Modernize your accounts payable processes today with automation

How much of a cost center has accounts payable (AP) been for your project-based business?  

Think of how much time you’ve dedicated to certifying that your bills are paid in full and on time. Not only do you have to pay the money to satisfy the invoice, but you also have to spend money on overhead to make sure it happens.  

With the right technology, however, your business can not only reduce that overhead, but also be more efficient and strategic about how you spend your money. This can allow you to strengthen your vendor relationships while potentially capturing discounts for paying early.  

So how can you achieve this? With one word: automation.  

The painstaking odyssey of traditional AP processes 

In the past, businesses managed AP processing manually. It started with a project manager making a purchase order (PO). Then the company waited for an invoice. Once that invoice is received an individual scanned or downloaded a file. That file will then sit somewhere until it’s ready to be reviewed, approved, and paid.  

Unless there’s a strict process – or a power accountant – tracking the status of these invoices and any remaining action items can prove burdensome.  

Once the business is ready to pay, the individual in charge of AP will manually input the invoice data into the accounting system. If there’s a corresponding PO, the individual will then need to painstakingly track down the PO and fill out the correct transaction codes. Depending on the size of the business, they may have hundreds of transaction codes. Without the right PO, an accountant could make a costly error or wait for the purchaser (likely not an accountant) to confirm what the purchase was for. The invoice was then coded, creating a purchase journal. The company would then send it through an approval workflow or trigger a payment.  

The major question remains: how do we pay? Traditionally, paper checks are the method of choice. But some companies will also trigger an ACH payment or call the vendor directly to pay via credit card over the phone. These all require manual human intervention – and careful manual review.  

Another important question to consider: when do we pay? The rule of thumb is always this: pay before the due date to avoid a penalty fee.  

You can see how the traditional process leaves room for human error, leading to delays, missed payments, and other problems.  

Technology makes the modern AP process easier than ever 

Contrast this with the new way of doing things. The modern AP process is built for sustainable efficiency.  

To start, the entire process is completed in the same system that connects purchases, the purchaser's data (i.e., applications that manage their work, project management, etc.), and business financials.  

When purchases are made, the purchases will create a PO in an integrated PO applet/application allowing for easy review and future “locate-ability.” Vendors send invoices to an email address that is synced up to the ERP, automatically uploading that invoice into the system.  

Through optical character recognition (OCR), the invoice is scanned with its data and values translated to the appropriate accounting fields. The system will then seek a corresponding PO (as the PO was created and stored within the same system) and fill out transaction codes by the appropriate line item. If applicable, the approval workflow is automatically triggered with workflow history and supporting documentation.  

This modernized approach allows companies to have an integrated and rules-based payment system: a spend management solution with automatic payments for certain invoices, potentially including a card for ACH.  

For invoices or vendors that fall outside of the rules engine’s parameters (i.e., value, vendor, project), a person will trigger a payment.   

The benefits of modernized AP 

If it isn’t clear why the new, modernized form of AP is favorable to the more traditional method, think of these benefits:  

• Less overhead. Businesses will spend on average $15 less per invoice when using a modern AP automation technology. That translates to thousands of dollars each year. It also saves time.   

• Strategic and highly knowledgeable employees. Automation and AI are reducing the need of individuals that are deeply focused on manual, singular processes. Businesses that used to hire for roles that were solely dedicated to AP can now focus on hiring highly skilled and knowledgeable finance and accounting professionals. These team members will bring understanding and visibility into processes that can impact a company's efficiency beyond accounting such as business capture, cost reductions, and identifying and implementing strategies resulting in more efficient business practices.  

• Fewer errors and less costs. Firms will have fewer payment mistakes while spending less time fixing errors – errors that could result in late payment penalties.   

• Improved vendor relationships. Faster payment times can enable firms to negotiate better terms with their vendors.  

How to adopt a modern AP process 

The best way to transition to a modern AP processes is by embracing the right kind of technology. Look for tools that not only have modern automation capabilities, but are also deeply integrated with your ERP.   

You’ll also want to continue to move away from checks. Talk to your customers and listen to their preferences. Survey your customer base on ways they would be open to being paid. From there, you can explore your options for an integrated solution that supports electronic payments to create a better experience for both your team and your customers. 

Traditional AP cost businesses time, money, and the ability to grow and capture new opportunities. The tools and technology for more efficient AP processes are out there – and using them benefits both payers and payees.  

Looking to make business easy while freeing up more time to do the work that matters? Learn how Unanet can help. Schedule a demo today.