In business, it is always important to improve efficiency, as this results in bigger profits. The accounts payable (AP) process took a lot of work and effort for many years. There seemed to be no way to improve this process’s efficiency significantly. However, this all changed with the advent of AP automation. Automating the accounts payable process increases efficiency in multiple ways, which means more profit. AP automation also leads to fewer errors in the AP process. Read on to learn more about how AP automation increases the efficiency of the AP process.

Streamlined payment processing

Perhaps the most important benefit offered by AP automation is streamlined payment processing. In the past, AP professionals often had to make payments using several different methods. This required them to access multiple payment systems. However, an automated AP program can submit payments automatically from multiple payment accounts. Also, automated programs can automatically send digital checks (ACH payments). This saves time because AP workers do not have to wait for the checks to be printed. Additionally, companies can save the money they would have spent on paper, ink, and checks. This could be thousands per month for a large operation.

Automatic reconciliation

Until a few years ago, AP professionals had to automatically reconcile their payment records with their general ledger. This process was error-prone and time-consuming. Accountants had to manually enter data from the payment records into the general ledger. An automated AP platform can now link payment records and the company’s general ledger. This means accountants can spend their time on high-value tasks that fully utilize their talents instead of menial data entry work.

Fewer errors

Even experienced and well-trained accountants make mistakes. These mistakes require time to find and fix. Time is money when running a business, so such mistakes can negatively impact a company’s bottom line. AP programs remove human error from the equation. These programs can operate with near-perfect accuracy as long as they are set up properly. Not only will this save the company money, but it will also avoid the problem of upsetting vendors with an incorrect payment.

Simpler integrations

AP departments without automated platforms often use several software packages from different vendors. Integrating these programs may be impossible, so accountants will have to transfer data manually. Even if it is possible to integrate various accounting programs, connecting them may take a lot of time and effort. The most efficient way to handle multiple accounting functions is through one automated AP platform with multiple accounting functions.

Preventing lost invoices

Losing an invoice is one of the worst mistakes during the AP process. Unfortunately, this is a fairly common error when companies manually handle the entire AP process. Invoices can get easily lost during the transfer from accountant to approver or payment authorization. It is necessary to locate a lost invoice. This means the AP employees must search until the misplaced invoice is located. This search often takes hours and involves multiple employees. Searching for a lost invoice can halt the entire AP department, drastically reducing efficiency. An automated AP system tracks an invoice through every step of the process. These systems will also save copies of the invoice to ensure it is always accessible to everyone working on it. Also, the digital invoices used by AP automation systems eliminate the problem of misplacing a paper invoice.

Tracking due dates

An AP department needs to track the due dates for each invoice. However, this is a time-consuming and inefficient process. This is because AP professionals must manually check the due date on each invoice. However, automated AP programs automatically record each invoice’s due date. Any AP professional working on this invoice can easily access this information. Not only do AP programs make tracking due dates easy, but they also make it easier for companies to get discounts by processing invoices early. This is because such programs track the early payment dates specified on each invoice. Companies can often save two percent or more if they pay by these dates.

AP automation has multiple benefits

Enhanced operational efficiency is one of the biggest benefits offered by AP automation. However, it is certainly not the only benefit. Automating the AP process helps businesses track their expenditures more accurately and easily. This makes complying with relevant taxes easier. Also, vendors will appreciate the ease of doing business with a company that uses an AP automation system. This could result in these vendors doing more business with the company. Existing vendors may help the company get more business through word of mouth.