As an entrepreneur, you will have to wear different hats at the same time to ensure that your business operates properly and attains long-term success in the industry. Aside from making sure that you are able to hire the best talents and implement an effective business plan, you also have to pay attention to your accounts payable process. This is an important responsibility that entrepreneurs should take on as this can affect their businesses’ daily operations and financial health.
Businesses follow different accounts payable processes, but, usually, the full cycle starts with capturing invoice data and concludes with posting invoices for payments. The rationale of creating and implementing an accounts payable process is to ensure that the business only pays for accurate and legitimate invoices and find opportunities to save money.
Your accounts payable process can make or break the success of your business, which is why you should look for ways to automate it. Here is how you can start automating invoices, billing, and bookkeeping with 5 tips:
1. Embrace E-Invoicing
As mentioned, the first step in every business's accounts payable process involves receiving invoice data sent by vendors. This is the most crucial step of the process because any error can adversely affect the entire workflow and, in worse cases, can become the reason why your business will lose a hefty sum of money.
To avoid errors in receiving invoices from vendors, embrace e-invoicing. In fact, this should be your first step in automating accounts payable as this can minimize errors to ensure that the workflow goes smoothly for both parties. Moreover, embracing e-invoicing will also prevent you from losing important documents as files are sent, received, and stored digitally.
There are different types of e-invoicing software available today, but all work the same way—it allows vendors to enter data (amount payable, bank details, due date, etc.) into the system, and an e-invoice is immediately sent to your own access point.
2. Set Up Vendor Portals
Businesses usually have to work with different vendors for many different reasons. While some vendors provide wholesale products at lower prices, others supply raw materials for the production of goods. Regardless, you need to make sure that these vendors can easily send accurate invoices to your business to keep your finances in check.
Another way to automate your accounts payable process is to set up vendor portals. Investing in software or apps that offer this feature can be very beneficial to the vendors because it allows them to submit and track a quote fast, communicate real-time with your business's purchasing team, and receive automated payments. Since vendor portals no longer use paper mails, you will be able to eliminate mailroom costs and the time required to receive, open, sort, and distribute paper mails.
Several contractors and businesses offer vendor portal services, so make sure to choose a provider that suits your needs. Ideally, you should also choose a service provider that offers support for mobile, PDF, and e-invoicing to make it more convenient for vendors to send invoices and receive payments.
3. Ditch Data Entry
Data entry is one of the most vital parts of any accounting process because the information gathered here will be used by other departments to make decisions and look for strategies to increase profits. Although important, most businesses still choose to manually input data as part of their accounts payable process.
If you want to automate your accounts payable process, ditch data entry and use software that allows you to capture data. This will jumpstart all other accounts payable processes with zero room for errors. Moreover, automating your data entry allows you to store valuable information in different mediums, such as a CSV file or a smart spreadsheet, making it easy for every department of your business to access and use that information for analysis.
4. Expedite Approvals
Invoices sent to a business usually has to go through different persons for approval. This is an essential phase in every accounts payable process as it's meant to manage budgets and verify expenses, but can create significant points of errors. The more people involved in a specific phase, the more susceptible data is to errors and loss.
Expediting or improving how your business approves invoices is another great way to automate your accounts payable process. This will ensure that vendors are paid fast and the business's financial health isn't compromised.
Ideally, you should invest in an account payables process that automatically routes invoices to the concerned parties. The invoice should be sent to and approved by the person who initiated the purchase order, sent to the manager or department head next, and then to the financial admin for final approval. Because there’s no paperwork involved, this will allow every individual involved in the approval process to save a lot of time.
5. Automate Complex Coding
Businesses will use different codes to sort out their invoices. The bigger the business is, the more codes they have to use to ensure that their invoices are organized properly. Assigning codes can be helpful, but also opens windows for errors. This is especially true if the business uses many different codes.
You should be able to automate complex coding as part of your accounts payable process. Doing so can speed up the entire process and lessen errors as different codes are automatically applied in every data point.
Since everything is classified based on different codes, you just have to sort information by typing in the codes of the data you want to access. This will make it easy and convenient for you to assemble data during tax season and analyze the business's spending patterns.
Why Should You Automate Your Accounts Payable Process?
Businesses that have been operating for years with manual accounts payable processes might not find the need to change their ways. Their process has been working for years, and they would often think that changing anything will only cost them more time and money.
Manually working on your business's accounts payable process might be convenient and cheap, but this doesn't always mean that it provides the best results. More often than not, sticking to manual processes can cause bigger problems in the long run.
To ensure that your business stays afloat for years, it is best if you work on automating your accounts payable process. This will require time and effort, but will be worth it as your business can enjoy the following benefits:
• Saves Time
Your business will have to complete different processes every day to ensure its efficiency. Aside from managing invoices from vendors, your business also has to manage customers, implement marketing strategies, and implement strategies to retain employees.
Automating your accounts payable process is a great way to save time. Getting rid of manual data entry, for example, will save your employees a lot of time, especially if your business regularly works with countless vendors every day.
• Boosts Productivity
The business industry is competitive as more and more companies are opening and expanding. If you want yours to stand out from the competition, it is vital that you implement strategies that can boost your productivity, like automating your accounts payable process, for example.
Automating your accounts payable process will require time and effort from your workforce, but the results will be worth it as this can improve your employees' productivity. When your employees no longer have to spend their entire work day for data entry or coding invoices, they will have more time to focus on other important tasks that require their skills and experience.
• Reduces Errors
Money is an important resource for every business, and mismanaging it can adversely affect your business's daily operations. In worse cases, mismanagement of funds can even become the reason why your business will be short-lived. If you don't want these to happen, work on automating your accounts payable process as soon as possible. Automating processes will lessen human errors, reducing the risks of losing money and other important documents.
Merely transposing numbers like changing $59 to $95, can cost a lot of money from your business, and can easily be avoided when you automate your data entry. Errors of lost budgets and invoices not submitted on time can also be avoided once you automate your accounts payable process.
• Prevents Fraud
The amount of money a person earns can affect their quality of life, which is why a lot are tempted to steal or deceive other people just to get money fast. And, regardless of how trustworthy you think your employees are, they are not completely immune from stealing money from your business. This is especially true for employees who have access to your finances and believe that their schemes will be left unnoticed.
Automating is an effective way of preventing accounts payable fraud. Since transactions are done digitally and within a system, fraudsters will have a hard time falsifying financial reports and altering business expenses. In fact, any physical document will be useless as this is no longer necessary for your accounts payable process.
Moreover, automating your accounts payable process will lessen the number of people involved, making it easier for you to maintain confidentiality concerning your business's financial health.
It Will Be Worth Automating Accounts Payable
Automating your accounts payable process and accounts receivable billing will require time, especially if your staff has been used to doing everything manually. To make the transition easier, invest in tools and let them undergo the necessary training and workshop. All of these will be worth it as your business will eventually experience the benefits of a fully automated accounts payable process!
