10 Accounts Payable Automation Best Practices

Unlocking the full potential of accounts payable (AP) automation requires more than just implementing software—it demands a strategic approach grounded in best practices. By blending cutting-edge AP automation tools with the following guidelines, your team can reclaim valuable hours spent on manual tasks, enhance efficiency, and fortify your business against potential pitfalls.

Understanding AP Automation: Accounts payable automation, or AP automation, involves employing tools or processes to automate the manual elements of accounts payable processing. This digital transformation begins with invoices and purchase orders, eliminating the need for manual data entry and enhancing overall efficiency.

10 Key AP Automation Best Practices:

  1. Secure Buy-In: Overcome resistance to change by ensuring every finance team member is onboard and committed to AP automation. Engage in one-on-one discussions, highlighting the ways in which automation will simplify their roles and benefit the business. Document feedback to refine your approach and build a compelling business case.
  2. Designate a Project Manager: Appoint a dedicated AP automation project manager *to liaise with software suppliers during implementation. This individual manages behind-the-scenes aspects, oversees optimal setup, and serves as the internal point of contact for issue resolution. Regular reports on efficiency improvements and optimizations are part of their responsibilities.
  3. Prompt Invoice Entry: Maximize the benefits of AP *automation by entering new invoices into the system promptly. The reduction in days payable outstanding (DPO) hinges on the timing of invoice entry. Develop a habit of entering invoices on the day of receipt, whether in digital or paper form, to track transactions efficiently.
  4. Phased Automation Implementation: Introduce automation gradually to allow for troubleshooting and adaptation. While automation streamlines processes, improper setup can lead to larger issues. Implementing changes incrementally ensures a smoother transition, allowing the team to adjust and realize maximum automation benefits.
  5. Vendor Communication: Maintain open communication with vendors by leveraging *AP automation systems that offer vendor access portals. These portals enable suppliers to update information, monitor invoice statuses, and find answers to common queries. Proactively inform key suppliers about the upcoming changes, fostering collaboration and reducing customer service calls.
  6. System Integration: Choose an *AP automation system that seamlessly integrates with existing finance tools, including enterprise resource planning (ERP) and customer relationship management systems. This integration minimizes data duplication, reduces the learning curve, and provides end-to-end data for comprehensive reporting.
  7. Leverage Early-Payment Discounts: Maximize savings by taking advantage of early-payment discounts facilitated by AP automation systems. *These tools streamline cash management and approval processes, eliminating manual bottlenecks that could hinder savings potential.
  8. Implement Workflows: Utilize AP automation software *to establish clear workflow systems, ensuring transparency and accountability among team members. This helps align responsibilities, particularly with respect to deadlines, and facilitates identification and resolution of bottlenecks.
  9. Monitor Metrics: Harness real-time data provided by AP automation software *to create dashboards and generate business insights. Regularly assess metrics to track cash flow, identify operational strengths, and pinpoint areas for improvement. Adjust workflows based on these insights to enhance overall efficiency.
  10. Contingency Planning: Develop a robust business continuity plan that includes documentation of AP processes. *In the event of a natural disaster, server crash, or power outage, having a contingency plan in place allows for a seamless pivot back to manual processes. Ensure staff is trained on manual functions as a fail-safe measure.

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