Setting Accounts Payable Goals & How AP Automation Can Help
- Posted by: David Watters
- Category: Best Practices
Your Accounts Payable (AP) function is an incredibly important part of your business and an area that has been challenged throughout the pandemic. Organisations that have typically had more manual, paper-based, processes have been hit particular hard as staff were forced to work from home. As business start to emerge from the pandemic and enter the ‘new normal’ a lot of focus is being put on optimising and automating back office functions. We take a look at two important aspects that organisations are considering at the moment:
- How AP Automation can help an organisation
- Setting up Accounts Payable goals to drive operational efficiency
How AP Automation can help an organisation
Completely Digital Workflow
With AP Automation, you never have to deal with a paper invoice again, this is particularly important in ensuring that invoices can be processed with staff working remotely but also approved digitally as well. You get a full digital audit trail through AP automation platforms making it perfect to ensure audit compliance.
Invoice fraud is a growing issue across the region with scammers working on very sophisticated ways to intercept invoices and manipulate them. Digital invoice processing and accounts payable automation solves this problem as you can embed automated data verification of a number of key data points such as:
- External Supplier validation
- Business Number validation
- Internal supplier details validations
- Duplicate check
- Purchase order matching
- Bank account verification
Data verification of invoice data through AP Automation can completely mitigate the risk of invoice fraud.
Improved Accuracy and Reduction in Manual Work
One of the main tenets of AP automation is the ability to shift high volume, low value transactional activities, like manual entry of data, away from your staff so they can focus on higher value activities. With AP Automation, invoice data is captured digitally vastly reducing manual intervention and nearly eliminating data entry errors – consider that manual entry of invoice data accounts for 3.6% of errors on invoices requiring to be fixed. (AP Association Facts and Statistics).
AP Automation drives greater control over how your invoices are processed and ensures that financial and approval policies are adhered to. This control is driven by the approval and exception workflows that are created in the your AP Automation platform. Consider that 54% of businesses said invoices were being sent to the wrong place (AP Association Facts and Statistics), thats a huge waste of resource time in trying to manually resolve – AP automation can remove this type of wasted effort.
Setting up Accounts Payable Goals to Drive Operational Efficiency
As organisations start to move towards AP Automation the next question is what goals should you be setting yourself drive greater operational efficiency. We complied a list of a few Accounts Payable goals that you should be tracking:
- Percentage of invoices created digitally through a workflow – you should be aiming for at least 70%. Meaning 7 in 10 invoices are being created in the system without any manual data entry
- Percentage of invoice paid on time – whilst this may vary based on your industry and supplier base, being a good debtor and paying on time will always drive better relationships with your suppliers. You should be aiming for at least 60%.
- Average number of days to process an invoice from creation to transfer to your ERP – this one is one to watch closely to see how your AP function is performing overall. An industry-best sits at around 5 days. Focus your efforts on benchmarking and then taking action to reduce as much as possible,
Accounts payable automation that drives costs down and charged on a pay-as-you-go model is available to businesses of any size.
Organise a free demo today -> www.valtatech.com/apcloud/