7 Accounts payable tasks to automate

Managing a company’s accounts payable (AP) process can be a tedious job. The work can be repetitive and prone to human error; one mistake can have costly consequences. A report by the Institute of Finance and Management [1] found that 39% of invoices contain errors.  Inaccuracies that lead to overpayment are a significant risk in accounts payable, and a common occurrence in finance departments of all sizes.

How can a business improve accuracy without overtaxing its finance teams?

Enter AP automation.  With artificial intelligence (AI)-driven data extraction capabilities, it’s designed to mitigate transcription errors or oversights that occur when manually keying in invoice data. While the software does the menial work, your finance team can focus on more strategic activities. 

There are a variety of software options available to meet varying business requirements.  Regardless of the option you choose, you should absolutely streamline the following tasks with the help of technology and automation.

1. Invoice intake

Every finance team understands the importance of maintaining accurate invoice records. However, manually uploading invoice data consumes a significant amount of time due to extensive data entry activities.

Consider a system that streamlines invoice intake. For example, the ability to email an invoice directly to a system-linked inbox, or simply drag and drop or upload an invoice in seconds. From there, invoices are saved and ready for processing. 

2. Extract data from invoices and verify accuracy

Where do most data transcription errors occur? From copying line-level data from one place to another. Even with excellent training and processes, data entry errors are inevitable, particularly when dealing with disparate, incompatible systems. In accounts payable, this can lead to overpayments, incorrect tax calculations, and ultimately, profit leakage.

Luckily, many modern solutions now offer AI-powered data extraction. These tools can extract values such as invoice numbers, line items, tax rates, currencies, and vendor information from both single and multi-page invoices and can even handle handwritten invoices. Verify the accuracy of extraction with advanced AI tools.

AI-powered data extraction is the next wave in AP automation technology, succeeding optical character recognition (OCR) capabilities with improved data recognition, accuracy, and learning capabilities. Here’s where you can read more about Fraxion’s invoicing features. 

3. Match purchase orders, receipts, and invoices

When purchasing records are lost or outstanding, additional costs can be incurred, often without awareness.

With automated processes and digital records, 2- or 3-way matching is streamlined, and effective in identifying discrepancies. In fact, many systems issue alerts when a discrepancy occurs. You’ll be immediately alerted for any mismatch between order quantities and unit costs across documents. This step in the accounts payable process mitigates the risk of duplicate invoices, overpayment, and paying for goods not received.

4. Streamline invoice approval

There’s nothing more frustrating than waiting for approvals. But instead of sending countless emails (or chasing your boss around the water cooler), you can rely on an automated approval workflow, from single to multi-level structures.

With AP automation software, you can:

• Automatically alert teammates when they need to take action (e.g. for approvals)
• Set up workflows based on approval structures (e.g. spending thresholds and escalations)
• View a dashboard with a quick overview of your accounts payable process, providing details on AI extraction accuracy, processed invoices, and vendor expenditure.

With these steps, you can minimize delays, stay informed, and ensure that invoices are approved at the right level and paid on time, to reduce the likelihood of late payment penalties.

5. Code and classify

Invoice coding is a systematic approach in accounts payable (AP) for assigning unique codes or identifiers to invoices and can be complex and time consuming. With AP automation software, you can create and maintain codes for:

• Cost center allocations
• General Ledger (GL) accounts
• Vendors
• Projects
• Products

Predictive coding, enabled by machine learning automatically assigns appropriate coding, leveraging insights from recent transaction data, further improving efficiency and time savings.

6. Analyze accounts payable processes

Having visibility into accounts payable processes can help your team to identify process improvements and opportunities to save. Accounts payable automation enables visibility into processes, and solutions with business intelligence tools enable advanced analysis of AP processes.

Examples can include the ability to analyze and report on the total value, number, age, variance, and vendor activity of invoices within a selected period, including monthly spend and vendor-specific invoice values.

For ongoing monitoring of your AP process, rely on reports to provide a comprehensive overview of your AP processes by period.

7. Integrate to improve accuracy

To take accounts payable to the next level, consider integrating your procure-to-pay or AP automation solution with your ERP or accounting solution. You'll gain seamless, accurate and automated data transfer, and replace error-prone manual data capture and duplication of efforts. 

Find the right AP automation software for your company

AP automation software can certainly relieve many invoice processing headaches. But not all software solutions will have the features that you need. It’s important to analyze your company’s unique requirements, consider any integration needs, and explore potential solutions to identify the system that best matches your functionality, budget, deployment, and support needs.  Remember to review third-party software sites, to view independent customer satisfaction ratings and reviews.

Book a custom demo with Fraxion today to see if our procure-to-pay solution with AI-powered AP automation is the right software for your business needs.

Resources

[1] Institute of Finance and Management (IOFM: Special Report: The True Costs of Paper-Based Invoice Processing and Disbursements