Managing business expenses is a crucial job for employees, and that is what the accounts payable department deals with. Anything that is purchased by the company is directed towards the accounts payable department. Here, the invoices are put into records, approved, and directed to the respective department for payment.
stack of files and documents, on a messy desktop
Accounts payable keeps track of all company expenditures and keeps archives for reviewing and auditing purposes. Therefore, for a company to operate competently, it needs to develop and maintain proper accounts payable processes to continue business activities.
An important part of this process is report building. In this article, we shall discuss report building in accounts payable and everything else you might need to know about it.
Report building for accounts payable
Report building is tracking all expenditures and funds used after a fixed time. The reason why report building is such an important task is that it gives you a transparent view of the expenditure standings and credibility of your company.
The need for proper tracking and report building arises from the necessity to make sure that all your suppliers are paid on time and that your company does not have any dues. As accounts payable deals with any expenditure and use of funds by the company, despite the mode of payment, cause, or nature of the transaction, generating reports for it can give you a proper insight into the expenditure behavior of your company. It also helps in reviewing budget and expenditure strategies, management of cash flow, verification of bill payments, as well as providing reports for auditing.
Companies need to work to put together a well-established process that can track and generate proper reports. Although the period for report generation may depend from company to company, the usual tenure is for a month. However, developing the proper report-building process is the main point of concern.
Building reports — the traditional method vs. modern approach
There are various types of reports out there that you can use and reap the benefits of. However, before that, you first need to come up with a way to generate the reports in the first place. Previously, when there were no digital aids, these reports were done manually. The hurdle was, it would take too long and require too much effort just to come up with one report. After all, the processes would involve manually going through invoices and relevant data to compile the report. So, even if it was done once in a few months, it would take a long time to prepare for it.
However, the situation has changed drastically over the last few years, thanks to the advancement of technology. Now, the entire AP process can be automated. This includes receiving invoices, collecting data, approval of said invoices, storing and archiving them, and even resolving them. All of these steps are done with the help of smart technology and AI and do not require any human interference.
The same applies to report building. Employees need not go through weeks of materials and data to compile a report. Instead, the system itself can compile data into a report for you at a scheduled time.
As a preparation, you only need to set the automation for the reports, and the rest can be done by the system. This method is quicker and more efficient. Also, unlike the traditional method, which is prone to human errors, this method eliminates any room for error while ensuring accurate data.
Also, with modern software, there are different types of in-built report systems. This means you need not even prepare the automaton as they already exist. The major few reports are as follows:
AP Aging Report
Reports on invoices that are about to be due soon or are past their due dates
History of Payment Report
Reports on all payment transactions for a specified period
Voucher Activity Report
Reports on payment vouchers over a specified period
AP Trial Balance
Reports on all vendor payments and any subsequent errors
Reconciliation of Accounts
Reports on all transactions related to company debt
Conclusion
A good report should be able to give you all the necessary data accurately and effectively without costing you time, effort, or funds. As accounts payable is an important department of your business and a source of important business data, you need to ensure that there is a good process of report building in place here.
However, with the traditional method of manual reporting, you would end up investing too much time and effort with no guarantee of accurate data. Therefore, the best solution here is to adopt AP automation. AP automation comes with a great many benefits, of which report building is one prominent advantage. Henceforth, you will not have to worry about setting a special team just for making reports every time because the system will do it all for you.
Technology has a fair influence on just about everything around us. Businesses especially have seen immense changes and development in the recent few years, thanks to the overwhelming impact of technology.
Automating accounting processes in the digital age
This has helped businesses and industries gain years of advancement. One of the biggest examples is all the digital transformations that companies are going through. It has helped businesses adapt faster, more efficiently and improved business practices and habits. One such influence includes automation in the accounts department. In this article, we will take our time to understand digital transformations in account payable processes and the subsequent changes they brought along.
Is Automation of AP processes a good development?
