2011 has been a very important year. We learned about new ideas, applied them to our processes and envisioned better ones. Today, we share our top 10 automation ideas for the accounts payable (AP) process. We implemented many of these ideas in 2011 and are exploring and executing others in 2012.
• Use Excel to Upload to Software
Most accounting packages, including standalone or enterprise resource planning (ERP) software packages, offer this utility. Using Excel has the following benefits:
- Ease of data entry
- Minimal user training
- Ability to work offline
- Ability to keep building the data files despite work interruptions (and we have a quite a few!)
• Give Vendors Access to Your Accounting Package
What could be a better solution than to get your vendors to do your data entry! A strong purchase order processing system and a secure online portal are essential to run this effectively. In case this functionality is not available as a standard feature with your platform, there may be OEM or third party add-ons that offer this capability.
• Introduce P-Cards
P-Cards (or Purchasing Cards) not only reduce the volume of transactions to be processed, but also give you benefits in the form of discounts and rebates. Further, they ensure timely payments and effective cash flow management! A recent study indicates that companies using P-Cards could reduce their purchasing costs by 85% and it’s a great first step if you are planning to implement 2- or 3-way matching.
• Implement an Automated Workflow
Automation will drastically reduce turnaround times and ensure better implementation of your “Delegation of Authority” document! There are dozens of such tools available today . Most offer open platform integration with standard accounting packages and email applications, like MS Outlook or Lotus Notes. The increasing trend now is to usemobile handheld devices to approve transactions. This greatly accelerates routine transaction approvals, besides securing the audit trail.
• Go Paperless
More and more companies are adopting electronic invoice presentment and payment (EIPP) for their payables processing. Convince your vendors to submit electronic invoices and accept electronic payments. This will not only reduce the mailing float, but also makes cash flow more predictable. This will be reflected in reduced late payment charges and better bargains when it comes to pay terms too!
• Combine Your Low Value Bills
This is really a no-brainer. Smaller transaction amounts mean more transactions to process. Consolidating multiple transactions into one facilitates faster processing, and yet retains the required cost allocations. Talk to your vendors about combining bills if possible and reduce the volume of low value invoices handled.
• Duplicate Vendor Invoices
These errors are commonand every AP manager’s nightmare. Enable “duplicate invoice check”, assuming your accounting system allows you to do so. If not, it’s a simple fix! Export your data to an MS Excel file and run the function to spot duplicate values using a macro that can be run at a set frequency. Implement such proactive controls and avoid expensive recovery audits or worse—let them remain hidden, never to be resolved!
• Simplify the Travel and Expense Voucher Processing
This accounts for more than 35-40% of the total volume processed by the Payables team. Re-examine the entire process to see what can be automated, deleted and combined to reduce the time spent on checking and processing employee expense vouchers. You can also consider implementing travel and expense (T&E) modules, which ensure online submission of claims and proper compliance to your expense policy.
• Consolidate Vendors
Assess your vendor master to see if your procurement is spread too thinly. If it is so as part of a deliberate strategy, that’s fine (but chances are it is NOT!). Vendor consolidation allows you better negotiation of commercial terms and also helps you standardize payables processing, not to mention the reduction in calls to your accounts payable helpdesk from multiple vendors.
• Use OCR Tools
Though optical character recognition (OCR) has been around for a long time, very few companies opt for it due to lack of understanding regarding its benefits. Note that more and more vendor invoices are computer generated these days with consistent font and predictability. They are thus more conducive to electronic text recognition. Though vendor invoices don’t have a standard format, today’s tools create a virtual library of each vendor invoice profile, making it referable for future transactions. The OCR tool can create an automatic upload file (after due verification by your Payables processor) and thus bypass manual processing. This has already been effectively implemented in insurance companies and banks where documents are more standardized.
We hope you find the above tips useful. And do not forget to share your experiences with us when you implement any of these!