Smart companies proactively seek out ways to streamline their business workflow and to use innovations that increase efficiency and improve resource management. One enormous area of potential improvement is finances — in particular, the accounts payable workflow.
As companies expand, the process of taking care of vendor payments, employee reimbursements and dozens of other outgoing payments often grows cumbersome and inefficient. This issue becomes even more apparent when competitors begin taking advantage of advancements in payment technology. The explosion of payment options has introduced system compatibility issues and similar risks that slow down business.
Finance departments can benefit significantly from increased control over their processes and better communication tools. Meeting these challenges requires an understanding of the accounts payable process and innovative solutions that integrate automation, standardization and centralization.
What is Accounts Payable?
Accounts payable is the amount of a business’s invoices waiting to be paid to vendors or suppliers for goods or services that have been received. Accounts payable appears on company balance sheets under current liabilities and can be thought of as short-term loans that must be paid off, usually within 15 to 45 days.
Having an efficient and orderly accounts payable process is a must when it comes to managing the flow of money going in and out of a company’s operating budget. In the past, manual accounting tasks were the only option for managing the accounts payable cycle. However, more thorough practices, such as accounts payable automation, exist today to save companies trouble.
The Manual Accounts Payable Process
Accounts payable departments are unique to each company. But most accounts payable duties include the same overarching steps, aimed at delivering accurate, on-time payments to ensure smooth business flow.
In general, the full accounts payable cycle follows these steps:
- Vendors or suppliers send invoices to the accounting department
- The accounting department verifies each invoice against information like product stock data, order history or other stored data
- If necessary, the accounting team distributes invoices to department heads for approval
- An accounts payable employee manually enters the payment info into the accounting platform and may need to save a physical copy to meet auditing requirements
- Checks are printed in house or through a third-party and then mailed to the payee — or are handled electronically. Each payee may request a different type of payment, which the accounts payable employee must verify
Bear in mind that this is an overview of the accounts payable duties. In reality, many accounting teams follow 15 or more steps to complete the accounts payable process for every single payment.
A manual accounts payable process can snowball into large problems. Not only is a manual accounts payable cycle inefficient, but it is also prone to errors, compliance oversights and unbalanced books. If an error occurs in any step of the process, payment processing slows significantly, resulting in vendor (and employee) dissatisfaction and sizeable fines. Over time, slow payments will drive vendors to new partners that can more reliably and efficiently make payments.
If ever there was a good target for automation, it would have to be the labyrinth that is the accounts payable processes. Accounts payable automation systems drastically speed up the accounts payable workflow and help reduce the occurrence of serious issues.
The Automated Accounts Payable Process
Automating the accounts payable processes results in a much more streamlined cycle:
- An employee submits invoices to an invoicing platform, built with accounts payable automation software
- Processing and approval occur within the platform
- Payment is automatically sent to the supplier
Automation not only increases efficiency but also makes significantly fewer errors. Errors that do occur can be quickly resolved so that outgoing payments meet due dates. Some companies have added automation to parts of their accounts payable cycle but would do well to fully automate their process.
Why Automate Accounts Payable
Accounts payable automation software such as Pipefy streamline the full accounts payable cycle, minimize the amount of error and bring a host of other benefits to businesses.
Make Life Easier With Streamlining
Automation simplifies complex payment systems, which benefits everyone involved.
There are numerous tasks involved in the accounts payable cycle, many of which can be eliminated or performed more efficiently. Too often, finance department employees waste time tracking down payment details, cross-referencing disconnected data stores or working with incompatible systems.
Automation bypasses unnecessary steps, standardizes routine tasks for machines and allows employees to focus on performing intelligent activities instead of manual ones.
When employees are able to take care of an issue with one click or process a payment with a few keystrokes, companies save time and reduce the level of expertise required to handle many common payment handling duties. Automation also saves companies money by limiting the need for extra staff to perform cumbersome manual tasks.
Say Goodbye to Costly Errors
Streamlining complicated procedures with automation brings a level of accuracy in financial reporting that can’t be reached through manual processes.
Accurate record-keeping has only become more important in the era of increased regulatory compliance requirements. Errors mean spending more money than you should, delaying crucial payments and eroding trust with important partners. With automation and built-in database functions, duplicate payments and erroneous entries appear much less frequently, substantially lowering the risk of fines or overpayments.
Enhance Collaboration With Centralization
It’s cumbersome to record tasks, keep track of small project details and monitor the whole team’s progress. Automation makes it easy by keeping all of these details neatly in one place, letting managers easily track company projects, prioritize assignments and streamline collaboration. This also helps eliminate duplicate assignments and opens up new opportunities — for instance, it’s much easier to spot potential collaborations between employees working on complementary tasks.
Never Miss a Due Date Again
With automation, it’s easier than ever before to keep track of even the smallest of project details. Even if a task escapes your eye, receive automatic notifications about upcoming deadlines and priority assignments so you never accidentally miss a due date again.
By providing prompt and efficient service with an automated accounts payable system, you will build trust with your suppliers and partners. Having lasting relationships with third-party partners is just as important as the relationships you have with your clients or customers. When your vendors and suppliers love what you do, they will happily work with you on pricing and inventory and provide a pleasant working relationship.
Protect Yourself From Fraud
Nearly 47% of surveyed companies experienced fraud in the past 2 years, with 13% losing at least $50 million each. In many cases, companies fall victim to fraud because of employee mistakes.
Automation helps by reducing human touchpoints, adding substantial visibility, increasing centralization and bolstering security. Combined with employee training on security developments and trends in payment platforms, automation will significantly reduce your risk of falling victim to fraud. At the same time, it will improve your payment request process, add valuable standardization at every step of the process and help build your company’s reputation as not only a business that pays on time but also a safe partner.
Customized Automation Tools
When selecting an automation platform to streamline the accounts payable process, look for one that allows for customization. Generic solutions add limited functionality, but a customized solution offers a better return on your investment because it addresses your unique needs.
Pipefy allows you to customize your process with a long list of features. Start with the plug-and-play Accounts Payable template, which unlocks your ability to customize advanced Pipefy tools that will drive your processes forward through automation, centralization, and standardization.
Email communications often become cumbersome, especially when routine confirmation and notification emails have to be set up manually. Pipefy’s email templates and email inbox help eliminate these issues so your team won’t have to waste time on repetitive tasks. They will be empowered to communicate clearly with each other or across departments without leaving the platform.
Also, you can enhance the user experience and provide employees the ability to streamline third party requests using the public forms and portals.
You have many options when it comes to automating your accounts payable process. Focus on factors that will add the most improvement and value to your process. While many automation improvements will help, two areas for improvement are crucial: centralization and organization.
Accounts payable processes that use legacy programs and rely on spreadsheet-based solutions are prime targets for improvement. Today’s vendors and third-party providers seek partnerships that provide value through efficiency and reliability. These organizations need consistent, predictable payments and responsiveness when they encounter a payment issue or request. If you can’t provide timely service, the trust you’ve built up with your partners will deteriorate.
Pipefy will increase efficiency, relieve stress among your financial department employees and enhance your partner relationships. We’ll help you identify your logjams and streamline and simplify your accounts payable process.
Learning how to use Pipefy is straightforward and intuitive. Once your company gets the hang of it, Pipefy will completely transform the way you handle your entire accounts payable process.