The accounts payable process is a critical function in any finance department, and it’s not just about paying the bills. You also have to ensure spend control and compliance, reduce costs, and maintain healthy supply chain relationships.
The accounts payable workflow covers all accounting steps required to complete a purchase: from placing a purchase order to making payments. The full accounts payable cycle usually includes invoice data capture, invoice review and coding, matching bills to purchase orders or performing 3-way matching, invoice approval and, finally, posting for payments.
The question is: are you doing it in the most efficient way possible by employing the best accounts payable software? Let’s have a look at 5 reasons why you should improve this process and establish efficiency, clear communication, and transparency.
1. Move your accounting to the cloud to get more control over processes and data
This might sound like a very obvious piece of advice and most probably you’re already using cloud automated accounting software. Still, we think it’s important enough to be mentioned again and again. Only with a platform serving as a single source of truth for your accounting processes, you’ll be able to properly control them and organise efficient workflows for your accounts payable team. Manual processes and paperwork lead to siloed data as well as the inability to analyse a company’s spending or get a proper overview of its outgoings.
Using cloud accounting tools like Xero or QuickBooks Online enhanced with an appropriate app stack tailored to your requirements eliminates data silos and provides you with both a clear picture of the company spending and efficient automated workflows.
2. Implement OCR and/or switch to digital invoices to cut costs
The biggest source of clutter in the accounts payable process is probably paper invoices. You need to print them out, enter them by hand into the accounting system, get them to the right people for their manual authorisation, and have the space to store and archive them. All in all, the cost of processing invoices manually is much higher than doing it digitally, even if you only count the direct costs for paper, toner and physical storage. When you add the indirect costs such as manual data entry and correcting data entry errors afterwards, you’ll see that you’re paying a huge price for using paper invoices.
To cut these expenses, switch to digital invoices. Many suppliers will be able, and happy, to do so. For eliminating manual entries and organising all invoices conveniently, it’s great to use a data entry (or OCR) tool that will scan your invoices and feed the data into the accounting system. This also paves the way for implementing a paperless invoice approval process.
3. Monitor your budgets closely to prevent overspending
To make sure you’re not going to overspend, include budget checking in your accounts payable process. Set clear budgets for each expense category and establish a process to monitor them in a way that does not affect team productivity.
With ApprovalMax, people authorising invoices see the relevant budgets right next to the invoice on the same screen, which saves approvers a lot of time and enhances spend control. Learn more about this feature here.
4. Establish clear seamless authorisation processes for an easy handoff
When an organisation grows, its spend control process becomes more complex. Without a clear authorisation policy in place, complexity will eventually cause confusion, inefficiency and delays. So, take some time to compose a document that contains detailed authorisation rules. Specify who is responsible for approving particular types of expenses, which amounts are to be approved by several stakeholders, and which can be approved automatically. It’s also possible to define a rule for mandatory invoice matching to increase the level of control.
If you already have an authorisation policy in place but the process doesn’t seem to be effective, you should look closely to identify bottlenecks and maybe add some more flexible rules. For example, if the CEO in your company is the only approver but just doesn’t have time to look through all the invoices, you might want to consider delegating their invoice approval authority to someone else. If the authorisation process is still a major hindrance, our next tip is for you.
5. Use approval automation to streamline and track the authorisation process
So, you have digitised invoices, implemented a cloud accounting system, prepared budgets and established a strict authorisation policy for your company – but something’s still not right? We know what might be wrong: you’re probably trying to manage purchase order and invoice authorisations by email. Maybe you even print them out to perform approvals on paper even though you already have everything in the cloud. Well, the good news is that you really don’t have to do it manually anymore.
An approval automation app takes a lot off your shoulders. With finance automation provided by ApprovalMax you set up a complex (or simple!) multi-level approval workflow only once and it will work without any human intervention, send automated notifications and reminders to approvers and move the invoices forward through the process. You can also add steps for budget checking and invoice matching to the approval process as well as benefit from automated audit trails and fraud detection capabilities.
ApprovalMax is a great app for workflow and eliminating invoices being lost through passing around for approval and email approvals processes. Seamless integration with Xero. Can see an immediate improvement in approval workflow efficiencies and time spent approving invoices.Xero App Store review by Reece Jory
Great app, easy to use. Has saved our business heaps of time = $. Configuration options allow approvals to be tailored exactly to our required workflow. Minimal training required for even our most tech challenged peopleXero App Store review by Gordon Tivendale
The accounts payable process can cost your company a lot of time and money. With the right processes and tools to support everyone involved, you’ll have the transparency and control needed to increase the efficiency of your accounts payable process and can say good-bye to late payments. This will also reduce stress for your team, improve collaboration and save team members time that’s better spent on doing more valuable work than data entry or chasing approvers.
Increase your accounting process efficiency with powerful approval automation
You’re just a few steps away from using automated workflows that will save time for the whole team!