We’ll firstly discuss what exactly goes into accounting and bookkeeping in order to understand the time, labor, and costs involved. This will give us a clear picture of why it, in fact, helps to optimize accounts payable using intelligent process automation.
Bookkeeping: In its most basic form, bookkeeping involves jotting down or journaling a company’s day-to-day or periodic transactions in a book. Typically known as a daybook, it is basically a log of all daily or periodical purchases, payments, and cash receipts of a company in chronological order. All business transactions that mobilize cash flows into and out of a company are noted in a daybook. The next step would involve posting the amounts from the daybook to a general ledger, usually under different transaction categories like sales, loans, expenses, etc. A general ledger holds the official record of a company’s business transactions. The balance of all ledger accounts are tabulated under debit and credit columns — the sum of all the debits must ideally match the sum of all credits based on all company transactions during a given accounting period. If the sum totals on the debit and credit side don’t match, it means there was an error in the daybook entries, and companies must go back to finding what it was — whether it was an error during the original data entry, a duplicate entry, a missing or unrecorded transaction detail typically resulting from either a missing invoice or a debit transaction that is not immediately recorded if the purchase was made on credit.
Balancing books, or a trial balance as it is commonly called, can take forever simply because of the difficulty re-proofing entries for validity. Whereas daybooks show just the transaction amount, a general ledger records the balance before and balance after a transaction, much like in a bank account statement. With this, much of the bookkeeping work is done. The next stage is accounting.
Accounting: The recorded transactions from a daybook are summarized in a financial statement or report, commonly known as a balance sheet. We discussed the recording of debits and credits from transactions under two separate columns. This is called double-entry bookkeeping. Accounting standards require that debits and credits are logged on an accrual basis, meaning expenses are logged under debit when they are incurred rather than when they are reconciled. Similarly, earnings are logged under the credit column once, say, an order is confirmed, rather than when the company receives the final payment for the order from the customer. Financial statements give stakeholders a clear understanding of the working capital, which is the difference between assets and liabilities, and the related cash flows of a company over a certain accounting period. Typically, all liabilities are recorded as accounts payable and all assets as accounts receivable. A critical requirement for business continuity in any sector is liquidity, defined as the amount of ready cash that a company holds at any point to be able to pay off its current liabilities and make future purchases. Financial statements say a lot about the liquidity of a company and the plausible trajectory it must take as a result.
We have discussed the basics of bookkeeping and accounting. These are mission critical functions that determine a company’s financial
standing in the marketplace.
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But the difficult part is the amount of scrutiny, diligence, and timebound data entry and process control work that goes into maintaining a sound accounts payable and accounting schedule on a regular basis, if done manually.
Fortunately, intelligent process automation (IPA) and related digital transformation technologies have streamlined the document-and-labor-intensive accounts payable operations to such an extent that today, you may only be required to intervene if the system encounters an exception during straight-through processing of invoices and your approval is needed to carry on.
One manufacturing firm typically spent hours holding up their skilled personnel to perform data entry and invoice processing of around 8000-9000 pages of invoices per month. With the Artsyl docAlpha transformation platform for AP invoice automation, they are now able to accelerate invoicing from weeks to days, while also saving on the labor costs of 4 full-time employees. Read their story to learn how effective an intelligent process automation suite can be for your business — www.artsyltech.com/s/e8z.
AP invoice automation software, built on an intelligent process automation platform, employs digital transformation technologies to process invoices from the edges of an organization. IPA bots use AI, machine learning, and other advanced automation technologies to capture, classify, extract, validate, verify, and approve invoice data and documents, before exporting the final results to an ERP system or related business application. All the aforementioned tasks in bookkeeping and accounting are automated and devoid of manual intervention, making the process error-free, accurate, and fast.