Anyone associated with the finance and accounts field would be aware of how arduous the accounts payable processes can be. Not only are they time-consuming, repetitive, and labor-intensive, but they are also prone to frequent errors. Manually handling such processes requires special care and yet requires quick actions, which makes it even more of a difficult job to execute.
However, with the introduction of technology and automation, such factors are quickly dismissed. AP or Accounts Payable automation allows all kinds of accounts payable processes to be completely automated without the need for human or manual interference. The system automates every action at amazing speed. Thus, it helps reduce time, effort and also almost completely reduces any chances of errors.
Therefore, overall, yes, automation of AP processes is an excellent digital transformation that contributes to the betterment and development of businesses. This is precisely the reason why more and more companies are quickly adapting this digital transformation to reap the best benefits that it offers.
How has digital transformation improved AP processes?
Now that we know that digital transformation in the AP process is indeed a good development, let us now understand how exactly the processes have improved.
Ease in importing of data
One of the most exhaustive tasks in the accounts payable process is manually documenting and capturing data from invoices. The process itself was long and arduous and included a greater risk of errors and misplaced information.
With AP automation, such worries are no longer a concern for businesses. AP automation provides two great solutions for data entry for the AP process:
For physical invoices
AP automation allows easy integration with tools such as OCR (Optical Character Recognition) tools that allow easy reading of data from physical invoices and making the relevant data entry. However, the OCR technology is still developing further, which promises better and more accurate data reading and entry.
For electronic invoices
The other, more convenient solution is the usage of electronic invoices. As industries keep progressing, almost everything is getting an electronic alter ego, and the same applies to invoices. These invoices transfer directly from the supplier’s devices to the businesses’ systems. It does not include the hassle of data entry and does not require any manual intervention. This solution cust down chances of error almost entirely.
Reduced error and misplaced invoices
Manual and traditional AP processes bore a heavy risk of losing, misplacing, and overlooking invoices. With an overwhelming number of invoices, it would always be a great headache for employees to keep track of every single invoice without misplacing them.
However, with AP automation, the number of invoices means close to nothing. The system effectively deals with each invoice without misplacing them. Also, this reduces the chance of fraud and deception.
Proper records of cash flow
A business needs to be able to know and keep track of every percent of its funds. A clear record of cash flow, investments, and expenditures help businesses get a clear understanding of where it stands financially. With AP automation, keeping track of such variables becomes easier and convenient.
AP automation allows you to keep and archive all invoices for auditing and reviewing purposes. Having to do it manually is not only a hassle but also would involve additional responsibilities such as document storage and management and bear risks of losing them. However, with digital and cloud storage and management, such factors are eliminated.
Increased satisfaction among employees
Lastly, AP automation allows for optimum usage of human resources. With traditional means, a good number of employees were constantly buried under the redundant job of data entry, approval of invoices, and so on.
However, with the automation of the AP process, the employees are relieved of such monotonous activities. With that, the company can make better use of its employees by involving them in projects that are of high priority.
Conclusion
Digital transformation has brought forward some amazing developments in the business sectors, and AP automation is, without a doubt, one of the greatest among them. It has enabled companies to have a better financial and AP infrastructure that is quicker, efficient, and highly secure than traditional means.
When we were all sent home in the March of 2020 to work virtually, most of us had never had to rely on some of the digital ways of life that we now use every day. Zoom, Cisco WebEx, and Microsoft Teams meetings changed the way that we interact with each other.
Meetings were extremely awkward at first: cameras on or off, relying on your poor at-home Wifi, or trying to keep your children at bay while you were presenting. Now that it’s time to head back to the office, some of those problems go away while new ones arise. How can we focus on the positives that have come out of this unique situation? While most of us were complaining about staying inside, others were changing the way we leverage financial technology.
As I said, some of us struggled to adjust socially, but how about how we operated as businesses? Suddenly the need to understand and utilize technology became increasingly important, especially in a back-office role. If your company still ran on paper copies of purchase orders and invoices, your job suddenly became much more complex.
