How to Improve AP? Artsyl’s LinkedIn Poll

How to Improve AP? Artsyl’s LinkedIn Poll

How to Improve AP? Artsyl’s LinkedIn Poll

Sound accounts payable (AP) operations help a company lower their liabilities and improve cash flows. The main responsibility of the AP department is to reconcile all outstanding payments to vendors. The department must review all transactions with its vendors and ensure timely invoice payments. Invoice processing is a major part of accounts payable operations. Processing an invoice involves performing a lot of data entry to input invoice details into a company’s accounting or bookkeeping system, validating the invoice details for correctness, and sending the invoice to the concerned managers for approval — before making the final payments to vendors. These data entry and validation steps involve a lot of back-and-forth between staff and also between the company and its vendors.

Manual Accounts Payable Management Is Laborious & Time-Consuming

Whenever a transaction takes place between a company and its vendor, a vendor invoice is issued corresponding to the purchase order. The accounts payable department of the company then goes over the vendor invoice to validate it including confirming the items on the invoice corresponding to the ones listed in the purchase order, and also matching it to the vendor details in their database.

“...Artsyl conducted a LinkedIn poll to find out how members of the Accounts Payable Professionals’ group would change the way AP is done, given the choice…there are several opportunities to optimize accounts payable operations, but a combination of intelligent automation technologies with skilled staff who can vet the process, especially in times like the pandemic — where processes and systems have to be suddenly re-engineered overnight — becomes most useful…”

Usually, an invoice received by a company is matched against the purchase order, as part of the validation steps. This is called 2-way matching, and once it is accomplished, the invoice is sent for approval. Alternatively, some companies may opt for a more stringent validation rule where an incoming invoice needs to be matched with the purchase order and also the corresponding receipt or packing slip, before it can be considered valid and sent for approval. This is called the 3-way match. Sometimes, if the quantity of goods that a company receives from a supplier is above a certain threshold, the company may automatically approve the invoice rather than perform a 2-way or 3-way match. Depending on the business requirements and rules, there may be other validation check points that a company may have before sending the invoices to the concerned manager for approval.

An invoice that is approved for payment is termed as vouchered, and it is recorded in a company’s general ledger as a liability. The column under which all vouchered invoices are recorded is called the accounts payable of a company. The expenses lodged under accounts payable include purchases of goods and services made by a company. These purchases, more often than not, are made on credit on the goodwill and under contractual undertaking with vendors. Vendors offer different payment terms; for instance, the 3% Net 30 where the vendor offers a discount of 3% on the original cost price if the payer, that is the company, chooses to pay within 30 days of receiving an invoice. Sound accounts payable management requires a close monitoring of cash inflows for when a company makes purchases and a corresponding outflow to reconcile payments that need to be made against those purchases.

There Must Be A Better Way to Manage AP...

There Must Be A Better Way to Manage AP...

The data entry and validation of invoices takes a lot of manual effort and time. There is the element of human error that can cause a lot of repeat data entry and reprocessing. For growing businesses, manual invoice processing can slow down payments to vendors. Companies could be overpaying in late payment fees and fines. Delayed payments can not just make a company look bad but also lower their chances of clearing debt and improving cash reserves. With manual invoice processing and accounts payable operations, there is also occasion for mismanagement of funds and wrongful practices by AP staff. In order for companies to save on operational costs and costs from late payment fees, while also ensuring optimum checks and balances to avoid cash mismanagement or fraudulent practices, there must be a better way to manage accounts payable.

We have asked accounts payable professionals how they propose to change existing AP practices in their company to ensure timely vendor payments and optimum management of funds. Accounts payable is a highly cumbersome, labor-and-document-intensive process.

Artsyl’s Poll Results: How AP Professionals Propose to Improve Operations

Artsyl conducted a LinkedIn poll to find out how members of the Accounts Payable Professionals’ group would change the way AP is done, given the choice. We proposed 4 options:

  1. By recruiting skilled staff
  2. By outsourcing AP
  3. By automating AP
  4. By simply hiring a consultant

These options take into account the AP best practices adopted by some of the leading firms and also those currently adopted by growing companies looking for a way to lower operating and manual labor costs.

Artsyl’s LinkedIn Poll Results

Artsyl’s LinkedIn Poll Results

New age advances in technology as well as adoption of novel AP management practices have led to many forward-looking companies transitioning their accounts payable operations from being a mere cost center to a strategic hub for cash savings and business growth. The respondents ranged from business consultants, chief accountants, P2P professionals, and Revenue Assurance Analysts, to business owners — all interested in or catering to accounts payable operations in their company.

The poll closed with 471 votes, with a common theme among all the respondents — all looked to removing manual data entry completely and reducing the intensity of the process. 30% of the respondents sought to improve accounts payable operations by recruiting skilled staff while 64% decided that automation was the best possible way to lower the overhead and stress of managing complex AP tasks.

Automation + Skilled Staff Is The Winning Formula

A good number of participants to the poll proposed combining automation with skilled staff — skilled employees can build, configure, and test the latest feeds to program an AI-powered accounts payable automation system according to individual business requirements. Having skilled staff work alongside digital workers will also help make the AI-powered AP automation tool fully functional, and ensure 100% improvement to accounts payable operations.

Only 4% opted to outsource AP functions, with many suggesting outsourcing merely shifts the intensity of the AP operations to another entity or third-party. With outsourcing, there is a risk of sharing sensitive business data with third-party firms. Also, companies are left in the lurch when it comes to knowing fully the state of their finances when sensitive operations like cash outflows and payments processing are being managed by another firm. The overwhelming feedback is that outsourcing AP operations only solves the problem temporarily.

Apart from resolving the short-term challenges of manual data entry and document processing work, coupled with operating and labor costs, many companies are looking to achieve more long-term goals from changing their current state of AP. These goals include managing cash inflows and outflows more efficiently, and ensuring optimum liquidity.

Intelligent Automation Is The Way Forward

Intelligent Automation Is The Way Forward

Intelligent automation of accounts payable helps lower the time, costs, and effort to process vendor invoices and post payments, but also helps companies lower the huge time delays and operating costs of managing AP. Intelligent automation can be a combination of digital transformation technologies like AI, machine learning, robotic process automation, business process automation, recognition software like OCR/ICR/OMR, and intelligent data capture technologies. Accounts payable automation software, powered by intelligent automation technology, becomes very useful for companies, both large and small, in lowering the challenges associated with traditional AP management. The software performs straight-through invoice processing and helps accelerate AP operations.

Many of these solutions come with configurable workflow automation options, where skilled staffers can configure specific invoice processing tasks according to their business requirements. Many solutions are built on a codelsss, modular architecture, making it easy for users to configure specific steps including invoice capture, data extraction, data validation, and approval as per their individual business rules and requirements. Users can work their automation needs depending on their organizational goals.

There are several opportunities to optimize accounts payable operations, but a combination of intelligent automation technologies with skilled staff who can vet the process, especially in times like the pandemic — where processes and systems have to be suddenly re-engineered overnight — becomes most useful.

Intelligent automation certainly helps transition traditional cost centers into fully functional strategic hubs — the trick is to program it to perform routine repetitive tasks and also manage new document types using self-learning, while also combining it with skilled staff to manage exceptions.

Need to improve invoice processing and AP at your company? Talk to Artsyl.

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