Automating Your Accounts Payable Process
It streamlines. It simplifies. It saves. That’s accounts payable (AP) automation, and it’s becoming a must-have asset for companies across the world. Why? It offers your team more control and visibility into your accounts payable processes, which provides your business with a number of benefits, like the end of data entry, filing and manual approval routing. With its numerous advantages, it’s worth learning about what AP automation is, how it works and where you can apply it in your company’s day-to-day operations.
What Is AP Automation?
AP Automation is the process of automating accounts payable processes – including receiving invoices, processing payments, noting discrepancies and getting approvals from responsible parties.
In business, there are always challenges to combat, and AP automation helps remedy some of those issues, which can include:
- Manual data entry
- Missing invoices
- Manual invoice routing
- Slow approval times
- Low liability visibility
- High processing errors
One of the most substantial drawbacks in accounts payable is the time it takes to review, process and approve invoices for payment, which is exacerbated by the fact that invoices are often decentralized and accounting departments are frequently coping with a high number of discrepancies and exceptions. So what is AP automation? A trusted solution to the troubles of manual accounts payable operations.
How Does AP Automation Work?
As a simple, smart and seamless solution, AP automation is easy to follow and starts with the following steps:
- Receive invoice: When your invoices arrive, you can input them into your AP automation solution one of two ways — by scanning them in-house or outsourcing the process. If you decide to have your invoices sent to a third party, like Vanguard Systems, you’ll have a solution you can trust. We offer a turnaround time of one business day, as well as 97 percent accuracy. We return the information to you via file transfer protocol (FTP).
- Submit invoice for data extraction: Whether you take care of reviewing your invoices in-house or send them to us, you’ll need to submit each for optical character recognition (OCR) in your AP automation solution. OCR will turn your picture into text as well as pull specific information that it’ll input into your accounting program, like the due date, amount, invoice number, account number and more.
- Route invoice per business rules: After extracting the data, your AP automation system will route the expenses to the appropriate party based on whether it’s a purchase order or invoice. The system makes this differentiation in accordance with your established business rules, which you can modify as your processes change. You can also create new ones.
Next, your automation solution will complete one of the following, based on the chosen route:
- Purchase order matching: After you receive the order and invoice from your supplier, the system will do a two or three way match based on your requirements. If a match isn’t found, the system will alert you so that you can review the entry.
- Expense approval: If the invoice registers as an expense, the system will send it to the designated party responsible for that charge. That person can look over the invoice by logging into their email or the program, which makes it convenient for busy schedules. After they’ve approved it, the system automatically uploads it to your accounting application for voucher generation. Your accounting team can then decide what expenses will go into your next check run.
Whether it’s an expense or purchase, your AP automation solution will then take care of the GL distribution. In this step, the system applies one or multiple codes to each invoice, which gives your team insight into what type of expense is coming out of your budget, such as a sales, marketing or supply charge. In the long-term, that can alert your accounting department to rising costs that could be managed better in the future.
How Does AP Automation Differ From Manual AP?
To see the difference of AP automation, think about the traditional step-by-step process of accounts payable:
- Receive, scan and upload invoice
- Input invoice data into the system and route for approval
- Review and approve invoice data
- Record approval and post update to the system
- Assign GL coding and key ACH batch
- Print checks or ACH batch
- Review checks or batches and authorize the release of payment
- Sign and scan checks
- Send payment
In comparison, AP automation workflow software follows a series of automated steps after you upload your invoices. It’s quick and helps you:
- Improve accuracy
- Reduce time-consuming tasks
- Lower labor expenses
- Obtain vendor discounts
- Limit document losses
As a result, AP automation is becoming a standard for companies worldwide, especially as many businesses move toward digitizing their operations.
How Can You Use AP Automation?
No matter your market, you can use AP automation — look at the following case studies as examples:
- Chesapeake Energy Corporation: Before automating their accounts payable, Chesapeake Energy Corporation relied almost entirely on paper and manual work. With an increase in receiving and processing paper invoices, they were in need of a business process improvement. That’s when they contacted Vanguard. Using our expertise, they successfully implemented an AP automation system — including AP invoice approval and payment process — that started saving them both time and money almost immediately. Today, they can process a five-fold increase in invoices with less personnel, and savings accrue at each and every step of the system.
- Quickfire Restaurants: The challenge for Quickfire Restaurants was time. It didn’t make sense to spend several hours a week processing, approving, printing and sending checks for 90 invoices. That’s when the Texas company turned its attention toward AP automation. After incorporating it into their business, those hours dwindled to 30 minutes a week, letting staff maximize their time.
Streamline Your Business Processes With Vanguard
At Vanguard Systems, we’re passionate about simplicity. That’s why we’ve developed a suite of tools — including Vanguard AP Automation — for streamlining your business operations, limiting time and material waste and improving visibility. It’s what we’ve done for more than 30 years, which is why companies across industries, from finance to retail to transportation to manufacturing, trust our team for smart solutions built by businesspeople for businesspeople.
See what our AP automation system can bring to your company by contacting us today for a free demo. You can also call us at 800-455-1418 to chat one-on-one!
See How Vanguard Systems Software Works Today
The best way to see how Vanguard Systems software works to protect and maximize the efficiency of your business is to see it in action for yourself. We want every business to be able to benefit from our services, so we’re happy to offer a free, no-risk, no-obligation demonstration of what we can do. To schedule your demo or discuss ID Protect or any of our other software applications, call 800-445-1418 or contact us online now.