As businesses grow their operations naturally become more complex and far trickier to handle. In order to remain effective and continue to deliver strong growth, businesses need to streamline processes with the support of digital solutions.
Finance is a department that can especially benefit from this, as many of the repetitive tasks involved are both time-consuming and labor-intensive. Accounts payable automation is a tool that can transform the way businesses handle their invoicing processes, making life easier for overburdened staff and strengthening their outlook.
Read on to explore the role that accounts payable automation has in driving modern businesses forward in an increasingly globalized and digital market.
The key components of accounts payable automation
Before we dive into the specific benefits of accounts payable (AP) automation, it is useful to understand the core components of the system. AP automation platforms include multiple features, all of which work towards making the whole invoicing process more effective and efficient.
These include:
- Invoice capture and data extraction – as the AP automation platform uses optical character recognition (OCR) technology to enable it to capture and process invoices electronically. This allows the system to extract key data automatically, without team members having to sift through.
- Automated workflows – once the invoice is captured, the automated workflows of the AP automation platform route it to the appropriate approvers based on predefined rules set by the team. This streamlines approvals, enabling faster turnaround times.
- Three-way matching – the system also performs comparisons of the invoice, purchase order and goods receipt to ensure that data is accurate before any payment is approved. This naturally reduces the likelihood of any overpayments or duplicate payments occurring.
- Reporting and analytics – AP automation platforms can generate reports and analytics for businesses on a range of key metrics such as payment status and cash flow. This empowers more data-driven decision-making and the further optimization of financial operations.
Now that we understand the various components of the AP automation platform, let us look closer at some of the major benefits its adoption can bring to businesses.
Making businesses more scalable
Any business considering its future path and growth potential will already have scalability on its mind. Being able to effectively keep up with expansion and increases in workload is essential for businesses that want to stay competitive.
Fortunately, AP automation is incredibly scalable. The automated workflows can handle higher volumes of invoices, allowing businesses to keep pace, with the platform performing just as well as it would when only handling smaller numbers of invoices.
With the support of automation businesses can scale up without fearing the impact of growing workload on their finance team and cash flow management. In addition, there is no need to hire extra manpower to cope with rising volumes of invoices.
AP automation platforms also integrate seamlessly with other parts of the backend, such as enterprise resource planning (ERP) tools, to increase efficiency as data is automatically passed between systems.
Strengthening cash flow management
Another effect of the improved operational efficiency that AP automation delivers is the ability to improve business cash flow management. Through automation and the centralized dashboard offer by the platform, businesses can instantly improve their oversight into key financial data.
Better visibility into the invoicing process – and the progress of individual invoices through the system – allows stakeholders to monitor cash flow more accurately and forecast potential bottlenecks or payment delays.
This all leads to stronger cash flow management, which is crucial for any business that wants to remain at the forefront of the competition.
Having a slow and outdated accounts payable process is a liability that growth-minded, modern businesses cannot afford to maintain. By implementing an AP automation platform, a business can transform the way its crucial invoicing systems function for the better.
