How to select the best AP Automation Software?
What is Accounts Payable Automation?
Accounts Payable (AP) automation is the automation of manual tasks typically performed by humans using cutting-edge tools and software. Due to the advanced capabilities of machines to perform complex tasks with consistency and accuracy, it is possible to ensure the accounts payable processes function with minimal expense and maximum efficacy. Since the work is performed using modern technology and software rather than humans, it also helps to reduce the error rate to negligible levels. It also improves accountability by ensuring that processes are open and easily trackable via digital records.
What is Accounts Payable Automation Software?
Accounts payable automation software is a program designed to automate the accounts payable process. It employs digital codes to execute AP tasks previously performed manually by humans. Due to its advanced processing capabilities, the software can deliver accurate and efficient results that significantly reduce the margin of error. The significance of accounts payable automation software is growing as many businesses place a premium on efficiency, accuracy, and cost reduction. It has resulted in the development of several new software solutions with advanced features to meet the growing market demands.
Tips for selecting the best AP Automation Software
The process of selecting AP automation software can be daunting. However, there are numerous accounts payable software options available on the market! A big portion of the market is outsourcing Accounts Payable Services to third-party providers. Companies opting for in-house solutions must rely on AP automation software, whose implementation requires an investment of time and money. So follow these tips, features, and functionalities before selecting an AP automation solution.
Define your AP structure
Before selecting accounts payable automation software, you should have a clear understanding of your goals so that you can gauge your success.
Whether you want to streamline your processing, reduce the cost per invoice, or obtain more accurate records, we can help! Outlining objectives will make setting up your AP software easier. When objectives are clearly defined, you can determine what you need from an AP scanning application.
Diagram your existing AP Invoice process
It is essential to map or outline your current AP processes, beginning with how invoices are received, coded, approved, and processed for payment. How many participants are there? And at what intervals? What division of labor do they have? Once the process has been mapped, you will better determine what the ideal accounts payable solution should provide.
Identify system dependencies
Your ability to automate accounts payable depends on how well the automation software integrates with your Enterprise Resource Planning (ERP) or financial system. You should ensure that the new AP software has a stable and seamless connection to your ERP for optimal data synchronization.
After synchronizing your data, all your invoices, procurement, and accounting data can be exchanged seamlessly, allowing for the most automated and accurate invoice processing possible.
Consider centralized management of information
In payment automation software, a standardized application means having access to complete functionality configuring according to the needs of an individual and process that in a fast and streamlined deployment project and establishing a centralized information system within a cloud.
Think about your workflow rules
Suppose you are relying solely on the native workflow capabilities of your finance system or enterprise resource planning (ERP). In that case, you should determine if they can provide an effective solution for touchless invoice processing. The IT overhead and ongoing support for configuring and maintaining native workflows should also be considered in the respective business case, success metrics, and ROI analysis. It would be profitable and sensible to opt for Accounts Payable Outsourcing solutions to stay dynamic, cut costs, and helps in staying innovative.
Analyzing and comparing solutions
Now that you have a clear and thorough understanding of the type of solution your business requires, it is time to begin searching for the solution that best matches your identified requirements. Here is where you must conduct research – When selecting and implementing a new AP automation software, use Google to locate potential candidate solutions and LinkedIn to participate in relevant group discussions.
Desirable Accounts Payable Automation Software Functionalities
Once you shortlist suitable systems that will better suit your infrastructure, then start looking for these below-mentioned functionalities which will make the whole process more efficient and productive:
User-Friendly Interface
A straightforward interface expedites the learning curve and onboarding process. In addition, the dashboard should be clean and uncluttered, allowing employees to identify vital accounting aspects within seconds.
Integrated functions make it easier for employees to manage accounts. In addition, it should be easy to navigate and facilitate quick task completion.
Robust Data Protection
The software for automating accounts payable protects sensitive financial data. Choose applications from reputable brands that support two-factor authentication, encryption, and secure communication.
Multiple Payment Options
Consider an AP automation solution that offers customers a secure online payment option. Integrated payment gateways provide numerous payment options, including:
- Debit/Credit Card
- Internet Banking
Once the payment is successful, the system updates the status of the corresponding invoice. There are a variety of payment gateways to choose from, and their transaction fees vary.
Dynamic Integrations
Integrations render a technology stack more robust and adaptable. The AP department must be able to utilize multiple platforms without leaving the dashboard. In addition, modifications to third-party applications should be updated in the system.
Accounting software must integrate with the ERP system and other third-party applications, such as:
- Inventory administration
- Reporting and analytics
- Project management tools
- Relationship management with clients (CRM)
Accounts Receivable Capabilities
Accounting systems permit the recording of both accounts payable and account receivable. Accounting software includes operations such as:
- Certified invoices
- Data capture
- Receive online payments
The software will indicate which customers have not yet paid and the total amount they owe. In addition, it should track payables, such as vendor bills and operating expenses, and send automatic reminders to ensure on-time payments.
Cash Accounting versus Accrual Accounting
The selected AP solution incorporates AI to allow businesses to switch between various accounting methods.
A small business records transactions primarily based on cash inflow and outflow. In this situation, the cash accounting method is optimal.
Consider the accrual method for larger businesses that buy and sell on credit (and record accounts payable and receivable).
Many businesses begin using the cash method of accounting and later switch to the accrual method. The AP software provides options for both.
Project-Based Invoicing
Hourly billing clients necessitate accounting software that handles project-based billing. The regulations permit billing based on the amount of time spent on specific tasks.
Then, timesheets can be transformed into invoices. Before creating an invoice, the system permits timesheet approval to prevent billing errors.
Analytics and Reporting
Today, businesses require accounting software to generate standard and custom financial reports. The data must include:
- Income statements
- Financial statements
- Cash flow assertions
The software facilitates the generation of reports for various accounting departments, including:
- Accounts receivable and payable
- Projects\Inventory\Taxes
This information can reveal how well a business performs in specific areas and where it can improve.
Role-Based Access Controls
Excellent accounting solutions enable a company to assign specific modules to employees based on their roles.
For example, all employees have access to timesheets to record their hours, but not to reporting and sensitive data. In addition, the AP solution provides selective access that restricts access to sensitive data by unauthorized parties.
Account Reconciliation
The AP program retrieves bank statements automatically. Set custom criteria and bank rules to match and classify imported statements in seconds.
Automation eliminates bottlenecks caused by human error during manual data entry.
Taxes
The selected AP solution includes tax liability calculation capabilities. In unannounced tax audits, it is imperative to be tax-ready. AP software must be able to perform the following tax functions:
- Multiple tax rates
- Tax liability
- Tax filings
- Compliance
Mobility
The AP platform provides cloud-based, mobile capabilities for flexible access. Complete the entire accounting process on the go.
Customer Service
Automating invoice management should always include a comprehensive onboarding procedure and the ability to respond to questions as the user progresses. Choose an AP solution that provides round-the-clock customer service.
Pricing
Different AP software brands base their price points on the features they provide. Nevertheless, there are some universal pricing standards that every organization should look for when sourcing AP platforms, even though certain plans may be optimally suited to the needs of a particular business.
Here are some alternatives:
- Free sample
- Includes upkeep and support costs
- Low cost of implementation (or none at all)
- Same price for multiple users
- No additional fees for standard features
Conclusion
Choosing the best AP Automation Software is critical to your business. This could improve and enhance the situation or could make it worse. So I hope this blog is of much help to organizations yet to figure out which solutions will best suit their requirements.
