Are you looking to enhance your accounts payable (AP) processes and streamline your financial operations? AP automation has become a game changer for organizations aiming to improve efficiency and reduce errors. However, simply implementing automation tools isn’t enough. To truly capitalize on the benefits of AP automation, finance teams must follow proven best practices.
This Rillion article provides an in-depth look at five best practices for AP automation. By exploring each practice, we highlight how organizations can optimize their accounts payable processes, improve efficiency, and minimize errors.
AP Automation Success Explained
AP automation success is defined by the efficient implementation of technology that streamlines accounts payable processes. This success is marked by faster invoice processing, reduced errors, and significant cost savings, allowing finance teams to allocate resources to more strategic tasks. Enhanced accuracy in data handling and improved cash flow management also play crucial roles in strengthening financial operations.
In addition, successful AP automation fosters better vendor relationships through timely payments and clear communication. It ensures audit readiness by maintaining organized documentation and transparent workflows. Achieving buy-in from the finance team and providing effective training are vital for maximizing the benefits of automation, ensuring that the system is used to its full potential.
5 Best Practices for AP Automation
1. Define Your Workflows
To improve your processes with AP automation, start by mapping out each step in your current accounts payable workflow, from receiving an invoice to making a payment. This is essential for gaining a clear view of where delays, errors, or unnecessary steps may be happening.
With this clear outline, your team can identify areas where automation can be most helpful, making repetitive tasks easier and reducing delays.
Here are steps to take when defining workflows in readiness for AP automation:
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Involve key stakeholders to get different perspectives on the current workflow.
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Document each step in the AP process, from invoice receipt to payment.
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Determine what triggers each step (inputs) and what the expected outcomes are (outputs).
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Analyze the mapped process to identify delays, errors, and unnecessary steps.
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Clearly outline who is responsible for each step in the workflow.
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Create standard operating procedures (SOPs) for each step in the workflow.
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Determine the approval workflow for invoices and payments, specifying who needs to review and authorize each step.
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Ensure that your workflow adheres to relevant regulations and company policies.
A well-defined workflow allows your team to set up automation tools more effectively, leading to a smoother, faster, and more accurate accounts payable process.
2. Have Clear Key Performance Indicators (KPIs)
Clear Key Performance Indicators (KPIs) provide measurable goals that help track the efficiency and success of the AP automation. They offer insights into how well the automation is working and where improvements may be needed.
Here are key AP automation metrics to track:
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Total number of invoices received
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Invoice processing time
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Approval cycle time
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Error rates
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Average cost per invoice
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Early payment discount captured
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Invoice exception rate
To set clear AP automation KPIs, consider these tips:
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Ensure your KPIs align with business goals.
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Choose KPIs that are easy to measure and truly reflect the effectiveness of AP automation.
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Begin with goals that are realistic based on how your AP process currently performs, and gradually increase them.
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Reference industry standards to set initial KPI targets.
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Engage the AP team to identify which metrics best reflect their workflow and areas for improvement.
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Include a mix of long-term and short-term KPIs.
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Review KPIs regularly to keep them aligned with changing business needs.
KPIs in AP automation act like a roadmap to track performance, find problem areas, and reach financial goals. By reviewing and adjusting KPIs regularly, you can be sure you’re getting the most out of your AP automation.
3. Select a Suitable AP Automation Software
It may seem obvious, but many companies miss the mark with AP automation by choosing a tool that doesn’t fully meet their needs. Selecting the right software is critical to ensuring seamless integration, user-friendliness, and compatibility with existing systems.
Look for a solution that supports your specific workflows, offers robust reporting, and provides reliable customer support. Taking the time to choose the right tool can make a huge difference in the success of your AP automation efforts.
At Rillion, we offer comprehensive AP automation solutions designed to optimize your accounts payable processes with ease.
Let’s take a quick look at our key features:
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Invoice capture: OCR technology automatically and accurately captures and digitizes invoice data so you can process invoices faster.
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Purchase Order matching: Rillion automatically matches invoices with purchase orders and receipts, helping you prevent duplicate payments and ensuring accuracy in every transaction.
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Automated approval workflow: Our platform simplifies the approval process by routing invoices to the right people based on predefined rules.
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Integration with ERP systems: Rillion integrates seamlessly with popular ERP systems, ensuring all financial data is synchronized and accessible across platforms.
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Real-time reporting and analytics: Gain insights into invoice processing times, approval statuses, and cash flow trends with our robust reporting tools.
By selecting the right AP automation software, you can streamline your accounts payable processes, reduce manual errors, and improve overall efficiency.
4. Leverage Real-Time Reporting and Analytics
Real-time reporting and analytics are crucial for maximizing the benefits of AP automation. These tools provide immediate visibility into key metrics such as invoice processing times, approval statuses, and cash flow trends, allowing finance teams to monitor the efficiency of their processes and address bottlenecks proactively.
With real-time insights, your team can identify areas for improvement, track performance against established KPIs, and make informed decisions that enhance your overall financial operations. By regularly analyzing these metrics, you can continuously refine your AP workflows, improve accuracy, and ensure optimal use of resources.
Here are tips for effectively utilizing real-time reporting and analytics:
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Focus on metrics that align with your organization’s financial goals, such as invoice exception rates or cost per invoice.
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Review reports regularly to ensure that your processes remain efficient and compliant.
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Use dashboards to provide a clear and concise overview of your AP performance.
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Share insights with stakeholders to maintain transparency and collaboration.
By taking advantage of real-time reporting and analytics, you can stay ahead of potential issues, improve overall efficiency, and maximize the value of your AP automation solution.
5. Automate Piece by Piece
Automating your AP processes step-by-step, or “piece by piece,” is a best practice that allows you to implement automation gradually. This approach ensures that each aspect of the process is carefully evaluated, implemented, and refined, leading to a smoother transition and more successful outcomes.
With gradual automation, you reduce the risk of overwhelming your team with significant changes all at once. Your staff can adapt to new processes and technologies at a comfortable pace, minimizing disruptions to daily operations.
Implementing automation in smaller increments also enables you to concentrate on specific tasks or areas within your AP process. This targeted approach allows for more thorough testing, adjustments, and training for each piece of automation before moving on to the next.
Apply these tips for a gradual AP automation:
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Break down the automation process into phases.
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Begin with a single, manageable task with high impact like invoice capture or approval workflows.
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Offer training sessions for your team to help them adapt to new automation tools and processes.
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After each automation implementation, closely monitor its performance.
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Regularly solicit feedback from your team on the new automated processes.
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Be flexible and ready to make adjustments based on the results and feedback you receive.
Level Up Your AP Automation with Proven Best Practices
Adopting AP automation is not enough. Without a clear strategy and the right best practices in place, you may not fully realize its benefits. We hope our list of effective techniques has provided you with actionable insights to optimize your accounts payable processes.
Ready to embark on a journey of seamless AP automation?
Book a personalized demo of Rillion today and see what we can offer your business.
