Accounts Payable Automation: The Ultimate Game Changer For Accounting Firms
Accounts payable automation, also known as AP automation or invoicing automation, is the process of automating accounts payable processes and activities while collecting the critical data required to make smart decisions, improve efficiency, and grow your business. How can AP automation streamline your accounting firm's processes?
- Improving AP efficiency by eliminating bottlenecks in the AP process
- Avoiding data entry errors
- Reducing paper and increasing security
- Providing audit trails for all transactions processed through the system
- Creating a better, more positive work environment for employees
- Making faster payments
- Enabling easy, secure access to AP information from anywhere, at any time, on any device
1. Improving AP efficiency by Eliminating bottlenecks in the AP process
As a firm grows, managing Accounts Payable (AP) can become cumbersome and time-consuming. To quote Modern Treasury's landmark annual report 'The State of Payment Operations', 80% of decision makers said that up to half of their payment operations processes are still manual. 88% reported facing problems with their payments system.
As a result, firms may lose focus on core activities such as client service and growth opportunities. In addition, manual AP processes are more prone to human error, which can lead to lengthy payment delays and poor customer service. As real-time and embedded payments technology accelerates, the need for a modern solution is clear and opportune.
Accounts Payable automation is one of the most important features of the subscription-based cloud accounting software that many accounting firms have adopted. It cuts down on the time needed to process invoices and payments and provides accountants with more time to focus on their clients, rather than managing their own payments.
With the help of an AP automation tool, accountants can improve their AP efficiency by automating routine tasks like:
- Creating invoices
- Importing and running payroll
- Entering payments
- Approving expenses
- Reconciling bank statements
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2. Avoiding data entry errors
Accounting firms play a crucial role in the financial operations of their clients, but their own operations are often hampered by paper-based processes. Furthermore, manual processes make it difficult to maintain an audit trail that can help identify the cause of errors and prevent them from happening again.
The firm’s accounting team spends time on repetitive tasks such as data entry, which makes it difficult for them to focus on more strategic projects. The lack of automation in accounts payable can also lead to duplicate payments. This can happen when an invoice has been paid but there are still outstanding invoices from that same client. In this case, the accounting firm will pay twice for the same vendor or service provider.
The good news is, invoice automation softwares include features such as Optical Character Recognition to automate data entry and and detect duplicate invoices.
3. Reducing paper and increasing security
Accounts payable is usually considered one of the high-risk items in the financial statements. The reason is that it is an area where internal controls are most likely to be weak and where fraud can be committed with relative ease.
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By eliminating all manual processes from the process, accounts payable automation reduces paper and increases security : no more printing checks, mailing invoices, receiving payments, etc. In addition to this, companies are able to eliminate old fashioned check books which increase security risks for them.
4. Providing audit trails for all transactions processed through the system
Audit trails are used to determine if the right amount of money was paid to vendors on time and in the right amounts. They also help ensure that no invoice has been double-billed or paid twice. The complete audit trail enables teams to easily review every transaction. The report includes the following:
- Time stamp of each action taken on a transaction
- Transaction number associated with the action taken
- User who performed the action
- User who initiated the transaction (if different than above)
This is especially important when reviewing payments made by check or ACH (Automated Clearing House) transfer. Teams can see who authorized and approved each transaction before it was sent out, as well as the amount paid and any related notes or comments.
The best part about this type of automation is that it provides audit trails for all transactions processed through the system. This means that if there are any problems with your accounts payable, there will be a record of it somewhere within the system itself. This makes it easier to track down any problems and make sure they are fixed quickly and efficiently so that they don't affect other parts of your clients operations.
5. Creating a better, more positive work environment for employees
Accounts payable automation can help employees maintain a high level of productivity while reducing stress levels. When employees have access to easy-to-use software that helps them complete tasks quickly and avoid awkward conversations with their clients.
Indeed, offering an invoice automation software to their clients allows accounting firms to get paid faster, as it makes it easier for clients to pay their bills, which will save them time from having to call or email multiple times about missing invoices or incorrect charges on their statements.
6. Enabling faster payments
The survey conducted by Modern Treasury shows that 69% of financial leaders agree that managing payments takes too long from start to finish and 52% said that payments take longer to post than their purported timelines.
The good news? There's a solution that can help your accounting firm increase profits, automate workflow processes and speed up collections — all while saving time and money: AP payment automation. The technology helps automate routine tasks such as invoice review, approval and payment tracking. It also ensures that each invoice meets corporate policies and complies with HMRC Invoices Requirements.
7. Enabling easy, secure access to AP information from anywhere, at any time, on any device
According to Modern Treasury's, 98% of financial decision makers said they would experience benefits if their company had automated, faster payment operations including long term financial savings, improved customer experience, and a reduction in money movement problems.
It's important to understand that AP automation isn't just about saving time and money; it's about increasing efficiency and helping you scale your firm more effectively. Accounts payable automation delivers real-time visibility into every invoice and associated payment so you can see where cash is being spent.
If your accounting firm has been considering deploying an accounts payable automation software solution or a third party accounts payable service and is intrigued by the benefits discussed in this blog, we urge you to contact us and learn more about how Libeo can deliver compounding tangible benefits to your firm.
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