Manually tracking money owed for products or services can often be overwhelming and frustrating, especially if your business makes purchases on a regular basis. You want to avoid missed payments at all cost and need an entirely accurate, precise method for keeping up with your debts and credits. Automated Accounts Payable just might be your company’s smartest financial decision, allowing you to remove the burden of tedious AP tracking and instead concentrate on building up your business.
Understanding Accounts Payable
Accounts payable, often shortened to AP, refers to the money a company owes to a vendor or creditor for purchased goods or services. Accounts payable are considered to be a form of short-term debt, requiring payment within a short amount of time. So your accounts payable records keep track of money owed and payment dates.
The process of managing accounts payable requires a considerable amount of attention to detail to verify payment information. These processes include reviewing company purchase and receiving orders, invoices from vendors, and contracts or agreements, as further described by Accounting Coach’s AP explanation. If your business does not process accounts payable accurately, you may end up paying more than needed or miss important payment deadlines.
What is AP Automation?
So many business transactions occur digitally: from trusted ACH payment processing to heavily-controlled virtual cards, many if not all of your business transactions may be taking place online. Your accounts payable should follow suit; you need an Electronic Accounts Payable solution in the form of AP Automation.
Streamlining your accounts payable process will save your company time and money. We discuss this more in-depth in our article <internal hyperlink> “Why Your Company Should Start Automating Accounts Payable Now,” </hyperlink> but as an overview, AP automation allows your company to better track expenses, manage online invoice processing, verify account data, and avoid late payments.
Improve Your AP Review and Approval Process
With digital access to information, staff can review and approve payments anywhere. Why waste time physically tracking down an invoice that is being routed through four different people? You can drastically reduce the amount of time it takes to pay invoices by simply automating this approval process. A more efficient payment process can benefit your company in many ways, including a reduction in errors, better control over immediate financial records, and faster debt clearing.
If you can verify and approve payments faster with automation, that means you always pay vendors on time. Some vendors even offer early payment discounts, which you can cash in on once you start improving your AP processes. These discounts, often at a percentage for every day the invoice is paid early, can save your business quite a bit of money, especially if you make a lot of purchases and consistently pay ahead of schedule.
Choosing Your Accounts Payable Software
To automate your accounts payable, you will need to implement a third-party tool. The good news is you have a lot of choices when it comes to accounts payable automation software. To get the most out of your AP software, pay attention to recommended best practices and understand your business needs. You can do this by creating an automation process that is in line with your company’s goals, ensuring you have chosen the best set of tools for your business, and keeping updated on the accountability and efficiency of your software.
Your AP automation software works with your invoices and current accounts payable records to ensure you are making timely payments and catching fraudulent charges. There are many types of accounts payable processes, so it’s important to work with a company to find your best solution. Your company’s employees will be able to rely on your chosen software solution to stay on task and work within a given workflow offered by the software.
AP Automation for Improved Business Practices
Accounts payable automation allows your company to streamline your accounts payable processes and track invoice processing smoothly and efficiently. Automation improves overall workflow of your invoice and payment approval process, which can lead to better cost savings through vendor discounts. Your accounting and finance office will be able to reduce errors, prevent avoidable late payments, and better manage your company’s finances through automation.