Accounts Payable Process Improvement | 5 Steps to Paperless Accounts Payable

When looking to improve your business operations and increase efficiency, look no further than your accounts payable and invoice processing procedures. With the number of processes that can either be eliminated or streamlined, the face of AP is currently changing. And there are a few things you can do to keep up with the times and help your company improve its accounts payable process.

Here are five steps you can take that will have an immediate impact on your current accounts payable workflow. They will help to reduce your overall cycle time and save you money as a result. Follow these five steps and you’ll be on your way to a more efficient, paperless accounts payable process.

 

Step 1: Accept Electronic Invoices

The first step is to eliminate paper invoices as much as possible and to accept electronic invoices.  The past challenges in managing electronic invoices revolved around electronic data interchange (EDI). Most systems today did support electronic invoices without expensive EDI infrastructure.  Most vendors today will gladly send you a PDF “electronic invoice”. While this may be just as cumbersome as a paper invoice since it still requires data entry and archiving, it does eliminate pushing paper and scanning invoices.

The same AP automation solution used for extracting data from paper can be used to pull attachments from emails then extract the data.   Starting from an electronic document further enhances the process as you eliminate the scanning process.   Some suppliers will continue to send you hard-copy invoices. But if you can get just half to deliver them digitally, you’ve saved a ton of time on scanning.

How long is your procure-to-pay cycle time?  Studies show the average cycle time is 23 days.  This time can be reduced if you don’t have to handle paper or invoices that come in as email attachments. Despite only one quarter of companies sending invoices electronically, best-in-class companies have been able to whittle down their processing time to as little as 5 days.  AP automation solutions are key here. 

 

Step 2: Centralize Data & Eliminate Data Entry

For vendors that do not supply electronic invoices, businesses can implement invoice processing solutions that convert images into computer-readable text. This would eliminate the need for a human to enter data manually into a system.

The best AP automation solutions can perform all the invoice processing functions to parse the data and automatically enter it into your system. Not only is this a faster process, but with the proper controls eliminates human error and data discrepancies. Invoice processing software also has the ability to feed the data to other programs (like your financials).

Studies show that the #5 reason most companies aren’t moving to an automated invoice process is because management feels their current paper-based process works.  However, companies also report that the top challenges AP departments face are:

• time spent on data entry
• 2-discrepancies and entry errors
• 3-missed capture of discounts
• 4-decentralized invoice receipt and 5-lost invoices. 

Clearly, most organizations need an AP automation solution.

 

Step 3: Streamline your Invoice Workflow with AP Automation

Once your invoice is digital you can leverage more efficient ways to automate invoice processing. Digital workflows for invoice approvals and automation will truly streamline the end-to-end invoice process.  A fully automated AP process not only allows you to receive invoices swiftly, but also manages approver assignments. It also manages workflow, general ledger posting, review, approval, and provides real-time reporting and notifications.

 

Step 4: Simplify and Standardize with Invoice Processing Software

By standardizing basic functions like invoice receipt and approval workflow, you can create more streamlined and easier to organize processes. This won’t just benefit the AP department. Your suppliers will also be happy with the quicker procure-to-pay cycle because they’ll receive accurate payments faster.

When a company doesn’t have a standard procedure for invoice receipt, vendors tend to send invoices to everyone but the AP department.  When purchasers or field approvers receive invoices from vendors, the invoices sit an average of 1 to 2 weeks on their desks before even being sent to AP for entry into the accounting system.  AP automation solutions eliminate the possibility of invoices becoming “stuck.”

 

Step 5: Archive Your Invoice Images and Data Immediately

Paper files are not efficient. That is a fact. However, if your company is still receiving paper invoices see Step 1 above. Implement an invoice automation solution that seamlessly converts them into a digital format.  Processing paper documents then scanning and archiving them after is not efficient.  Adding a feature like a “digital mailroom” to receive and process your invoices means your data is more secure. It gets archived immediately and ready for processing in a fraction of the time.

Studies show that many AP departments are implementing back-end imaging (scanning invoices and supporting documents after they have been processed).  Utilizing front-end imaging (scanning directly after receipt) with an AP automation solution will drastically cut processing time. And it will help to eradicate rogue documents.

Some of these steps will take longer than others to implement, but they’re all worth the work. Start with step one and work your way down systematically. You will be on your way to a more efficient AP and invoice process.

Is accounts payable or invoice processing automation on your AP department’s agenda?  If so, let’s chat!

 

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Edenred Pay, an Edenred Company, is the global leader in invoice-to-pay automation. Our integrated platform connects businesses with suppliers, ERPs, banks, FinTechs, and payment rails to automate, optimize, and monetize the entire B2B payments lifecycle – from invoice receipt through payment reconciliation. Edenred Pay’s efficient, integrated solutions create a frictionless process and help deliver value to the enterprise by enhancing visibility and monetizing AP.

Visit www.edenredpay.com or contact us to learn more.