How You Can Use Business Process Automation to Fix 5 Common Payables Issues in Your Company
Accounts payable issues are more than just annoying. In a worst-case scenario, serious AP issues can sink a company. Delays, errors, and other issues in accounts payable can damage your company’s relationships with vendors, increase costs, and make audits more challenging, among other issues.
As the business world becomes more and more reliant on digital technology, automating accounts payable processing with business process automation (BPA) software just makes sense. This software speeds up invoice processing, cuts costs, and solves a host of issues that traditionally face AP departments.
Problem 1: Delayed Payments and Credit Holds
If you’re working with a clunky software system or processing paper invoices manually, it’s easy to lose track of invoices. Even if you don’t lose invoices, keeping track of deadlines and paying them all on time is often a significant challenge.
Too many missed invoices and late payments may result in a credit hold, which can lead to delayed shipments from vendors. In contrast, if you have a good relationship with suppliers, they’ll often ship orders before you make payments because they know they can count on your company to pay promptly.
Delayed shipments can have cascading effects. If you’re a manufacturing company, for example, delays in receiving a key resource could mean non-productive time on the production line or changes in the order of production. Those delays may then affect your customers because your company gets behind on production. Even a simple problem like a misplaced invoice can kick off a costly chain reaction.
Solution: On-Time, Accurate Invoice Processing
An accounts payable software system like the one from NextProcess keeps track of all your invoices automatically. Once the system is fully set up in your company, it’s not unusual for the system to auto-process 90% of invoices. That’s a huge chunk of the invoices going through your financial department that are paid on time without any extra work from employees.
For invoices that require approval, the system tracks deadlines and sends approval notifications in plenty of time for approvers to look over the information and approve payments. You can make the payables process easier as well by using Payments as a Service software to streamline payables. With BPA software supporting your payables process, you’ll be able to avoid credit holds and late fees, and there’s the possibility of early payment discounts from certain vendors.
Problem 2: High Invoice Processing Costs and Long Turnaround
Slow, inefficient invoice processing affects more than just your company’s relationships with vendors or suppliers. It also has a direct, negative impact on your business. The slower and more labor-intensive invoice processing is, the higher the cost to your company.
Part of the high cost for long invoice processing comes from employee wages. Manual invoice processing requires many hours of employee time. This also means employees are spending time on tasks that could easily be automated. They also might be too distracted or busy by all the extra work to process exceptions invoices quickly or keep a close eye out for signs of fraud.
Solution: Faster, More Efficient AP Processing
Organizations using fully automated accounts payable processing save an average of $14.93 per invoice processed compared to organizations that manually process invoices. Using automation reduces the average days to process a vendor payment from 8.6 to 5.4 days. For invoices connected to Purchase Orders that are already in your system, AP automation software can usually process and pay the invoices within 12 hours.
With accounts payable automation, employees can skip time-consuming and monotonous tasks like data entry and focus on other projects. This makes invoice processing happen more cost-effectively. Freeing up employees from routine tasks like data entry can also improve morale and give them time to spend on more value-added tasks for the company.
NextProcess does not charge individual licensing fees. You can give as many employees access to the software as you want for no additional cost. In addition, you’ll be able to customize each employee’s access and permissions so they only see the information and software features needed for their jobs.
Problem 3: Compliance and Security Issues
Paper-based systems or inefficient, outdated digital systems can make it difficult to comply with taxation and legal requirements in a manual AP system. Entering data by hand is especially problematic because there’s such a high risk of accidental human error. Paper files also make audits more challenging and time-consuming, which isn’t good for either your staff or the auditor.
There’s also a high risk of security issues and fraud in manual systems. It’s more challenging to monitor manual transactions, which makes it easier for fraud to slip through. If you’re using an outdated digital system, it might also be vulnerable to electronic security breaches.
Solution: Transparent, Configurable Payables Software
Automation software from NextProcess includes optical character recognition (OCR) and data indexing. These software features enable the system to capture all data on your invoices and the metadata about the receipt of the invoice from your vendors. It also records that information and makes it available in real-time, giving you complete oversight into every detail of your invoices.
In addition, NextProcess software is customizable and flexible. We’ll help you configure the software to automatically enforce compliance with your company policies. We also provide extensive security protocols which are SSAE-16 and HIPAA compliant to help you protect your data.
Problem 4: Data Visibility Issues
With a paper-based system or digital systems that aren’t user-friendly, it’s hard to get a quick and accurate look at the state of accounts payable. Analyzing data trends or checking cash flow is a lengthy, involved process. Even checking the status of a specific invoice can involve several hours and multiple phone calls.
Without easy access to accounts payable data, it’s difficult to plan for the future. You need accurate data in order to forecast and budget. Accessible, accurate data is also important for making audits go more smoothly. Without access to good data, your company will suffer.
Solution: Easy to Search Database
In addition to accurately capturing data on your invoices, NextProcess software makes that data easy to access. You can search through this digital data at any time. Full text and metadata searches let you find specific invoices quickly. You can also sort files by categories to see groups of invoices or trends in data.
Access to past and current financial information makes it easy to monitor cash flow and access important financial data. As a result, AP automation simplifies audits. It also makes processes like financial forecasting and budgeting easier since you’ll have access to reliable data.
Problem 5: Hard to Use AP Processes
Clunky systems are another common problem that companies face in their accounts payable process. Employees working with manual, paper-based systems spend huge amounts of time manually processing invoices, mailing checks, and filing papers. If you’re working with a paper and digital system, then part of that time is also spent manually copying information from paper invoices into computer systems.
Outdated or inefficient software can have similar issues. Many older systems aren’t intuitive for new employees to learn. They may also have weird quirks that make working within the system difficult. Developing workarounds can be frustrating for employees and it also wastes time they could be spending on more interesting tasks.
Solution: User-Friendly Software-as-a-Service
The cloud-based, software-as-a-service model for AP automation makes accounts payable much more user-friendly. Firstly, the system is intuitive and easy to learn. NextProcess’ customer service team responds quickly to questions, and we’re happy to help your employees acclimate to the new software.
The system also automates many mundane, repetitive tasks like data entry and record keeping. This frees up employees to quickly respond to things that do require hands-on attention, like reconciling exception invoices. Employees also have more time for other tasks that are important but got pushed back under a heavy invoice processing workload. Finally, AP automation that works like it’s supposed to can also help improve employee morale by making work less stressful.
How NextProcess Can Help
NextProcess offers a suite of programs to automate financial processes within your company. You can choose to use our accounts payable automation and payments as a service software on their own or together. You also have the option to add other modules like purchase order and capital project management software, Plus, we can seamlessly integrate our software with existing ERPs like NetSuite. To learn more or set up a free demo, contact us today.