10 Must-Have Capabilities for AP Automation Solutions

Most organizations today are moving away from manual Accounts Payable (AP) practices and slowly making upgrades to realize a holistic invoice ecosystem. The goal is to embrace technology and practices that will streamline their processes through end-to-end automation. Automation does the heavy lifting to elevate the resources above routine and repetitive work and helps tackle the grunt of work to accelerate workflows for higher efficiency and better savings.

The objective going ahead is to integrate automation into every facet of the Accounts Payable ecosystem. From invoice intake to invoice validation, routing, and archival, embed automation across the spectrum to expedite the stressful and error-ridden labor-intensive tasks. Overworked teams struggling to relay and consolidate documents will be freed to focus on high-value activities, besides allowing them to process and approve invoices faster and pay the suppliers on time.

The global Accounts Payable automation market is expected to reach $5.8 billion growing at a CAGR of 10.8% by 2029 — Data Bridge [1]

Let’s take a deeper look at why companies are investing in automation in the first place

Why do you need AP automation?

Organizations can accelerate their AP processes by making their internal workflows and overall invoice processing dynamics more compelling and robust. To do so, they’ll need to eliminate the existing pain points and drawbacks in legacy processes through intelligent AP automation to simplify and streamline the AP culture for higher efficiency, faster payments, and improved supplier relationships. Here are some of the pain points affecting AP teams worldwide:

• Slow and manual procedures that occupy several workers in wasteful activities
• Inaccuracies and errors from manual data entry that result in delays and risks
• Laborious tasks create bottlenecks, require more effort, and clog your invoice cycle
• Missed vendor discounts, late payment penalties, and an inability to pay suppliers on time
• Minimal transparency & end-to-end visibility for approvers, higher AP heads, and leadership
• Suffers from fraudulent and duplicitous activities and payments
• Inability to coordinate and work cohesively in a disconnected and disjointed AP system
• Inability to archive and retrieve invoices with ease in a time-efficient manner
• Missing audit trail and compliance-centric capabilities that can lead to litigation
• Absence of analytics and reporting to identify gaps and under-performing areas
• Chasing suppliers for updates and other communication. No centralized common workbench
• Increased Cost of Goods Sold and minimal savings lead to a shrinking bottom-line

Must-have capabilities in an AP automation solution

• Aggregate invoices from multiple channels -AP teams can automate the intake of invoices from multiple channels. Invoices can be channeled/received through different interfaces such as Email, Scan, faxed (working with smaller suppliers) Idoc, EDI, Supplier Self Service Portal, Procurement Platforms, or other supplier portals. Automation gives suppliers the convenience of submitting invoices from anywhere and in any format. From hardcopies to DOC, PDFs, CSV, and other formats, AP teams can import and process invoices from any source, and that too in bulk.
• A Single centralized interface: AP teams often lack visibility and coordinating with peers, especially remotely becomes a hassle. An easy-to-use and personalized interface minimizes silos by consolidating all the invoices and related documents into one control panel. AP members and senior leadership get full transparency and a granular view of every change on an invoice. Credentialed access limits access and secures all the data from unauthorized use. An aesthetic and user-friendly interface improves collaboration, heightens productivity, reduces costs, and ensures near-real-time information exchange and communication.
• Supplier Collaboration Portal: The Supplier Collaboration Portal serves as a common workbench that frees up your AP team from chasing suppliers and suppliers chasing AP clerks to coordinate on invoices. A single, unified, and centralized communication interface lets suppliers view invoices and purchase orders, chat, exchange documents, view changes, and more. It ensures seamless communication, makes the AP operation more time-efficient, and improves vendor relationships, through easy creation and tracking of invoices and grievance handling.
• Suppliers can record and save their details including contact information, invoices related to POs, credit notes, and debit notes. Suppliers can even update payment terms and discounts, and check the status of their invoices, payments, and deliveries. A common portal keeps communication lines open and lowers manual follow-ups on both sides. Suppliers get full visibility and manage every aspect of invoices from the platform without relying on email, phone, instant messengers, and other channels.
• Custom Business Rules Management — AP departments can set unique business rules, implement these rules using a no-code platform, and activate/deactivate them at will. Enter the preferred business rules, logic, roles, and follow-up action into the system and get the AP workflow moving as per these conditions. Customize business rules for returns, line items, payments, refunds, document types, due dates, suppliers, invoice amounts, or other parameters. Set the threshold up to which an invoice with discrepancies will be cleared without any interjection, but above a certain threshold, it won’t bypass the rules and will instead raise a red flag or notification to the designated AP member.
• Besides custom rules, the Automated Routing in your invoice solution helps to direct the invoices to the personalized cockpit. As per this, the correct vendor invoice reaches the personalized cockpit of the selected resource in the AP. AP departments can add as many approvers and design custom workflows that sync with their chart of authority. The tailor-made routing mechanism helps to automate, route, and configure invoice approvals to the right AP clerk. Assigning an automated workflow eliminates the need to chase approvers manually. Invoice from a said supplier, above a certain amount, from a specific region, or as per any other condition can be redirected to the exact AP member. This makes remote work possible, as approvers receive invoices anytime and anywhere.
• Fraud Prevention: Accounts Payable faces cash shortage and carries a financial burden from suppliers overbilling or double billing on invoices. Additionally, they have to deal with internal employees swindling money through fake invoices. Your AP requires powerful fraud protection procedures running on the backend, built around robust inbuilt rules and stringent fraud detection algorithms to ensure it steers clear of incurring any needless financial losses. 2-way matching (GR and Invoice) for non-PO-based invoices and 3-way matching (PO, GR, and Invoice) for PO-based invoices help verify invoice authenticity by validating every line item and by validating the invoice data with the master data in the SAP backend.

