Workflow That Works: This Is Why You Want To Improve Your AP Processes

  • Workflow That Works: This Is Why You Want To Improve Your AP Processes

    Workflow That Works: This Is Why You Want To Improve Your AP Processes

    Accounts payable might not have the exciting revenue increases of sales or the fashionable benefits of new product research. But it’s certainly an important part of your organization. A well-managed AP department can nurture positive vendor relationships, flexible payment terms, and even effective cash flow. On the other hand, disorganized Accounts Payable can be an insidious and powerful drain of both time and money.

    Whether your accounts payable is working for you or against you all depends on the organization in your AP department. There are a few major pain points that all accounts payable departments share. Most companies can benefit from a thorough assessment of all of these processes. It’s time to ask yourself, “Is our workflow working for or against the company?”

    In most companies, you’ll find there are issues bogging down workflow in the accounts payable department. Some of these issues are pretty serious, even to the point that they can sink your company if left uncorrected. But once you start addressing these issues, improving your AP process, and creating workflow that works for you, you’ll find accounts payable is no longer a drain on your company. In fact, it can become one of the strongest supporters you have for good cash flow and even revenue generation.

    Improve Intake


    Simply getting the invoices to your accounting staff for review can be a challenge. Many companies find themselves with a hodgepodge of submission methods that make tracking nearly impossible. You’ll often get invoices on paper, by fax, email, and also in a wide variety of different electronic formats.

    Whether the invoices are manual or electronic, managing the daily influx and varying volume of billing documents can be daunting. And if you’re still managing things manually (aka “the hard way”) there are way too many opportunities for your invoices to go missing. A strong intake can make all the difference. Even scanning and loading invoices into a viewing application for manual entry will help. Even better, send them into an automated AP system for easy processing. Removing the burden of handling paper and electronic invoices internally will significantly improve your timeliness and reduce lost invoices.

    Proper Payments



    Audits and compliance demand proper approval of payments, but many companies find their policies inconsistently enforced. Purchase Orders can go a long way toward promoting proper payment approvals, but there will always be occasions where a creating a PO is simply impractical. Historically, companies have relied on signature books or, more recently, printed email approvals to validate invoices. Both of these methods require manual intervention to validate the approval and follow-up if invoices aren’t processed for payment.

    Your ERP system may provide some approval workflow, but this isn’t always as flexible or configurable as you need it to be. In contrast, many automation workflow partners have in-application approvals for any payments. Before you purchase AP software, make sure that your potential partner has flexibility in the approval routing they allow. This helps ensure your team will be able to review these approvals easily.

    Timely Turnarounds


    When your company relies on manual accounts payable processes, your department’s turnaround time can vary considerably. As many as 97% of all invoices are still processed manually. The complexity of some invoices means they require individual review. However, there may be a high percentage that just require entry and matching to an accurate PO or a constant GL code.

    Find a workflow partner that harnesses automation to push these invoices directly to an ERP module — no keying or other reconciliation required. When your staff only has the exceptions to review, they’ll be able to focus their time better and avoid backlogs. In fact, you’ll save so much time that automation makes the average number of invoices processed per AP employee jump by a factor of five. In other words, if you’re normally processing 1,000 invoices per employee, automation can make it 5,000 per employee.

    Centralize Control


    The larger your company gets, the more important it is to keep all your accounts payable information in one place. If your accounting processes aren’t centralized, it’s much easier for duplicate payments to slip through when more than one employee pays the same invoice. It’s also easier for late payments to occur when everyone thinks that “someone else” is working on that invoice.

    Handling all your invoice processing with a single, shared system strengthens internal controls. By putting all your invoice processing information in one central system, everyone in the AP department will have access to each invoice’s status. It also makes it easier to access all your AP data in real-time, which gives you a more accurate view of exactly what’s going on the AP department.

    Fight Fraud


    Because accounts payable is the department that handles money leaving the company, it’s a prime target for fraudsters. They think that since money leaves the company there already it’ll be easy for them to slip in some fraudulent invoices or trick you into paying a fake vendor. Such fraud can originate inside or outside your company, and there may be more than one person involved. To fight fraud, you’ll need to strengthen your internal controls.

    A good AP software system will automatically perform 3-way matching, catche suspicious invoices, and make it easy for your legitimate vendors to keep their information up-to-date. And those are just three ways to fight fraud as you improve your AP processes.

    Accounting Accuracy


    Much of the accounts payable department’s time and energy goes into keeping information accurate and up-to-date. Poor data capture often forces AP support departments to spend long hours correcting and reclassifying documents in your ERP system. Errors are especially common in departments where employees are manually entering data into Excel spreadsheets.

    Even with an optical character recognition (OCR) software attached to their AP process, many businesses struggle to record all their information accurately. You need to find a workflow partner that uses a combination of OCR and keying review to ensure extremely high data accuracy. For example, NextProcess’ proprietary data capture technology ensures over 99% accuracy on every invoice.

    Supplier Self-Service


    Paying invoices isn’t the only task that falls on the accounts payable department. AP also has to be ready to handle customer service calls from vendors. And this department is also in charge of keeping vendor information up to date. If you’re using a manual process, these tasks often take up quite a bit of time.

    In contrast, vendor information is much easier to manage if you’re using AP software to improve the accounts payable process. Setting up a supplier self-service portal lets them log-in to check payment status and update their own information. This makes things easier for them since they don’t have to spend time on hold or worry about reaching your AP department during business hours. It’s also easier on your AP department as well.

    Digital Data


    Keeping accurate, accessible records is another challenge AP departments need to tackle. Not only is it important that you record transactions accurately, but you also need to have the records in a format that’s easily accessible. Audits are much easier to tackle when your records are easy to understand, sort, and access.

    Good AP software will automatically store transaction data. They’ll keep easily-searchable records of every step in the invoice approval process. These records can be accessed in real-time while invoices are processing and long after the invoice is paid. Couple that with digital document management (preferably from the same software suite) and you have electronic records that are easy to manage.

    Simple Sharing


    The tools in accounts payable software that give you control over your process, make data storage easy, and streamline approvals also have another advantage. They enable collaboration within the accounts payable department as well as between AP and other departments.

    Having a single system to process all your invoices centralizes information flow. And when you give people access to that system, they can collaborate as a team to keep things running smoothly. If this is one of your goals, make sure you pick a software system, like NextProcess, that doesn’t charge extra for user licenses.

    Improving accounts payable processing can be difficult, but the benefits are tremendous. With the right mix of automation, internal process improvement, and teamwork your AP workflow can be transformed into an efficient, well-oiled machine. And once your workflow is working for you, you can stop wasting time fighting problems in accounts payable and focus on how AP can help the company thrive.

    But before you can enjoy the benefits of accounts payable automation software, you have to get the software setup. If you choose NextProcess for your AP automation, we’ll be here to help you every step of the way. We have a near perfect implementation rate. That’s a sharp contrast to industry standard, where only 33% of implementations successfully reaching conclusion. And even after the software is set up we’re still committed to making sure it’s working well for your company before we consider the project complete.

    Still trying to decide which AP software provider is right for you? Just get in touch with us and we’ll schedule a free no-strings-attached demonstration. You’ll get to see exactly how our software can help your business before you commit to purchasing it.