Risky Business: Automating Accounts Payable
DIFFERENCE BETWEEN AR AND AP
The accounts payable department has long been manual bottleneck in corporate accounting. Whether through manual data entry, paper forms, or slow and manual disbursement processes it can be hard to maintain the accuracy and timely execution of payments. The risks are high that?s why automating the accounts payable process with software can be strategic investment.
Using software tool to process accounts payable needs can dramatically reduce complexity, accuracy, and execution time. It also frees up employees to perform higher-level activities and streamlines the reconciliation process. The average invoice subject to AP automation can take 40%-50% less time and human resources to process.
From the C-Suite perspective, the most significant risk of not using software to automate the accounts payable process is the potential for systemic errors. Without automated, data-driven processes in place to streamline payments, the accounts payable department may process duplicate payments, outdated guidance documents, or payments to incorrect vendors. Software eliminates most of these risk by enforcing consistency, accuracy, and precision in the end-to-end accounts payable process.
A major advantage to automating the Accounts Payable process is that it reduces the need to reconcile both accounts receivable (AR) and accounts payable (AP). When software system is in place, each step of the process, from entering data to approving invoices, can be tracked and stored in central database, making separate reconciliation of AR and AP unnecessary.
For companies with strong desire for visibility into their AP process and the ability to detect fraudulent activities, automation makes it much easier to monitor and maintain accurate records. Software tools designed for automating accounts payable offer the ability to track and populate vendor records, approve invoices without manual checks or paper forms, and generate real-time analytics and reports to monitor the financials associated with the accounts payable process.
Finally, preventing non-compliance costs associated with income taxes, payroll deductions, and other regulatory issues is one of the most important benefits of automating accounts payable. The right software solution will automatically ensure compliance with IRPF and ensure that staff are adhering to compliance standards, while also providing alerts and notifications when the system detects risk.
The potential cost savings, improved accuracy, and risk elimination offered by automating accounts payable must be weighed when evaluating the right solution. An automated system will ensure that the accounts payable process runs smoothly, and ensure that accurate records are maintained for audit and compliance purposes going forward.
