7 Ways AP Software & Automation Increase Control Over Finances

As a finance professional, control over your payments is always front of mind. It’s understandable to be concerned about losing control and taking on more risk by using accounts payable (AP) software and trusting automation.

This report highlights seven factors that make the case that while your concerns about losing control of your corporate finances are well-founded, automating your AP processes will undoubtedly give you much more control in 2021 and beyond.

1. Insurance against fraud

It starts with insurance. If you allow a company to automate your payment and invoice processes, you can be certain that if anything happens to your money you won’t lose any of it because you’ll be insured with that company you’ve hired to handle these financial transactions.

Let’s say the company you hire makes a $100,000 payment to a vendor that a fraudster intercepts and steals. This company will make sure your vendor gets paid in full, and you won’t lose any of that money.

Had you used your own manual process and a cybercriminal swipes that $100,000, there’s a better chance you may lose it.

Read more: “Red Flags” to Watch for to Prevent Corporate Fraud

2. Total visibility and control from anywhere

You may be concerned that by hiring a company to handle these processes you won’t be able to track what’s going on with your payments and invoices. But the exact opposite is true.

You’ll have much more visibility into your payment and invoice processes more often and in more granular and more organized detail than you ever could using manual processes. Manual methods are jumbled and unwieldly piles of paperwork inside an office.

Read more: 5 Accounts Payable Software Insights You May Not Know

Using automation, you’ll have total traceability back to every step in the payment and invoice process. Do you want to check the amount of a payment and when it was sent? You can do that from the office, your home office, the grocery store and many other places.

What’s more, you’ll automatically receive more frequent alerts and verifications of completed actions. There’ll be continuous audits of the process, constant checks to make sure the process cruises along as it should.

3. Fewer mistakes

By automating your AP processes, you’ll make so many fewer mistakes because more people will be able to review the payment and invoice data more often. Catching mistakes will happen faster. Your AP department won’t make nearly as many inaccurate or duplicate payments and other costly mistakes prevalent using paper checks.

How?

More people will be able to look on their computers at the same invoice and payment data simultaneously. They’ll spend more time more often verifying the accuracy of information, fixing errors and spotting anomalies in documents and data that lead to incorrect payments.

Read more: Survey Reveals Widespread Distrust in Financial Data — Here’s How You Fix It

4. No more losing money because of errors

How costly are mistakes? There are several different ways to evaluate this.

For example, a Technology Insight Corporation report said “if an organization processes 20,000 invoices per year with an average error rate of one-tenth of one percent, they can expect 20 errors. If this organization’s average invoice is $4,000, then their expected loss is $80,000 per year.”

So, just a few mistakes add up to big money fast.

A Nextprocess.com report found 88 percent of Excel spreadsheets used by businesses contain significant errors.

“Finding these errors and correcting them takes huge amounts of time. And if you’re relying on manual fact-checking, you’ll never be quite sure you caught them all,” the report said. “In a manual system, it’s pretty much inevitable that errors show up in spreadsheets, invoices get lost for a while and then paid late, and that duplicate payments will slip through.”

Read more: New Year’s Guide to Starting Fresh and Flourishing in Finance in 2021

But the problem goes deeper. Keep this mind: The number of errors using manual processes are likely far worse than any available statistics because it only includes the mistakes identified. For long periods of time, many go unnoticed. Some never get found. Others are ignored because of the time and effort needed to fix them.

By contrast, AP software requires less human intervention and reduces mistakes because they’re much easier to spot than using manual systems.

5. Better handling of exceptions

“Exceptions” come up from time-to-time when processing payments and invoices. These are unusual payment or invoice situations, such as numerical discrepancies, that need special attention and cannot be handled routinely.

AP software excels at identifying these exceptions, thereby saving you time and money. You’ll gain more control of the number of exceptions you have to handle and the speed you can process them using automated processes.

6. Easier segregation of duties

It’s natural for finance pros like you to be uneasy about your payments and invoices becoming more susceptible to fraud if you hire a company to automate these processes.

How can you be sure, for instance, that the same person within that company handles all the invoices and payments and, if they’re fraudsters, won’t send payments to themselves?

The answer is simple. Automated AP doesn’t allow any one person to handle all processing of invoices and payments. One person handles invoices, another payments, another checks, and another check signing. Tasks are meticulously divvied up to a broad set of different people to avoid one person controlling all these finances.

This is called “segregation of duties.” It’s one of the main reasons AP automation provides more security than manual processes and expedites payment and invoice processes faster and easier.

A NetSuite report further elaborates: “The same principle of checks and balances that keeps the United States government under control is a must-have in your accounts payable process. Segregation of duties is as simple as setting up a process where one person is responsible for queuing up business payments and another person is responsible for approving those payments before releasing the funds.”

A second Nextprocess.com report amplifies on this theme: “Giving a single employee total autonomy over money going in and out of your company just doesn’t make sense. Different people should be in charge of starting the payment process, handling exceptions invoices, and issuing approvals.”

Read more: 8 Powerful Ways to Convince Your CFO to Automate AP Processes

7. Better internal controls

Until now we’ve focused on several ways you’ll gain more control of your AP processes using bill payment software. Along with these are a few specific categories of internal controls that increase the security and minimize financial and data losses for your AP data and transactions. Three stand out:

  • verifying the obligation to pay;
  • entering payable data into the computer system; and
  • paying suppliers.

Put simply, verifying the obligation to pay ensures there’s a process and proves a payment needs to be made. Then that data needs to be entered into the automated system. After that, payment is sent to vendors or suppliers.

At each of these stages, checks and balances control the process. The whole purpose is to make sure tight controls are set up to determine who has asked to be paid and for how much. For example, a purchase order needs to match the amount of the invoice with the same account number and receipt of goods and services.

The payment then has to be OK’d by appropriate approvers. And these controls ensure the right person gets paid the correct amount without any duplicate payments going out the door.

These automated AP systems execute these steps much faster and more accurately than manual systems.

Internal controls, ranging from reconciliation, authority documentation and security, also exist to meet financial reporting deadlines and improve data accuracy. Auditors can be called upon to fix poor record-keeping or other aspects of your company’s financials that add risk to your business.

Final thoughts: Recapping how AP software increases financial control

Wanting full control of your finances is natural. You have every right to be concerned about large payments going to the correct people on time for the right amount.

All this can be done using manual processes, but it won’t be as fast and accurate as AP automation. If you want more control, AP software changes the game.

To reiterate a few of the most compelling reasons why, remember that if something goes wrong, you’re covered. If a payment gets lost or stolen, you’re not going to lose any money nor is your company. You’re insured.

You’ll also be constantly in the loop. At any time you’ll be liberated to check on exactly what’s going on with your payments and invoices. All this will be transparent.

If you want to speed up a payment to a specific customer, you can do that. If you want to delay a payment, that can be done. None of this will happen without you knowing about it and agreeing to the terms and processes.

And one final thought. You’re sure to have fewer mistakes when you automate. There’ll be many more eyes of more people looking and checking the payments and invoices more often than you could ever hope for using manual processes.

Using AP software, mistakes will go down, payments will speed up and you’ll be in much more control of your corporate finances.

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