Accounts Payable Automation is an automated accounting entry that constitutes a companies obligation to settle a short term debt to its suppliers or creditors – in simple terms, this means that ‘money is owed by a business to suppliers which is seen on the balance sheet as a liability.
Accounts Payable Automation is a way of simplifying and speeding the accounts payable invoice process, through accelerating the account payable process it can, therefore, minimize invoice data errors as you remove the human intervention aspect.
How do you automate Accounts Payable?
Organizations that want to implement an Accounts Payable Automation solution that is connected to an ERP (Enterprise Resource Planning) system—these systems are usually cloud-based systems. The automation of Accounts Payable work differently depending on the invoices that are managed.
Depending on the type of supplier invoices they are managed in different ways in terms of ‘spends’ either indirect or direct spend.
Indirect spend: (expenses or invoices) the Accounts Payable automation solution supports automatic data capture, coding and distribution of invoices to the appropriate approver within their organization.
Direct spend: is where a purchase order is involved, the Accounts Payable automation system which will automatically match the invoice data to the purchase order, and if all matches, they directly send the invoice for payment without any human intervention at all.
This whole process is referred to as touchless invoice processing and the end goal of automation in accounts payable. As mentioned before, this is to help minimize the faults and errors in the Accounts Payable service
What is the Accounts Payable process?
The Accounts Payable process refers to the technology used in order to automate and streamline Accounts Payable. This process removes manual tasks and provides companies with better control and visibility over their financial information whilst also enabling touchless processing of supplier invoices.
The process codes and routes the invoice through the digital workflow which functions on set logic configured in company-specific accounts payable automation software. This is then amalgamated with different companies ERP (Enterprise Resource Planning) harmoniously transferring information between systems.
It has also been proven to provide a significant saving, cost, and time-wise for companies due to the elimination of manual tasks. Accounts Payable also reduces the risks accompanied by human intervention such as fraud, as this process gives management and accounts payable staff visibility and capabilities to report into invoices and transactions company-wide.
Examples of Accounts Payable?
Accounts Payable are amounts owed to individuals or businesses for goods/services provided. These are commonly due in 30 to 60 days and companies are not charged interest on this amount if this is paid on time. Examples of Accounts Payable would be any type of accounting or legal services, supplies and utilities.
A common example used is a mortgage – as you sign a contract in which stating you pay the amount back over a predetermined period of time in installments.
B2BE would love to give you more insight into Accounts Payable and its intricacies, (e.g. Three-Way Matching), so feel free to reach out to the B2BE sales team for how we can assist within your organization, and we have a part two on this blog coming soon explaining costing, workflows, and the full Accounts Payable Automation cycle.