Accounts Payable (AP) departments are most susceptible to Business Email Compromise (BEC) fraud, 58% of respondents report that their AP department was targeted by email scams — JP Morgan [2]

• Gate entry and GR automation: Generally, AP teams are unable to reduce additional application costs by enabling Gate Entry Module and GRN automation within the same solution. Both, Goods Receipt and Gate entry creation take place outside the central solution. Hence can’t create gate entry, modify the gate entry within the same system, obtain GR from gate entry, reverse the GR, or attach additional documents. But now AP teams can use the Gate Entry feature to capture the details such as vehicle details, and driver details at the time when the consignment reaches the gate of the plant. The Goods Receipt (GR) Automation feature allows the creation of a Goods Receipt Note with or without Gate Entry when the material is received at the warehouse. The ability to automate and process GR and gate entry within the same solution saves effort, time, and money.
• Touchless Invoice Processing: High-touch and manually-driven AP teams struggle to manage invoices in bulk. Manually keying invoice information is strenuous and error-prone. Straight-through invoice processing ensures AI, ML, and OCR come together to ingest invoice information with the highest accuracy and route the same to the next person in the AP hierarchy. Your AP wastes less time on laborious and routine tasks and invests resources in high-value activities. Intake invoices in any format from any source with ease, extract metadata from the invoice, process and validate every line item without any intervention, and post them without any delays for on-time payments to suppliers. Additionally, the self-learning and data enrichment capabilities help improve the data extraction accuracy for future invoices.
• Audit and Compliance: Every time an AP member “touches” an invoice, the system timestamps the interaction, creating a permanent log. If anyone makes a note, raises a question, or takes any other action, the system creates an audit trail. Whenever you bring up that invoice again, its entire history is still attached to it. Additionally, you can record and store invoices for easy access on a future date. Retrieve any invoice at the time of an audit almost instantaneously — no need to manually go through a stack of invoices. Plus, lost invoices don’t lead to fines or penalties at the time of audit.
• Digital cloud-based records remain secure, offer backups, and don’t require you to dig through email or other channels. Archive everything in one convenient place for seamless retrieval on a future date. Plus, not having to store invoices in physical containers helps to cut down on storage unit expenses and reduces the clutter in your office. Relying on digital eliminates the likelihood of lost, misplaced, or damaged invoices entirely. Instead of hunting for missing invoices or wasting time locating past invoices, just search for them digitally and find them instantaneously.
• Advanced Analytics: Advanced analytics lets the AP team monitor the overall health of the AP ecosystem in near real-time to identify non-performing areas. The various metrics on the backend reveal pivotal information about the state of AP, allowing you to act on this data with unmatched speed. AP heads and other Finance leaders get in-depth insight and continuous feedback into KPIs causing bottlenecks allowing actionable measures to close these gaps. A graphical dashboard lets you easily visualize the key metrics, so even non-IT folks can analyze the dataset.
• Drilled-down Reporting: AP teams can extract and transform the data into a spreadsheet report in a matter of seconds. Create and share a wide variety of reports such as Process Reports, Audit Reports, Ageing Reports, and more. Seamless self-service means, the parameters to review can be set and modified at will by anyone with access to the report creation side of the dashboard. The drilled-down reporting capability makes reviewing and sharing your AP’s performance useful. The ability to generate detailed reports helps to make informed decisions to help scale and grow your AP into a mature and performing asset.

Reporting is one of the most highly valued features of an AP automation tool, with over 90% of organizations deeming it as important — Level [3]

Value-based Accounts Payable Framework for holistic Invoice management

Traditional Account Payable teams acquire minimal value and fail to sustain it for longer. Not taking a value-based approach and the inability to devise a framework that links their internal capabilities to overall value means they couldn’t unlock even the expected value, let alone amplify the same. They fail to capture discounts, invite penalties, get caught up in regulatory damages, and make excessive fraudulent payments — leading to higher costs of goods sold and a constrained cash flow.

A value-oriented approach presents a plethora of opportunities that businesses can incorporate into their Accounts Payable (AP) processes, which will go on to impact their financial levers. A value map evaluates how unique capabilities affect your organization’s operational excellence, performance attributes, and financial metrics to influence savings and determines the incremental value an Invoice Management Solution can impart through financial terms.

Ensure your Accounts Payable division realizes extended and continual value from the invoice automation solution through a Value Assurance Framework for concrete uninterrupted returns forever. Your AP unit could derive tangible value, not just in the immediate weeks, but also several weeks post-deployment. You get to unlock and realize maximum and perpetual value from your Accounts Payable investments. Through a Value Assurance approach, you can:

• Conduct Periodic Audits to Track, monitor, and assess the total value unlocked
• Take concrete measures to optimize the generated value
• Take time-based action to sync generated value with the expected value
• Identify principal and secondary KPIs causing value leakage
• Suggest strategies and changes to course-correct and improve the value
• Identify new opportunities to maximize the generated value
• New tactics and earlier working methodologies help realize steady and optimum value forever

Wrapping Up

New-age Accounts Payable departments are integrating bleeding-edge automation to digitize, optimize, and accelerate their legacy AP processes to maximize savings and serve their suppliers better. The increased need to reduce the dependency of tedious activities on resources to save time and improve efficiency is another need to go all out on automation. Simplify procedures, eliminate anomalies, reduce operating costs, and improve real-time responsiveness with automation in AP.

Automate and future-proof your AP processes for top-tier efficiency even when you have seasonal spikes in invoice volume. An automated solution can scale and cope with a higher invoice volume without compromising on the output. Reduce erroneous and slow human touches to improve control & visibility and revolutionize the way your AP handles invoices. From compliance to Cost-of-Goods-Sold, process improvements through automation manifests into hard savings in time and cost.

Originally published at https://www.applexus.com.