Firms that set up accounts payable greatest practices enhance the visibility of data, scale back their bill processing time, lower your expenses, strengthen inside controls and money circulate administration, scale back fraud and errors, and enhance vendor relationships. Accounts payable greatest practices are a subset of accounting greatest practices. Companies utilizing greatest practices in accounts payable processes and accounting acquire a considerable aggressive benefit.
In accordance with the Ardent Companions annual report, “The State of ePayables 2023: Paving the Approach for a Smarter Future”:
“The flexibility to course of invoices straight-through is one other space the place the Greatest-in-Class organizations reveal their prowess. Whereas solely 29% of the All Others possess this functionality, a robust 69% of the Greatest-in-Class organizations can course of invoices with out handbook intervention, the elusive “holy grail” of bill management.”
Prime Greatest Practices for Accounts Payable
The highest 10 accounts payable greatest practices are:
- Streamline AP processes and accounting integration.
- Use an clever technology-driven, paperless AP automation system for straight-through bill processing.
- Implement robust inside controls and exception flagging.
- Onboard distributors and automate standing notifications by way of a vendor portal.
- Automate digital 2 or 3-way matching of invoices with buy orders and receiving paperwork.
- Use automated AP bill approval processes.
- Optimize digital cost strategies.
- Maximize early cost reductions.
- Reconcile funds and accounts payable balances to the final ledger.
- Optimize visibility, metrics, enterprise intelligence, and real-time AP reporting.
1 – Streamline AP Processes and Accounting Integration
Streamline AP course of workflows with paperless AP. An AP automation system has ERP or accounting system integration. AP automation software program will assist your organization obtain its accounts payable bill processing greatest practices objectives by way of built-in greatest practices for accounts payable and automatic AP workflows.
Advantages:
Acquire effectivity and stop bottlenecks by way of streamlining of accounts payable workflows. AP automation with ERP integration eliminates the necessity for additional information entry into an accounting system as a result of the information is synced between techniques.
2 – Use an Clever Know-how-driven AP Automation System
A cloud-based, fashionable AP automation system pushed by synthetic intelligence (AI), machine studying (ML), OCR (optical character recognition), and rules-based robotic course of automation (RPA) for automating repetitive duties would be the spine for implementing many of those greatest practices in accounts payable in your corporation.
Stakeholders utilizing the unified AP automation system acquire entry to related digital doc information, together with the seller bill, buy order, contract, and receiving report with a knowledge repository linked to the provider portal.
AI-driven optical character recognition (OCR) precisely digitizes and captures vendor bill information, together with line gadgets. The centralized digital doc information is obtainable to be used in automated bill verification, bill matching, and getting vendor bill approval for cost.
Advantages:
Apart from considerably enhancing bill processing effectivity, utilizing an AI-driven AP automation system helps your organization enhance its vendor relationships by way of higher communications, together with cost standing, and sooner funds. A contemporary, cloud-based AP automation system eliminates paper paperwork, strengthens inside controls, and helps your corporation visualize and management spend and make higher selections, utilizing one unified system accessible to stakeholders.
3 – Implement Robust Inner Controls and Exception Flagging
Accounts payable inside controls greatest practices embody correct segregation of duties and limiting position entry to the Vendor Grasp File. For instance, within the separation of duties, the accounts payable employees liable for bill processing can’t approve invoices for cost, full funds with out correct approval, make journal entries, or put up transactions to the final ledger to shut the books.
For accounts payable inside controls greatest practices, robust inside controls ought to use technology-based techniques to detect and flag potential errors, together with duplicate invoices, and stop potential fraud. Not paying invoices twice avoids prices that will decrease money circulate at a time limit or endlessly if distributors don’t promptly concern overpayment credit or pay refunds in money.
Advantages:
Firms should preserve robust inside controls to forestall fraud and errors. An AP automation resolution gives an audit path and digitizes transactions. Good inside controls additionally scale back exterior audit prices as a result of much less time is required to finish the audit.
4 – Onboard Distributors and Automate Standing Notifications By a Vendor Portal
AP automation software program features a vendor portal for onboarding your organization’s suppliers and enhancing communications, together with vendor bill cost standing.
Advantages:
Vendor onboarding by way of a portal in AP automation software program ensures the accuracy of knowledge within the vendor grasp file with out duplication, can be utilized to gather provider tax kinds like W-9 or W-8 kinds, and signifies cost standing, cost historical past, and bill historical past. Invoices could be uploaded by suppliers by way of the seller portal or acquired by electronic mail or different accessible strategies.
5 – Automate Digital 2 or 3-way Matching of Invoices
Automating digital bill matching is one other aspect of accounts payable bill processing greatest practices. The AP automation system ought to carry out 3-way bill matching by line merchandise for items with buy orders and receiving studies or 2-way matching of invoices with buy orders when receiving studies aren’t relevant to the kind of accounts payable bill transaction. Your corporation ought to solely be paying for the precise amount of products ordered and acquired on the negotiated buy order value.
