Your company may be ready to shift to accounts payable (AP) automation. But mistakes could be made along the way.
What are those mistakes and how can your company avoid them to make this transition a success?
Here’s a list of 9 common mistakes and advice on how to dodge them.
Table of Contents
Mistake 1: Not Securing Buy-In from Internal Stakeholders
It’s a big mistake to not make sure key stakeholders in your company understand the AP automation plan, the benefits it will deliver and how the change will affect their jobs.
Don’t explain to them after the fact why this change was made. They may not support or trust your motives and go out of their way to make the transition less smooth and potentially unsuccessful.
What should you do?
Meet with key stakeholders to share a checklist of the plan and how you’ve scheduled to roll it out. Ask for feedback and address any concerns directly and candidly.
You’re likely to gain valuable insights from these team members about how AP automation can help the business save time and money.
And ensure them they’ll be included in training sessions on how to use the software so they’ll feel comfortable about eventually using it.
Convince Your CFO to Automate AP Processes
This report guides you on how to speak the CFO’s lingo strategically. Learn powerful techniques to think through how automating AP syncs with your CFO’s strategic goals and find out how to come best prepared with answers to tough questions.
Mistake 2: Not Creating a List of “Must-Haves”
Don’t make the mistake of not being exactly sure, up front, what must-have benefits AP automation must deliver. If you skip this step, your company will be more likely to choose a software that doesn’t solve its biggest problems.
What should you do?
Be careful about what software vendors demonstrate to you. Test the versatility of the products to makes sure they solve your company’s specific problems. Ask them to prove how their software works with your invoices and AP workflows.
Write down a list of the five “must-have” features that the software must deliver for your business. One might be, for instance, at least a 50 percent reduction in time to process a single invoice. Don’t consider any software that won’t deliver this time-saving benefit.
Mistake 3: Not Calculating Current Cost and Time Spent Using Manual Systems
Don’t forget to calculate how much money and time your company will save by automating AP compared with manual AP. If you don’t figure this out, you’re bound to only have a general – and often inadequate – sense of the money and time savings you need to invest in AP automation. Ballpark estimates won’t cut it.
This will take time and diligence but will pay off. You’ll avoid investing in AP automation software that doesn’t deliver these benefits.
What should you do?
Double-check and verify the time- and cost-saving claims software vendors make. The claims may or may not be true and may not apply to your company’s financial systems.
Mistake 4: Not Thinking Through Software Integrations
You have to know how smoothly AP automation will integrate with your accounting and enterprise resourcing planning software.
The software you buy may not send data back and forth easily between the accounting and ERP software – even if the software vendor claims it will. As a result, your automation AP system will still be inefficient and create more problems for you to overcome.
What should you do?
To avoid this situation, make sure you test AP software with the actual invoices you’ll process and integrate with your accounting and ERP systems.
During this testing phase, verify how quickly and accurately the software automatically uploads your invoices and supporting documents directly into your ERP system.
If you determine these integrations run seamlessly, you’ll know when you integrate the software your manual data entry will decrease and that will save your company money. If you’re noticing lots of mistakes, you’ll want to test other software products until you find one that minimizes errors.
Mistake 5: Not Focusing on Future Software Roadmaps
Sometimes companies focus on what AP software can do for them now without considering what benefits and features the software will give them three-to-five years out. This will end up being a costly mistake if the software vendor’s future product roadmaps don’t align with your future AP automation needs.
A provider’s roadmap will clue you in to whether the software provider will continue to innovate and stay on top of industry changes.
What should you do?
Ask software vendors to give you their specific product roadmap plans and have them explain the strategy behind them. Have them share timelines for the next iterations of software and what benefits they’ll deliver for your AP automation processes.
Then, ask to speak with their customers who have used their software. Contact the customers and find out if they like (or dislike) the software and how confident they are in the vendor’s ability to deliver future software upgrades.
Mistake 6: Not Understanding Potential OCR Pitfalls
You don’t want to make the mistake of thinking that optical character recognition (OCR) technology solves all your challenges converting paper documents into digital formats.
It’s certainly helpful for capturing and moving data into electronic formats and helps reduce the amount of data manual entry needed, but it still needs occasional human intervention to confirm accuracy.
What should you do?
Have software providers show you how their OCR capabilities work. Ask them how accurate their software is in converting paper docs to digital forms. What percent of the time does the technology make mistakes such as placing the invoice amount in the invoice number field?
Get a granular understanding of how valuable the OCR technology will be for your business. Ask the vendor what else it can offer you to ensure higher levels of accuracy such as machine learning technology.
Mistake 7: Paying Invoices Too Fast
You don’t want to approve invoices and pay them as soon as you receive them unless you’ve confirmed the product or service has been delivered.
If you do move too swiftly, you may send the payment only to find the product was not delivered, or it’s not the correct product. And that payment you sent may be difficult to get back.
What should you do?
Be sure you check that the product or service has been delivered satisfactorily before sending a payment. Taking the extra time will be a lot less time consuming than retrieving the payment you sent too quickly.
Mistake 8: Not Training Multiple People
You definitely don’t want just one person in your company trained in using the AP automation software. That’s likely to expose you too many risks. What if that person resigns, retires?
What if that person is actually stealing money from your company doing this process? Who would know? What about all the work this one person would have to take on? Mistakes would be more likely especially with no one else able to check their work.
What should you do?
As soon as you start using the software, train at least three (preferably more) people on how to use the software. You’ll reduce risks and errors, increase productivity and gain more insight on how to use the software to make your business more productive.
Mistake 9: Not Catching Fraudulent Invoices
Sometimes so-called “invoices” may arrive at your company in an attempt for you to make a payment you don’t need to. It’s a mistake to use any AP automation software that doesn’t effectively flag these invoices before you pay them.
“Some companies will send marketing documents disguised as invoices to businesses,” according to Team One Accounting. “You may have to read the fine print to notice it is not really an invoice. In some cases, it is simply outright fraud, trying to get you to pay something that is not owed.
What should you do?
Ask AP software vendors to show you how their product catches these fraudulent invoices automatically and what percentage of the time it does. And have them show you these capabilities using your invoices.