What Does Workflow Automation Actually Look Like In The Accounts Payable Department?
Are you happy with your payables workflow? If you’re still on a paper system, chances are that you can point out some inefficiencies in the way your organization processes invoices. Your accounting department is doing the best it can, but there are still times that invoices get lost or when AP employees are buried under too much paperwork. Plus delays happen in getting invoices approved and in dealing with exceptions.
You’ve probably heard by now that accounts payable automation can drastically improve your workflow. And it’s true that automation speeds up your AP process, saving you both time and money. But what, exactly, does that look like? Keep reading for a detailed explanation of how workflow automation actually works in your accounts payable department.
Step 1: Digitizing
An automated accounts payable system requires digital versions of documents. If your suppliers are sending invoices via email or another electronic submission method, then there’s nothing to worry about. Those can be automatically routed into your new system.
When the invoices arrive on paper, though, the first step in workflow automation is to digitize the invoices. For that, you’ll be using optical character recognition (OCR) software. These systems use pattern recognition to create a digital document from a printed image. They turn paper documents into digital files.
Ideally, you’ll also want a system that supports document indexing. An indexing system creates a searchable index for virtually every aspect of the document. That includes all the information in the document (text, barcodes, etc.) as well as metadata regarding document submission (date received, user who submitted, etc.).
Step 2: PO vs. Non-PO
Once the invoice is in a digital format it enters your system for automated routing. The system looks at all the data surrounding an invoice and checks if it’s associated with a purchase order. If everything checks out and the system matches the invoice to a purchase order, then the invoice moves on to the next step automatically. If the system doesn’t recognize a purchase order number and doesn’t find any errors, the invoice is routed into a non-PO workflow.
When the system finds errors the process at this step looks a little different. If the system recognizes that critical data is missing, it routes the invoice for manual review. If the invoice is a duplicate of a previous invoice, that’s also tagged and routed for an employee to check. The system flags anything that falls outside what you define as “normal” so a human can look into the problem.
Step 3: Auto-Processing
When a PO invoice starts going through your system, the system checks every single line on the invoice against the purchase order. Item number or description, quantity, and price all have to match exactly before the system moves on to the next line.
For non-PO invoices, the system first tries to recognize what kind of invoice it’s dealing with. First, it’s going to compare the invoice being processed with others it has encountered before. If the invoice doesn’t match it’s assigned to a “no GL code” workbench so a human employee can figure things out. If the system can identify the invoice type, then it routes the invoice to the appropriate location.
When all goes well in the checking process, the automation system then approves most invoices and releases them to your ERP system. We describe an invoice as being “auto-processed” when it is scanned via OCR, processed, and approved without human interference. With a system like NextProcess, you can achieve up to 90% auto-processing in your AP department.
Step 4: Handling Errors
Invoices cannot be auto-processed if the system catches any errors. In that case, your accounts payable workflow automation will automatically route the exceptions invoices for manual review. This puts invoices which require manual processing in front of a human employee as quickly as possible.
Even though people have to take care of exceptions invoices, the tools that are a part of your workflow automation will help. Having an automation system in place gives you the tools to efficiently process invoices manually. All the information that the system uses for automatic processing is available to help employees with manual processing as well.
For example, the system will include tools that automatically provide historical data on the vendor. That helps the employee assign a GL code to the purchase or determine if the amount billed is within company parameters. The system also includes powerful a search engine that lets employees quickly look up any information they need.
Step 5: Getting Approval
When an invoice goes through the automated workflow system, it checks to see if the invoice requires manual approval. The system automatically routes invoices requiring approval to the appropriate person. That puts invoices in front of the people responsible for making decisions faster.
The system also makes sure that no one forgets about an invoice that requires approval. It will send multiple approval reminders or escalation emails to those who haven’t provided invoice approval. Plus, it makes approvals easier by enabling remote access to the system. Even if someone is away from their desk or out of the office, they can still issue approvals through a smartphone or laptop that’s linked to the system.
Are you ready to see what workflow automation would look like in your accounts payable department? Just get in touch with us and schedule a demonstration. That’ll let you experience first-hand that our AP Automation Software can save your company time and money by simplifying your workflow. And if you decide to purchase our software, we guarantee that we’ll be with you every step of the way to ensure the implementation goes smoothly. Within just a few months, you can have top-quality workflow automation enhancing your company’s AP department.