Advantages:
Automated digital bill information matching by line merchandise with the acquisition order (PO) and receiving report for three-way matching (or two-way bill and PO matching) ensures that invoices are acquired for gadgets authorized by the corporate, and funds are solely made when required for approved items or companies acquired.
6 – Use Automated AP Bill Approval Processes
Automated approval is without doubt one of the prime greatest practices in accounts payable processes. AP automation software program automates the accounts payable bill approval course of by routing invoices to the designated approver in compliance with firm coverage guidelines and limits. The accounts payable approval course of could use RPA to automate approval routing or provide the skill so as to add designated approvers. Should you add approvers, think about accounts payable inside controls greatest practices, together with segregation of duties, their approval degree, and authority to approve an bill for cost.
Advantages:
Automated bill approval leads to effectivity, no misplaced or lacking paper paperwork, and sooner approvals by designated approvers who can approve from anyplace. AP automation techniques flag exceptions and duplicate invoices to keep away from cost errors.
7 – Optimize Digital Fee Strategies
Greatest practices in accounts payable embody making digital funds slightly than utilizing paper checks to pay distributors. Fraudsters have expanded the frequency of stealing paper checks within the mail and washing checks to fraudulently revise payees and quantities and steal cash from the payers. Apart from the chance of monetary loss, printing paper checks, signing checks in particular person or with firm stamps, stuffing envelopes with checks, and mailing checks require pointless employees time and value your organization cash.
Digital funds switch (EFT) sorts embody home U.S. ACH funds, comparable techniques outdoors the US for financial institution account-to-bank account transfers, wire transfers, PayPal, and digital pockets transfers. Your corporation ought to exchange writing paper checks with an economical digital cost technique. With world funds, international forex trade can also be a consideration to deal with successfully when paying vendor invoices in accounts payable.
Advantages:
Making digital funds reduces cost prices per bill, will increase effectivity, reduces fraud threat, gives environmental sustainability, and will increase the sorts of cost strategies that can be utilized.
8 – Maximize Early Fee Reductions
Maximizing early cost reductions provided by distributors as bill phrases (like 2/10 internet 30) is without doubt one of the most important greatest practices for accounts payable as a result of it’s a cost-reduction technique that improves profitability and money circulate. When your corporation pays its invoices by the tenth day as an alternative of the thirtieth day when due on the full quantity, it may possibly scale back the bill quantity payable by the two% low cost. The low cost shouldn’t be 2% per yr, it’s 2% earned in 10 days, so it is worthwhile taking.
Your AP automation system hastens bill processing and vendor bill approval, making it potential to take these early cost reductions in time with accounts payable bill processing greatest practices. While you take early cost reductions constantly, your finance group is a contributor to enterprise outcomes slightly than being characterised as a enterprise price.
Advantages:
Incomes and taking early cost reductions saves substantial cash (significantly on giant stock purchases) and improves money circulate, gross margin, and profitability.
9 – Promptly Reconcile Funds and Accounts Payable Balances
Reconcile funds and accounts payable balances to the final ledger shortly and repeatedly to find accounts payable errors and irregularities and set up money stability reliability. Reconciliation is greatest carried out as an automatic course of as an alternative of utilizing manually ready spreadsheets.
Advantages:
AP automation techniques mechanically reconcile funds and accounts payable balances. Consequently, money and payables balances will likely be extra correct and the books could be closed sooner.
10 – Optimize Visibility, Metrics, Enterprise Intelligence, and Actual-Time AP Reporting
Greatest practices for accounts payable embody gaining real-time visibility into accounts payable balances, deliberate funds, and enterprise spend.
Companies obtain these greatest practices in accounts payable course of objectives utilizing AP automation with real-time information analytics, metrics together with AP KPIs, AI-enhanced enterprise intelligence, and higher accounts payable reporting. With well timed accounts payable studies, the accounting and finance departments can overview these studies for cost timeliness, resolve vendor discrepancy points or disputes, and request refunds if desired for credit score balances on account of your organization from rare distributors.
Advantages:
All stakeholders have visibility into one real-time system as an alternative of utilizing siloed techniques. AP automation software program gives real-time dashboards, analytics, and AI-driven enterprise intelligence for decision-making. With an accounts payable automation system, you’ll additionally seize invoices sooner to make accounts payable balances and enterprise spend extra up-to-date for close to real-time evaluation.
Conclusion
Digital transformation with AP automation software program is a key to attaining the advantages of accounts payable greatest practices. To implement prime greatest practices in accounts payable, uncover an AP automation software program known as Stream by Nanonets.