Accounts payable processes are daunting and complex at their best; manually processing your invoices can take weeks, and sometimes even months. Manual processing also opens the doors for blatant human errors, unauthorized payments, fraud, and theft. Fortunately, there are several AP automation software options available in the market today.
You need to keep watch on certain items while choosing an AP automation software to make sure it is a good fit for your business, providing the return of investment you want to achieve. In this article, you will find a list of handpicked recommendations that can help your automation process.
We also take an in-depth exploration of a few prominent AP automation software and give useful information about the features they provide to help you choose the application that aligns with your business goals.
The Groundwork to Choose the Best AP Automation Software
- Understand and Outline Your Current Processing Progress
Before deciding to invest in automation, you should determine the average time taken to get your invoices coded, approved, and processed for payments. Map out your workflow gaps, and find out where your Accounts are Payable clerks spend the most of their time. Whether it’s inputting and entering invoices into your Enterprise Resource Planning software, or matching the purchase order, receipt, and invoice.
- Search for Areas of Workflow Improvement
When trying to improve your Accounts Payable workflow, look for processes that can be improved with the help of automation. For instance, if manually typing and entering invoices is consuming your clerk’s time, you could look into software that provides AI-powered invoice capture tools. Automation can also help you modernize two and three-way matches among invoices, purchase orders, and delivery receipts. Your findings of shortcomings can help you prepare solutions before they turn into a real problem. This will also allow you to estimate whether your Accounts Payable is prepared for automation.
- Be Specific With Your Goals
Once you get the idea of what to work on, it is essential to set future goals. This will help you monitor your progress. The average Return on Investment for your AP automation should be in the range of 12-18 months. This timeline is subject to your invoice counts and available AP clerks. Once the system is automated, you can focus on relocating your existing resources to high-priority tasks like timely closing, prevention of late payments, and customer and vendor support.
- Research Software You Wish to Procure
While it is natural to be unsure of the choices, meticulously planning and researching the software that you want will help you choose the one that is the perfect fit for your business. Look for testimonials from other firms that have implemented the system you are considering.
Three things to keep in mind while researching the software reviews are:
- Verify the reviews are made by verified users
- Ensure open lines of communication from the software provider
- Does the provider regularly release updates and keep up with the development of new technology
Software Must Haves
The program you select has to have a user-friendly interface that is quite comprehensive and simple to explore. It should also enable electronic workflows to reduce the number of repetitive AP operations such as entering data, converting paper invoices to digital files, and connecting Enterprise Resource Planning (ERP) and other advanced financial software for better comfort.
- Data Security
Your automation software processes and stores sensitive financial data. Your software needs to be built with data breach prevention features. Cloud-based systems can be a solution as they are isolated from internal servers. As a result, any illegal access to internal systems is denied. External users and other parties can exchange data via the application and are never able to access your system. Make sure your software has encryption features and two-factor authentication. In a scenario of an accidental breach, your software must have backup processes to prevent loss of financial data.
- Multiple Payment Options
Having secure integrated payment portals in your automation software can be useful in fulfilling authorized payments. Payments portals should include multiple payment options, namely:
- Credit cards
- Debit Cards
- Net Banking
Applications that also procure bank statements and categorize the captured statement data using custom rules eliminates possible human errors.
- Automation Features to Look for
- The application should simplify repetitive tasks like data entry.
- Includes document capture and dynamic imaging features for converting invoices into electronic data
- Capable of processing large volumes of data, such as invoices and credit memos
- Provides centralized data management, for searching and receiving documents
- Provides a two-way or three-way match verifying mechanism between invoices and the same purchase order to keep an eye on money owed.
- Complies with AP processing standards and regulations.
- Software Integration
The software you procure must also integrate with your Enterprise Resource Planning system. It should also facilitate working through different platforms. Often, you will need third-party applications for Inventory Management, Analytics and Reporting, Project management, and Customer Relationship Management. Such third-party modifications should be updated on your automation software.
- Accounting Methods
The software should be able to toggle between cash-based accounting and accrual accounting. A small business’s transactions are mostly cash inflow and outflow. The cash-based accounting approach works well in this scenario. On the other hand, the accrual technique should be considered by larger enterprises that conduct transactions on credit. These large enterprises record both accounts payable and accounts receivable. Many businesses begin with the cash-based method of accounting and eventually move to the accrual system. When it is necessary to process accounts payable data, automation should aid in keeping track of payables such as vendor invoices and operations costs.
- Billings for Projects
In case your business recruits clients for some projects, your accounting system should be capable of handling project-based billing. Some modifications in your software can enable you to bill your client’s time taken working on individual projects. After that, timesheets may be transformed into invoices. The software allows timesheet approval before producing the invoice to avoid billing bottlenecks.
- Tax Liability
Businesses are often under the scrutiny of surprise audits; you might often find yourself in need of software that calculates your business’s tax liability. Make sure your software can execute tax functions such as calculating multiple tax rates and tax liabilities, tax reports, and tax compliance.
- Compare the Prices
Most AP automation solutions have a monthly membership fee, which can be paid monthly or you could also take an annual plan. When comparing pricing, though, check for less glaring charges. The most basic package may have limited functionality or allow you to handle a fixed amount of invoices each month. There are extra fees in the form of platform payment choices. Find an automation tool that charges a fixed fee rather than a per-user fee. Flat fees give the greatest overall cost reduction.
Keeping track of a company’s outstanding debts is critical to developing its reputation. A business’s AP must be managed successfully and efficiently. Since handling accounts payable may be stressful and time-consuming, using an account payable automation system is undeniably a better choice. If you follow these suggestions, you will be selecting the finest AP automation software available.