Accounts payable (AP) doesn’t always get the credit it deserves, but it’s the grease that lubricates the entire procure-to-payment engine. If AP processes aren’t sharp, they can delay payments, frustrate suppliers, and slow down the entire company’s growth plans. Inefficient AP processes can mean more work for the AP department, wasted time slogging through manual tasks, and a frustrating workday.
Fortunately, there are ways to improve AP processes and build a department-wide payment machine that hits on all cylinders. These are the five ways to optimize your accounts payable processes in the next year.
Why Improving Your AP Process Is Important
Optimizing AP processes doesn’t just impact your AP teams. It can reshape your entire operation for the better. Here are a few common challenges that plague AP departments that aren’t actively improving processes:
- Inaccuracies, fraud, and payment hold-ups: AP errors don’t just upset suppliers. They also riddle budgeting reports with inaccuracies. That can lead to payment hold-ups, wreck your organization’s growth plans, and distract your team from acting on your fraud prevention plan.
- Wasted time: If your team is spending the day searching for invoicing errors, trying to fix mismatching purchase orders (POs), or typing in manual information, it can eat into their day. That’s wasted time they could spend attending to high-value invoices or other important tasks.
- High operational costs: The more employees you have reading, re-configuring, or interacting with every invoice, the higher labor costs soar. Inefficient processes also bloat your cost-per-invoice figures and can lead to longer, drawn-out cycle times.
- Errors and damaged supplier relationships: Inefficient processes mean more employees’ fingers are hitting keys, and that boosts the potential for human errors. When errors pop up, they delay payments, distract you from focusing on other critical work, and hurt supplier relationships.
5 Ways to Sharpen Your AP Processes
These are the five best ways to craft more efficient and cost-effective AP processes:
1. Unify processes.
If your AP employees are clicking from screen to screen or transferring data from one payment system to another, time, money, and efficiency are falling through the cracks. That’s why it’s important to weave your buy-side and enterprise resource planning (ERP) systems into one digital system. By adopting a user-friendly system that integrates with your payment system, you can unify your AP processes and cut down the errors and frustrations of transferring data from one program to the next.
2. Embrace AP automation.
AP automation technology can cut down manual input and speed up processes. For instance, advanced AP automation solutions will automatically match invoices with order lines—even for partial receipt. Best-in-class solutions will also use machine learning to identify patterns, accurately code invoices for accounting, and route invoices for approvals. Automation speeds up your AP processes and reduces errors by cutting down manual input.
Additionally, AP automation technology will automatically locate errors, such as duplicates and overpayments. That means your team can trim cost per invoice, keep more money flowing within the organization, and eliminate errors that hold up payment processes.
3. Digitize your AP processes.
Anyone who has had to manually transcribe details from a handwritten invoice or transfer information from a PDF to a digital system knows that manual input complicates invoice management. This is why fully digitizing your AP processes is key to increasing efficiency.
Digital AP solutions will automatically resolve mismatching invoices and carve out faster workflows, routing documents to the right person in the fewest clicks possible. Advanced solutions will also use cognitive scans and data capture to read PDFs or handwritten notes and transfer invoices into your digital payment system.
4. Leverage AI.
Artificial intelligence (AI) is a hot topic with the emergence of tools like ChatGPT, but it’s also disrupting the AP scene. AI-powered AP solutions can automatically complete time-consuming tasks, such as invoice matching. These solutions can also push invoices straight through and complete two- and three-way matching for order invoices.
AI can learn to identify patterns, repair inefficient work routines, and increase efficiency. For instance, AI will scan your invoices for invoice exceptions—such as price mismatches or inaccurate billings—and push flagged invoices onto the correct employee or department. In turn, your processes speed up, and AP employees recover more time to take on specialized tasks.
5. Identify holes and improve.
Simply put, you can’t fix what you can’t see. That’s why it’s important to rely on an AP process automation solution that lays out clear reports and tracks metrics. Advanced SpendTech™, or spend management technology, shows users how process inefficiencies are holding the company back. That way, you can adjust, improve, and drive productivity higher.
Raise Your AP Performance to a New Level
By crafting lean, efficient AP processes, you can lower company costs, quickly push out payments quicker, and stride toward your AP goals.
There are more ways to lift your AP team’s performance to a new level! Download our free guide, 5 Ways to Elevate AP Performance and Simplify Operations, to learn what steps you can take to empower your team.
