Accounts payable solutions streamline invoice processing to help accounting departments deliver faster and more sustainably. Businesses, whether big or small, understand how a viable accounts payable system can save both time and money. While the manual process may be the tried and tested route, it remains to be error-prone and time-consuming. For this reason, it is no surprise that organisations look to more efficient and cost-effective ways to pay their dues.
Get your accounts payable system on the right track through accounts payable automation. Eliminating the paperwork and implementing an automation process may seem daunting at first. This is especially true if a business is used to the manual process of managing payables. However, a centralised process reduces the time spent on data entry, minimizes errors, and improves supplier relationships.
Defining accounts payable and the accounts payable process
Implementing an accounts payable automation process is the easy answer to businesses wondering how to make their operations more efficient. However, before diving into the core of accounts payable solutions, let’s quickly look at what accounts payable are.
According to financial content source Investopedia, accounts payable (AP) is an accounting entry that represents a company's obligation to pay off a short-term debt to its suppliers. It appears on the balance sheet under the current liabilities. In other words, AP is the money owed by a company to its suppliers for goods and services.
If your company orders $3,000-worth of printer ink from a supplier and you agree to pay them after 30 days, that $3,000 is recorded in your accounting book as a liability. This $3,000 liability or what your company owes for the printer ink is an example of accounts payable.
The accounts payable system requires the evaluation of a huge amount of data to ensure that a business effectively manages its payable obligations. It usually involves purchase orders, billing reports, and invoices from the company’s suppliers. Notably, the accuracy of a business’ financial statements is dependent on efficient accounts payable solutions. It should implement a timely processing of supplier invoices, accurate entries into accounting software, and careful tracking of pending payable obligations. Accordingly, efficient invoice processing affects a company’s credit standing and relationship with suppliers.
The accounts payable solutions workflow
Setting up an accounts payable process can vary from company to company. Some opt for an accounts payable system involving spreadsheets, while some feel more comfortable with an electronic process. The process and its structure usually depend on the size of the business. For example, a small business can require the basic process: (1) receiving an invoice for goods/services; (2) recording the expense in a spreadsheet or ledger; (3) paying for the service on the due date; and (4) removing the expense from the balance sheet.
To understand accounts payable solutions better, it’s important to understand how most manual processes go:
- Receiving the invoice and forwarding it to the accounts payable department or an accounts payable specialist.
- Encoding the invoice in the accounting database. The invoice details are usually keyed in manually into the accounting software or spreadsheet.
- Reviewing the invoice and ensuring that all details are correct before approval.
- Sending payment to the supplier.
- Removing the liability entry from the spreadsheet.
This simple process may be different with larger companies because they transact with more suppliers, thus, process more volume than a small entity. However, the basic steps remain at its core because they are built to avoid errors and frauds.
An accounts payable system is integral for any organisation, which is why businesses are turning to technology to simplify and support how they process invoices. Technology’s answer to this business need is accounts payable automation. An automated accounts payable process integrates with your existing systems to lessen errors, minimise the time spent on encoding and reduce the costs of invoice processing.
Accounts payable solutions eliminate the manual work i.e. paperwork involved in processing invoices. It emphasises accuracy and efficiency in the accounts payable process. Additionally, a faster accounts payable system can result in a sound cash management strategy.
Easier, faster invoice processing through accounts payable solutions
An expanding business means increased volume of transactions. A manual accounts payable process, while simple, may no longer be suitable once volume increases. Consequently, this may result in data entry error, delayed payments, and even sour your relationship with suppliers.
Accounts payable solutions save you time and raise your business performance. Once an invoice is received, it can automatically populate the required data fields in your spreadsheet and allow tracking of receivable goods and invoice payments. Furthermore, automating the entire accounts payable process improves business efficiency.
You can receive the invoice via email that is automatically routed to the system. If the invoice comes in paper form, you can scan and upload it to create a digital record. If there are any irregularities in the invoice, the automated invoice processing system can detect and flag it for review. Additionally, eliminating manual work also minimizes errors and makes reviews and approvals faster and more accurate.
Accounts payable automation offers transparency in the management of accounts payables. Reports can be generated to track transactions, resolve discrepancies, and ensure timely payments.
Start simplifying your accounts payable system through digital solutions specialist DTS (Digital Transformation Solutions)’s accounts payable solutions. With a complete suite of solutions for streamlining your workflows, DTS lets you keep an eye on your processes, so you can refine your business strategies. Improve your accounts payable system today by reaching out to experts at DTS to talk about the possibilities.