Accounts Payable Automation shortens the time it takes to receive, process, and pay invoices and contributes to business intelligence by bringing information from diverse sources together. It helps your whole business align around important indicators by automating processes and removing manual activities, allowing everyone to concentrate on what matters – increasing revenue and minimizing expenses.
We will use this chance to explore various elements of AP automation and assist you in selecting the appropriate AP automation tool for your company.
Let’s get started right away:
An outline of the accounts payable cycle
Accounts payable is a company’s financial record that tracks transactions associated with the purchase and sale of goods, services, and other resources. In a nutshell, they document your company’s financial responsibilities or liabilities to others.
This department is in charge of dealing with purchasing invoices, orders, and checks. However, since accounts payable is generally a tedious procedure, many small firms nowadays are prudent enough to outsource it.
According to a recent PYMNTS poll, 86% of finance professionals see automation as a new income-generating strategy to improve customer happiness.
There are several methods to configure your AP process; however, the key components of the AP process stay the same:
- Keeping track of finances
- Cash flow management
The following is a simple overview of the AP process:
- Locate suppliers and construct a vendor master file.
- Produce buy-order forms.
- Establish various payment conditions with suppliers.
- Set credit limitations for each vendor.
- Purchase orders should be entered into the system and sent out.
- When invoices from suppliers are received, create payments.
- Regularly enter payments into the accounting system.
- Follow up with slow-paying suppliers or those who have not replied to requests for further invoice information.
Every firm, whether it is a tiny business, a startup, or a conglomerate, must deal with accounts payable. Creating an accounts payable procedure is one of the most beneficial things you can do for your company.
- Ensure that all transactions are paid for.
- Ensure that the accounts payable process is up-to-date, consistent, and thorough.
Accounts payable may be processed in two ways: manually or automatically.
Because it is inefficient and lacks sufficient controls, a manual system is not the way to go. Furthermore, if the manual system is outsourced to a third-party accounting company, mistakes and discrepancies might be expensive. Manual systems often fail to provide the required reports to management and auditors for evaluation.
So, what’s the answer?
Accounts payable automation is the solution.
Why is account payable automation important?
With a few mouse clicks and keyboard strokes, you may write purchase orders, make payments, balance accounts payable, and even seek vendor information in today’s digital age. Other benefits of using automated systems over human processing include enhanced productivity, decreased mistakes, streamlined workflow, and a full audit trail.
They may also create reports for management and auditors, offering significant insight into accounts payable operations. Automation also lowers total expenses by lowering the number of people needed to execute the function.
Accounts payable automation consists of two major steps:
- Establishing vendor and monitoring accounts
Getting your suppliers set up in the system is the first step in automating your accounts payable process. You should consider how you utilize vendors:
- Do you have a few huge ones or a lot of tiny ones?
- Are they all different from one another in any way?
- Do you have any regular vendor bills that must be paid automatically?
When creating your suppliers, provide as much information as possible, such as their names, addresses, tax IDs, and contact information. Include the item numbers for each seller as well.
You’ll need these facts to keep track of your payments and spending. If a merchant lacks an item number, you may generate one for them.
- Data collection and payments
When you get a PO, invoice, or purchase order, you must extract and enter the information that is important to your process.
This contains fields such as:
- PO number
- PO date/time
- Vendor ID
- Vendor name
- Vendor address
- Invoice amount
- Due date, etc.
After you’ve collected this information, you may start making payments.
An automated solution may save you a lot of time and keystrokes in this situation.
Techniques for extracting accounts payable data:
Companies may now build up internal payment processing systems and web portals where suppliers can submit invoices, thanks to automation. As a consequence, accounts payable teams no longer have to spend as much time examining and processing each invoice individually; instead, they can depend on automated systems to accomplish the majority of their job for them.
Data extraction tools that simplify the whole accounts payable procedure include:
- Computer vision
Image analysis is used to find certain aspects of an image or video stream. The system can detect lines, shapes, objects, and faces all in real-time.
This is used to automate item tracking, component counting, industrial inspection, and a variety of other tasks. Object tracking in industrial processes is one of the most common applications of computer vision.
Computer vision technology can follow items as they go through a manufacturing line for quality control and notify supervisors if a problem is discovered.
- OCR (Optical Character Recognition)
Optical character recognition (OCR) software allows a computer system to translate and store data from pictures of scanned or faxed documents. One of the most efficient techniques to speed up invoice processing is with OCR. It can extract information from documents submitted to your accounting system automatically.
The program is usually installed on a single computer that is linked to a scanner or camera that captures a picture of the document being processed. After the picture is recorded, the program analyzes it to determine if it contains text or numbers. This allows the software to extract all necessary information from the document and process it according to the business rules specified by an organization’s management team.
