Accounts payable management is a function your business needs to get right. Sure, you need to serve customers and develop new products, but all that stops pretty quickly when the bills aren’t paid.
And while “paying bills” may sound simple from the outside, there are checks, balances, people, and processes to consider. As accounts payable systems evolve and scale, so does their complexity. For example, expenses may initially need approval from only one person but, as a business grows, approvals are often spread across departments and management levels. That’s when it gets harder to develop, document, remember, and enforce your processes.
It’s important to note that a document management system is more than an accounts payable electronic filing system. A filing system works as a repository for documents, like Google Drive or Dropbox. But the ability to automate workflows is what puts the ‘management’ in document management.
Automation can be a buzzword, and it’s not a good fit for every aspect of AP. We still need humans to make decisions, set strategy, and give approvals. But an automated accounts payable process—if done right—can free up an enormous amount of time throughout a document’s lifecycle, saving your best people for more brain-heavy tasks.
Here’s a rundown of high-level activities, and a summary of where automation fits in:
Developing systems: For now, this is best left to the humans. Until artificial intelligence gets a lot more intelligent, it can’t decide what systems are best suited to your organization’s resources, and it can’t parse office politics or preferences.
Documenting systems: This can be partially automated. The original inputs to an automated workflow have to come from a human. But once that information is captured, it’s easy to adjust. Automated documentation reflects changes in real time, so it’s always accurate.
Remembering systems: Automation wins here, hands down. Once processes are captured and automated, people can focus their time on something more important. If a workflow needs to change, the system can be updated. And an automated management system can handle unlimited workflows simultaneously.
Enforcing systems: Automated workflows are champs here, too. Firstly, they let you put down your AP Sheriff badge. An automated workflow can send notifications for people to take action, and its impersonal nature removes potential resentment and annoyance that might otherwise crop up in human-to-human reminders. Automated management enables tracking and helps ensure that all regulatory obligations are met and payments are made on time.
The added transparency of automated workflows ensures that processes are run according to best practices for accounts payable. Here are some steps involved in common workflows, and how they apply to accounts payable.
How many times have you missed an invoice or receipt because it went to spam, or someone just missed it in their daily avalanche of messages? And when they do find the information, data entry can introduce errors that are hard to trace. Automated email assistants scan incoming messages and identify document types, such as invoices. AI capture can then find and extract relevant information, like due dates, amounts, etc. This speeds up processing—say hello to early payment discounts. It also reduces data entry errors—no more $365 entered as $356.
Once you know how you want your documents organized, a good document management system can pull relevant data, identify the type of document, and file it. All of this is automated according to the rules you’ve set up. If you ever need to track down a document, it’s exactly where you expect it to be.
We’ve looked at high-level processes but workflows specific to accounts payable include: invoice approvals and verifications, vendor payments, and verifying relevant contracts.
Internal and external reporting is fast when all the data is ready. Custom reports can be pulled and sent to internal stakeholders or external partners, either on an automated schedule or as needed.
Preparing for audits
When accounting document filing, retention, and notification for destruction is automated, compliance is easy and your organization is always ready for an auditor.
Bonus: Integrating with existing systems
Having your accounts payable electronic filing system integrated with your accounting software provides real-time information and cuts down on duplicate data entry.
While automation isn’t the right fit for every aspect of accounts payable management, it can streamline and simplify your processes. The smartest use of automation is to remove repetitive tasks and let humans do what they do best: strategize and innovate.