AP automation: Solving real life problems in your accounting department
Some of the most difficult problems to solve are the problems you don't know you have. The purpose of AP automation is to solve real life problems. When an organization initially looks at AP automation, usually they are interested in getting rid of the paper and speeding up the process. Sometimes, they are also concerned with the thought of giving up too much control and losing important information. If automation is done correctly, the outcome will be greater control and more visibility to cash flow. And, those aren't even the main problems that automation really solves. Let's dig a little deeper.
Problem 1 – Centralized accounting
If you are an organization that has a corporate office where your accounting is processed and you have detached operations, then you have a problem that automation can solve. Take a property management company as an example. They had one accounting location where all the invoices went each day to be entered and paid. Before automation, they had 5,000 housing units that sent invoices to the corporate office. The problem is that the more spread out the operations and the bigger the number of locations, the higher the expense to process. Plus, they were losing a great amount of invoices. When you automate accounts payable, you instantly eliminate the distance between locations and the accounting staff knows where every expense is in the process at all times.
Problem 2 – Growth
There was a small book publisher that had a problem. However, only the accounting department thought it was a problem. The rest of the organization was extremely excited about it. The leadership team decided to double their size in six months through mergers and acquisitions. You would think this would be good news to everyone; but, the controller of the organization knew she had a problem on her hands. The problem was that her volume was going to double, too, and she wasn't very excited about the prospect of hiring more people. After all, skilled and qualified AP staff are very hard to find. That is where accounts payable automation came in. Automation will enable you to grow your organization without adding staff. One of the main outcomes of automation is to free up time. Once you're automated, your AP employees can spend their time doing more valuable tasks like negotiating vendor discounts.
Problem 3 – Audits
I always like to tell organizations that they don't have problems, they just have paper and paper creates paper problems. Paper gets lost, it gets held on to and the worst part is that paper can be misfiled. A nonprofit knows this problem all too well since they are consistently subject to audits. At a moment's notice, they may have to produce a stack of invoices to back up a project or any other expense that a board of directors would like to analyze. With paper, that means sending someone to the filing room and locking them in there until they produce the correct invoices. The big problem with paper filing is that it is only as good and as accurate as the person or people doing it. Because the process is subject to human error, misfiled and lost invoices are just going to happen with paper-based processes. Automation will give you access to the invoice the moment it is sent from the vendor, not just when the invoice is paid. Now, the nonprofit can log in to a search section within the software which gives them the ability to search for exactly what they are looking for. Once they find it, they can download that information into a PDF file that can then be printed, emailed and saved to a disk or drive. Not only is it easy to get the backup for an audit, but there is a full history of who did what and when, which makes discussions about expenses clear and accurate.
Your ERP and AP automation
Do you have to do more with less and maintain an extremely high level of timeliness and accuracy? With widespread operations, growth and audits, accounts payable automation makes your accounting processes not only easier to deal with, but frees up your accounting group from chasing people and paper down so they can do…well, what you pay them to do.
Written and submitted by Christopher Elmore, automation specialist at AvidXchange.