Because of COVID-19, AP Automation Has Turned into a “Must Have”

AP Automation or Accounts Payable Automation has long been the electronic cure for problems associated with the manual processing of invoices – no visibility, inefficiency, and potential for fraud.

Invoices_piling_up

But during the COVID-19 pandemic, AP automation has taken on an even larger role: it has helped keep companies running and the lights on.

That’s because AP automation allows AP teams to work remotely. They can ingest invoices, send them for approvals, and process them for payments – all from the comfort of their own home. Or backyard.  

WFH

And while sheltering-in-place will end at some point, there’s always the possibility of an ice storm, hurricane, or other disaster that will prevent trips to the office. So, for many companies AP Automation has turned from a “nice to have” to a “must have.”

According to CPA Practice Advisor

Accounts payable departments that had yet to automate processes before the crisis are facing significant disruption. For example, in accounts payable, simple tasks like receiving, processing and approving paper invoices require onsite teams. Furthermore, printing and, in the case of accounts receivable, receiving paper check payments depend on a person sitting in a well-established company location, rather than a person’s home residence. However, those AP and AR departments that had implemented automation on a broad scale prior to the crisis have experienced a smoother transition to remote work models.”

What is AP Automation?

Accounts Payable automation essentially converts manual invoice processing into efficient, electronic steps that are performed online and provide full transparency.
Digitize processes

On a high-level, these steps often include:

  1. Procurement and Electronic PO Creation: After clients select products from an online catalog, purchase orders are created electronically and sent to the supplier for approval. 
    Catalog
  2. PO Matching: After the supplier delivers products or services, he/she submits an invoice to the AP Automation software. Then, the invoice is matched electronically to the PO using two or three-way matching, eliminating double data entry for the buyer.
  3. Invoice Capture: The AP Automation software captures invoice data in a digital format. It can receive the invoice via multiple methods:
  4. Invoice Approval Workflows: Once reviewed, the invoice is then routed electronically to the designated approvers based on the company’s workflow rules. For example, some invoices may be routed to approvers based on the invoice’s GL code, others could be routed based on contract numbers, others could be routed based on invoice amount or even over-budget amount. The approvers then reject or approve the invoice. If approved, it’s submitted automatically to the GL for payment.Process from home
  5. General Ledger Integration: the AP Automation software is integrated with a company’s General Ledger so data transfers seamlessly between the two systems. This data can include approved invoices (going from the AP automation software to the GL); budget data (from the GL to the AP automation system, so approvers can track spend compared to budget), and even vendor data. The GL remains the system of record. 
  6. Payments Automation: Many AP automation software platforms pay vendors electronically on behalf of their clients. Instead of sending a payment file to the check vendor, the client sends the electronic file to the AP Automation software, which in turn pays their suppliers electronically.
    Pay electronically

While there can be additional steps and intricacies, these are the main ones for many businesses. Some companies, however, require more functionality, such as job cost tracking. This is when job cost information is pulled from the General Ledger and incorporated into invoices and purchase orders.

Industry-Focused AP Automation Enables Fast Ramp-Up and More Electronic Processes

Companies looking to automate their accounts payable should research different AP automation solution options carefully. Some companies provide a solution that works for all industries. Others, like Nexus, specialize in a single vertical, real estate.

An industry focus is very helpful for two reasons:

  • Workflows and processes are built to suit the complexities of that specific industry – and are not one sized-fits-all.
  • Ramp up time with electronic payments and invoicing is quicker.

That’s because suppliers who work for one client in the industry tend to work for many others. So, getting them onboard with the AP automation’s tool set is easier because they can work more efficiently for multiple clients across that segment.

You can see this trend play out with supplier self-service portals, which some AP automation companies provide. The portals enable suppliers to sign up for electronic payments (instead of paper checks) and track the status of their payments. Sometimes, suppliers can also use the portal to send their invoices electronically – for guaranteed delivery directly to their clients’ accounts in the AP automation software. It’s common for there to be high adoption of these portals when they provide suppliers with the opportunity to transact with multiple clients.

An industry focus typically proves helpful to the AP automation client because there’s little to no lift to get their suppliers on board with their new electronic processes.

Network

Accounts Payable – Anytime, Anywhere

The coronavirus pandemic has proven that paper-based AP processes are extremely problematic. Many companies have therefore turned to accounts payable automation software to allow them to work remotely and online, instead of in the office. At the same time, they’re finding themselves able to work more efficiently and productively. And this will have far-reaching effects, crisis or no crisis.  

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Nexus lets real estate companies like yours manage every aspect of the accounts payable process with clicks and keystrokes, not paper. Our cloud-based AP automation software helps you work faster, simplify your day-to-day, and gain the visibility you need into suppliers, budget, and spend.

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2020-09-08T21:00:44+00:00
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