What are the factors to consider in an AP automation solution?
When selecting an AP (Accounts Payable) Automation solution, there are several factors to consider. Of course your specific company and industry requirements will play a role, but in general here are some key things to look for:
- Invoice capture and processing: A good AP Automation solution should be able to capture invoices from multiple sources (email, paper, PDFs, etc.) and automate the processing of them. This includes extracting data such as vendor name, invoice number, and amounts.
- Integration with ERP systems: It’s important that the AP Automation solution integrates with your existing ERP (Enterprise Resource Planning) system. This allows for a smooth flow of data and avoids manual data entry. Make sure the solution is not tied to just one system.
- Approval workflows: The solution should have a customizable approval workflow to ensure that invoices are approved by the right people and in a timely manner.
- Exception handling: The solution should have a mechanism to handle exceptions, such as invoices with missing data or those that don’t meet certain criteria. This reduces the need for manual intervention.
- Reporting and analytics: The solution should provide detailed reports and analytics, such as vendor spend analysis, invoice cycle time, and other metrics to help improve AP processes.
- Earned Discounts: Implement an efficient and automated process that allows the capturing of discounts offered based on the best of terms by evaluating terms on the invoice, PO and contract.
- Security and compliance: The solution should have strong security measures in place to protect sensitive financial data. It should also comply with relevant regulations such as HIPAA, and SOX.
- Customer support: The solution should provide excellent customer support to ensure that users are able to fully utilize the system and and quickly address any issues that may arise.
Beyond the technology it is important that the solution, and solution provider, you choose understand and support Accounts Payable best practices. While not an exhaustive list, the items below are some of the key practices to focus on when evaluating solutions for your AP automation initiative:
- Maintain accurate records: Keep detailed records of all transactions, including invoices, purchase orders, and payments.
- Follow a standardized process: Establish a standardized process for reviewing and approving invoices to ensure consistency and accuracy.
- Enforce payment terms: Ensure that all invoices are paid according to the agreed-upon payment terms to avoid late fees and maintain good relationships with vendors.
- Communicate effectively: Communicate with vendors regularly to address any issues or concerns and to build strong working relationships.
- Use technology to streamline processes: Implement accounts payable automation software as discussed above to reduce manual tasks, streamline invoice processing, and promote vendor self-service where applicable.
By considering all these factors when selecting an AP Automation solution, you can choose a solution that meets your business needs and helps streamline your AP processes while adhering to best practices.
When choosing an AP Automation solution and solution provider consider the important elements addressed above but don’t become enamored with those “bright shinny objects” promised by many packaged solutions because they just might be fools gold. Do your research, ask good questions and and make sure to check all the important boxes before proceeding forward. The most important factor is the solution needs to fit your goals and match your process. Visit ICG Consulting for more information or to request a free evaluation and discussion of your AP automation requirement. Watch this short video on automating AP processes.