Companies of all sizes are warming up to the idea of automating. They’re identifying several business processes that can be streamlined using software solutions. One such solution is the AP (Accounts Payable) automation platform. Traditional paper-based processes drain a lot of man hours in repetitive tasks and manual data entry. Instead of crowding their accounts department with more resources and infrastructure, companies are keen on improving accounts payable department efficiencies with AP automation.
The market today has a variety of AP automation tools to offer companies a smarter way to manage their accounting activities. Although they all improve accounts payable efficiency, every tool has something unique to offer. You need to evaluate them thoroughly to choose a solution that fits your needs like a glove.
Identifying the right AP Automation solution
Choosing a financial automation solution can be tough for finance heads. AP automation platform can eliminate roadblocks by automating data entry, simplifying payment processing, eliminating errors, and reducing paper dependency. These platforms also give business leaders access to insights into their cash flow by generating real-time reports so that they can make informed strategic business decisions.
Although companies can improve accounts payable department efficiencies with AP automation, identifying an ideal solution can be tedious and confusing. To help you with your evaluation of AP automation systems, we have put together some key factors that your solution must have to improve accounts payable efficiency.
Working on an AP automation tool shouldn’t demand too much time to understand and learn its workflows. It must have simple dashboards and be so intuitive that your team can get a hang of it in no time. It should have easy navigation and must have built-in functions that make account management easy.
Robust Data Security
AP automation software deals with confidential financial data and it must protect it through multiple security guardrails like two-factor authentication, encryption, and secure data transmission.
It’s a no-brainer. The tool must have automated processes for billing, invoicing, payment processing, and reminders. These form essential aspects of improving accounts payable department efficiencies with the AP automation platform.
With the Optical character recognition (OCR) feature you can auto-scan paper-based invoices and turn them digital with minimal manual data entry effort.
As your organization grows, you will have to rely on multiple third-party tools to improve account payable efficiency. For this, your AP automation solution must be interoperable. It must allow you to add new capabilities to your system through dynamic integrations with tools like
- ERP solutions
- Inventory management tools
- Analytics and reporting system
- Project management solutions
- Accounts Receivable Functionality
Flexible accounting methods
An ideal AP automation system must allow you to switch between cash-based and accrual accounting models easily. While initially a cash-based approach may work best for you to manage a simple cash flow process, as you grow you might have to handle credit-based accounting.
Companies will need flexibility in how they generate bills. Having multiple bill generation options including project-based billing will be a plus. It will allow you to raise invoices based on client’s needs. If the customer wants an hourly rate billing, you can do that easily by converting timesheets into invoices.
Reports play a critical role in improving accounts payable department efficiencies with AP automation. They give business heads clear visibility into their financial health. An ideal AP solution should give information on:
- Income statements
- Balance sheets
- Cash flow statements
- Accounts payable and receivable
You can centralise your accounting operations on a single AP automation tool by giving employees access to modules they work on through role-based access. This way, you can secure sensitive data without making it difficult for your team members to work on the solution.
This can be a huge plus to improve accounts payable efficiency. If your AP automation solution can calculate your tax liabilities, it can prepare you for audits. Some typical tax functions that your solution must be capable of include:
- Multiple tax rates
- Tax liability
- Tax reports
The AP platform should free you from your desk by offering mobile, cloud-based access so that you can keep an eye on your finances at all times. You won’t be disconnected from your accounting processes just because you are not on your computer.
Pick an automation tool that works for you
Investing in an AP automation software solution is a big decision, and hence requires time for evaluation. However, if you make a list of your business needs and identify features that will help you improve accounts payable department efficiencies with AP automation. If your pick ends up making work difficult for your accounts team, it will not just waste your time and money, but also push you back in your digitalization journey.