As a finance professional, control over payments is always top of mind. So, it’s understandable to be concerned about losing control and taking on more risk by using accounts payable (AP) software and trusting automation.
This blog highlights five ways automating your AP will help give you more control over your payment processes.
1. Better visibility and control
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 be able to trace steps 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.
2. 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
3. Fewer errors
How costly are mistakes? Just a few mistakes can add up 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.
4. 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.
5. 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
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 can help change the game.