Over the last decade, it has become apparent that AP automation can help improve the overall financial operations of a business. Automation adds important value to accounts payable, including real-time visibility into performance and cash flow and increased reporting accuracy.
Applying automation to your AP and payment processes means removing paper invoices and checks which helps make the month-end closing process a painless experience.
Did you know that the Institute of Finance and Management (IOFM) has a resource center devoted to improving month and year-end close? In fact, automation is listed as one of their 12 recommendations for “Best Practices for Governing the Financial Close.”
The Problem with Paper
If your company is still receiving paper invoices or paying bills, you’re not capitalizing on today’s best practices. You’re also missing out on the potential for savings after relieving your AP team of time-consuming tasks such as tracking down invoices and filing mountains of paperwork.
If you’ve worked in a paper-based environment, you know month-end close is a time-consuming process that involves numerous checklists and journal entries. Cash management, accounts receivable, prepaid expenses, fixed assets, accounts payable – there are countless activities that must be accounted for before closing the books for the month. There’s also the reporting, running preliminary budget-to-actual expense reports by department, and reviewing and analyzing month-end financial data; making adjustments as necessary.
In a paper-based environment, invoices can sit on desks for weeks awaiting an approval signature, or get lost in the shuffle entirely. Often the AP team has no control over when invoices arrive, and it may take multiple trips between departments or offices to get all the approvals needed.
The staff may spend a week or more, including late nights and weekends, gathering and entering the invoices into their accounting system in order to close the books each month.
Automation Can Help
With AP Automation, invoices are automatically stored in a centralized, searchable database so you can easily reconcile invoices and produce financial reports on demand. You can track the status of any invoice at any time, giving you the ability to analyze critical metrics like approval cycle times and month-end accruals. And with one-click accrual, you can see what’s pending approval, how it’s coded, and the dollars outstanding in an easy-to-use journal entry format.
We’ve seen companies dramatically improve their month-end close by automating accounts payable processes.