IDP (Intelligent Document Processing)
Intelligent Document Processing (IDP) allows enterprises to extract, convert, and load data with unrivalled precision into their current databases and applications.
IDP is a significant advancement over conventional data capture technology in that it removes the requirement for templates, thus lowering the reliance of template-based data collection methods. Most significantly, IDP removes the need for human intervention when invoices do not follow conventional standards.
Intelligent document processing (IDP) uses machine learning algorithms to evaluate the structure of documents like bills, receipts, and reports, extract key information from them, and classify them.
Based on the line-item description, an invoice may be classified as “utility,” “travel,” and so on. Information from an invoice, such as the vendor’s name, address, and invoice number, may be retrieved and checked against existing data in ERP or accounting systems. Data is vetted before being classified into relevant business objects and stored in a data repository.
With an automated data extraction system, tasks like invoice reconciliation, invoice matching, and payment posting may all be expedited.
Streamline Your Finances with AP Automation
Let’s have a look at how Velan achieves it in 5 steps:
It entails removing papers from envelopes and placing them in document scanners. After being scanned into a computer system, invoices are sorted based on their kinds or qualities. Specific bills, for example, may need particular treatment or delivery to distinct departments.
The pre-processing stage is critical in accounts payable automation because it guarantees that your data is complete before proceeding to the next step of the workflow.
Each document is assigned a categorization tag depending on its attributes such as size, purpose, payer, and type (e.g., invoice, contract, check).
Velan does this via the document auto-classification API. Velan identifies invoices based on content and associates them with a particular business code or customer number using machine learning techniques. Invoices that the classifier is unable to recognize are returned to the pre-processor for additional validation.
Data extraction is the process of extracting essential information from physical documents and importing it straight into your accounts payable system, minimizing duplicate input and decreasing human error.
Advanced optical character recognition (OCR) software or bespoke business rules are used to identify the precise data fields in each document for data extraction.
Following that, an automated IDP scans the scanned papers and extracts the data into an electronic format.
To ensure the integrity of data, a data validation tool is utilized. To make choices, your organization relies on accurate and timely information. The process of reviewing and correcting extracted data is known as data validation.
Velan’s data validation function, which uses Excel-like algorithms to evaluate extracted data inside a document, may discover any inaccuracies. Checks for missing data fields, invalid formats, and inconsistencies within the data itself (e.g., customer name spelled properly but addressed erroneously) are also part of validation.
If the system generates an error message, the document is retained for human review. Using Velan’s integrated review panel, authorized reviewers may amend and approve the collected data.
Once a document has been approved by an authorized reviewer, it is routed to a host system for payment processing by the accounts payable department.
Transferring papers to accounts payable sometimes requires some personal involvement. When a purchase order is authorized, for example, it might be utilized as a source document to generate an invoice.
Account Automation Payable is ideal for businesses that routinely issue bills, buy products from outside vendors, and are okay with having to handle vendor payments.
Best AP automation software for streamlining your process:
AP automation software assists small and medium-sized organizations in managing their accounts payable automation process from beginning to end. It automates the whole process, beginning with purchase orders and ending with vendor bills and payments. You may quickly tailor your plan to match your company’s demands and efficiently manage your expenditures using AP automation software.
Read More: Accounts Receivable Automation Services
Why should you use Velan for AP automation?
Invoices are essential business records, but they may be difficult to handle and check. Velan comes in handy here.
Velan captures data from documents, classifies it, and extracts key information using ML-based IDP technology. This significantly improves the invoice processing system’s overall efficiency.
Velan offers a variety of AP automation solutions for organizations of all sizes. The platform is extremely adaptable, scalable, and simple to use. Velan provides the following major features:
Automated invoice processing:
Velan assists organizations in achieving a 95% or higher straight-through processing rate for invoice processing. It indicates that human involvement is unnecessary 95 times out of 100.
Velan allows you to define approval criteria by utilizing basic Excel-style formulas. As a result, it authorizes mutually dependent deleted information within solicitations, ensuring that no off-base information slips through the cracks.
Performs mass document processing:
Velan can handle a wide variety of invoices, from small to large, with over 100 pages.
Precision and accuracy on the field
For most bills, Velan provides 99%+ field-level accuracy. When combined with many ML models and diverse learning methods, the user is ready to choose the optimum model to further enhance accuracy and STP rate. It reduces turnaround time dramatically and saves up to 70% of total invoice processing costs.
Are you available to talk about Velan’s approach to automating accounts payable for your company now or later this week?