved the purchase, the payment amount, and other relevant communication records.
  
• Detailed records are maintained: The audit trail captures specific information such as invoice date, vendor name, items purchased, amounts, purchase order references, payment details (date, method, amount), etc.

Importance of a robust AP audit trail

Here's why a strong AP audit trail is crucial for your business:

• Fraud prevention: Mitigates fraud by providing real-time monitoring of activities and enabling you to detect and quickly address suspicious patterns.
• Enhanced efficiency: A well-maintained audit trail helps analyse bottlenecks and inefficiencies within your AP workflow, and streamline it.
• Compliance champion: A clear and verifiable record of your AP activities facilitates adherence to accounting regulations and internal control frameworks. This eliminates the risk of non-compliance and hefty fines.
• Dispute resolution: Misunderstandings with suppliers happen. A comprehensive audit trail gives the necessary documented evidence to swiftly resolve disputes.

Challenges of establishing a strong AP audit trail

While an AP audit trail offers significant benefits, establishing a robust AP audit trail is a challenge. Traditional methods often face these roadblocks:

• Paperwork chaos: Traditional paper-based systems for invoices, approvals, and communication are disorganised and messy. Documents can be misplaced, lost, or damaged, hindering the creation of a complete audit trail.
• Lack of visibility: Manually tracking transactions through a paper-based system can be time-consuming and inefficient. It's difficult to get a real-time picture of where each invoice is in the approval process, or identify potential bottlenecks.
• Reconciliation difficulties: Reconciling bank statements with invoices and payments can be tedious and prone to errors, especially if the audit trail lacks clear details.
• Limited scalability: As your business grows, so does the volume of invoices. Manual systems cannot cope with the increased workload, and the risk of non-compliance with regulations rises without a proper audit trail.

Digitising your AP process may seem like a win, but it doesn't eliminate manual work. Data entry errors can still creep in, and limited automation of tasks like approvals can keep your team bogged down. Furthermore, incompatibility with existing accounting systems can create data flow headaches. Automation is your magic word.

Tech solutions to level up the AP audit trail

Today’s cutting-edge technology offers powerful solutions for those who want to elevate their game. Here’s how tech has your back:

• Cloud-based AP automation: Cloud-based AP automation solutions provide a central, secure location to electronically store all AP-related documents. Accessible from anywhere with an internet connection, this eliminates the risk of lost files and allows authorised personnel easy access. Plus, cloud solutions are built to scale effortlessly, seamlessly growing with your business and handling high transaction volumes without a hitch.
  
  Automated reminders for approvals keep the process moving smoothly, preventing bottlenecks and delays. These systems also stay ahead of the curve by automatically tracking regulatory changes, ensuring your AP process remains compliant with the latest requirements.
• Optical Character Recognition (OCR): Manual data entry from invoices can be a tedious and error-prone task. This is where OCR technology steps in as your hero. OCR can automatically extract data from invoices, minimising manual data entry errors and ensuring a more accurate and consistent audit trail.
• Real-time AP automation software: This provides a clear and real-time view of the entire AP process. You can easily track individual invoices, see which stage they're in, and identify delays or issues. This enhanced visibility allows for proactive management and faster processing times.
  
• Automatic reconciliation: AP automation software can automatically integrate with your bank accounts, allowing for automatic matching of invoices and payments. This streamlines the reconciliation process and minimises errors.
• AI/ML supercharge: Artificial Intelligence (AI) and Machine Learning (ML) are revolutionising the software landscape, and AP audits are no exception. These intelligent technologies supercharge AP automation software, resulting in a quicker, more precise, and streamlined process. From intelligent data analysis to predictive capabilities, AI/ML empowers you to make informed decisions and optimise your AP process for maximum efficiency.

Conclusion

As businesses grow, so do the complexities of managing accounts payable. Technology helps transform the AP process from a paper-laden burden into a streamlined engine of efficiency and control. This, in turn, empowers informed decision-making, fosters positive supplier relationships, and safeguards your company from financial risks. Invest in technology and gain the peace of mind that comes with a transparent and compliant AP process.

How can Infosys BPM help?

Stay on top of your AP! At Infosys BPM, our innovative AP automation solution leverages our expertise and technology to automate manual tasks, minimise errors, and guarantee on-time payments. Enjoy greater control and a seamless AP process that keeps your suppliers happy and your finances healthy. Ready to up your game?