You had to learn a new way to organize and efficiently manage the way you did work in an entirely new way. Now that it has been over a year of staying at home, you are adjusted to the way you handle work in a virtual environment and are struggling to cope with the realities of coming back to the office. Will you go back to the way things were? Struggling to sort paper copies and following endless paper trails for days at a time? Or will you use your experience in a virtual environment to continue to innovate?
While you may have been honing your skills at manually reconciling purchase orders and invoices, there is a better way to operate in a virtual way. You may have enjoyed your time doing things virtually, it may have even cut down on costs of your business and opened up free time to explore other opportunities as a business professional, but there are still ways to improve.
Many businesses and companies have found that utilizing financial technology in their AP/AR offices completely changed the way their back-office operates. You are able to instantly reconcile data and eliminate the need for chasing paper trails. Think about how long it takes you to manually find a missing purchase order or invoice and think about doing that in a fraction of the time.
Not only are you saving time in your role, but you can also now leverage that time and energy elsewhere. You no longer have to be a paper pusher in the back office, you can use your financial acumen to transform yourself into a business leader. You may have found that switching your business from a paper-heavy setting to a business that runs on spreadsheets is fast, but the next step to innovating your business is utilizing financial technology.
The use of this financial technology will not only help you as you perform your daily actions, but you will also be able to put your business to the next level. The percentage of businesses using financial technology is still low, but growing rapidly. Traditionally, only huge companies and corporations were able to afford this type of advancement in their technology, but now you can use these systems on a smaller scale.
Do not be afraid to push your business to the next level and move past your competition. The time to switch is now while we are moving back into a more in-person setting. Use financial technology to your benefit and show your executive leadership that there are more improvements to be made in your business.
Our world is constantly changing and technology has been at the forefront of those changes. They also are showing no signs of slowing down. We tend to overlook the signs of technological changes in our lives. For example, we have Amazon Alexa’s in our homes to assist us with playing music, finding recipes, or even ordering food. Other changes tend to be more extreme or seem straight out of a science fiction movie. Have you seen Tesla’s plans to release a life-like robot? Times seem to be crazy now, but we all make investments into technology and automation without even thinking about it most of the time. Why do we make these investments into our daily at-home lives but not in the workplace? That is about to change.
Large firms are making heavy investments into their research and development teams for automation, artificial intelligence, and data analytics. These three fields are leading the way for large and small companies all around the world. Not only will these fields change the way our companies are run, but they will also affect our companies’ cultures as well. The ways we conduct business has been changed drastically since the pandemic struct. This gave companies a large shock and a chance to take a step back and say, “Why are we doing things this way?”
Artificial intelligence in Accounting
Remember those human errors we mentioned before? How often does it happen to an experienced worker? Maybe a few times a year? What if someone made a mistake once and then never again. This is what we get when we combine artificial intelligence into the workplace. A mechanical brain that is the center of perfection. You will never have to be plagued with the inconsistencies of human error and you can live in harmony with your operating systems.
Data analytics in Accounting or KPI´s
This field is one of the fastest-growing fields in business. Companies are constantly trying to reassess their positions in the market and data analytics help them do so. Leveraging data analysis from a specific software puts you at the forefront of business optimization. Never question where you stand again, where you currently are, and where you have stood in the past with powerful analytics technology.
Automation in Accounting
Automation changes the way we think about doing business. In our accounting positions, how often are we plagued with repetitive tasks that take forever and seem elementary? For an experienced employee in an accounting or back-office role, they can do this task easily and usually with very little human error. But this takes years of experience, training, and certification. What if instead of taking the time for someone to learn these skills for them to be eventually trained and pass down this field of knowledge, we purchase a system that already knows how to do these tasks and does it instantly. That’s the power of automation.
Reach out to a representative to find out more about automation.
