From invoice intake to three-way matching, the many parts of the accounts payable process all lead up to the final step: payment. Before payment can occur, the completed and matched invoice must receive approval from specific individuals within the business. The approvals stage not only ensures that the appropriate leaders review large purchases but also helps to prevent fraud and embezzlement.
The approvals stage provides the critical check on fraud and spending that is essential to a healthy business. However, the lingering presence of manual approval processes holds back many AP departments. Nearly three-quarters of businesses continue to use manual approvals. These efforts are often time-consuming, confusing and prone to errors that could lead to missed or double payments.
An electronic AP approval solution packaged with invoicing automation software is the better choice for modern businesses. With these tools, you can standardize your process and eliminate common errors and bottlenecks. These new workflows better position your business to prevent fraud, achieve cash-flow optimizations and secure early payment discounts from vendors.
In this guide, we’ll explore the key reasons to transition to digital AP approval solutions by examining the following topics:
- How Do You Automate Accounts Payable?
- Streamlining Invoice Approval
- What Is the Best Accounts Payable Automation Solution?
How Do You Automate Accounts Payable?
Although manual AP offices often have defined workflows, the in-between steps aren’t always clear. Ad hoc solutions and busy offices can impede your team’s ability to achieve the most efficient payments cycle possible. Automation is a solution that offers many clear advantages—so how do you take your department from its current manual work patterns to advanced automation?
Standardize the Accounts Payable Process
Automation is easiest to deploy when you can digitize your manual workflows quickly because they are standardized and highly repeatable. If your clerks don’t follow the same series of steps with every invoice, you increase error rates and the risk of lost invoices. Before you can successfully modify your process for accounts payable with an electronic approval process, you must create clear, well-defined workflows that you can then re-create in your software suite of choice.
Route Approvals Correctly
Who needs to approve which transactions? It’s a trickier question to answer than you may think.
Avoiding fraud requires ensuring that the same individual who processes an invoice isn’t the one providing approval—a situation ripe for abuse and embezzlement. Routing approvals correctly requires a clearly defined hierarchy, from who can authorize petty cash payments to who can approve the company’s largest purchases.
Create an organizational flowchart to make it simpler to understand which payments need to go where for approval. Using such a chart makes structuring your automation solution easier while keeping low-value invoices from consuming too much time in management or administration.
Request Approvals Electronically
Does your staff still need to walk invoices physically from desk to desk? It’s easy for documents to become lost in intra-office mail, especially when a large volume of invoices require attention. A paper-based AP invoice approval process is inefficient, error-prone and more likely to result in lost or late invoices.
Sending this information to the right approver’s workstation digitally is the answer. With the correct routing, AP clerks can send an electronic request to the appropriate individual. The request arrives instantly, and when the approver has the opportunity, they can review and approve the request quickly. Faster approvals drop cost per invoice and keep vendors happy.
Easily Track Approvals
Did the right individual approve that vital invoice that’s close to deadline? With manual processes, you might never know for sure until a late payment notice arrives in the mail. When you implement an automated electronic system, you gain a higher degree of accountability. The system will immediately report it when an invoice has been approved. It can even release the invoice to payment processing without additional human interaction.
Tracking approvals is a key element of visibility that is often lacking from traditional AP work. By choosing a software setup that partially or fully automates the routing and tracking of approvals, your team gains back valuable time for other work—time that translates into more invoice processing with greater accuracy.
Although there are many benefits to collaborating and working face to face, the need for personal interactions in accounts payable can be its own bottleneck. To achieve excellence in automation for AP, more communications should shift to digital channels.
This shift includes not only approval routing but also doing business with suppliers. Centralizing these efforts into a single portal that integrates with your existing ERP ensures a robust and highly visible mode of communication that keeps everyone on the same page.
Create a Permanent Audit Trail
Accountability is an essential element in AP. When questions arise, your team should be able to provide answers without disrupting the flow of the workday. When you automate, you can create a permanent and digital paper trail of every step of an invoice’s life cycle.
When was it received? Who handled it? Who approved the payment? All these details should be available in an immutable electronic record. With such records, identifying problematic patterns or resolving a difficult question from a vendor (or one of your own executives) becomes a matter of course.
The right AP approval software is vital to achieving success at each of these steps. Kofax ReadSoft® provides a suite of solutions built from the ground up to support business users at every scale. Learn how ReadSoft and other business tools by Kofax can support your efforts.
Streamlining Invoice Approval
Setting up your department to succeed with automation is only the first step. With considerations such as three-way matching and error reduction, electronic AP approval requires special attention.
Ask yourself, “What should I look for when approving invoices?” The answers will help you consider how to structure a digital system that supports good governance and visible, accountable outcomes. Additionally, the attitude of your staff toward this change is a critical factor.
There are four key areas to consider when preparing to automate this step to keep your team engaged.
Make sure everyone knows what to anticipate from the new automated process. Demonstrating that it is superior to “ad hoc” workflows can be key to earning the individual buy-in necessary for any new technology to be successful in the workplace. Make it clear that the intent isn’t to replace anyone’s job but rather to make their work easier.
When staff enter the automation process with clear ideas about what to expect, you can easily onboard teams into this technology.
Leverage Automated Notifications and Reminders
A key advantage to automation is the opportunity to set up reminders that fire at predetermined milestones or time intervals. A busy high-level approver might need to handle a significant number of invoices every day on top of their other professional duties. With automatic notifications, you can reduce the likelihood that something critical will slip through the cracks.
Use every feature available to you in the software solution that you choose to make tasks simpler throughout the process. When AP can easily provide context for an invoice, approval speed increases. Showcasing the other documents found in a three-way match, for example, can make it clear that an invoice has received proper vetting.
You can also link other supplier documentation, such as insurance certificates and data, to the invoice. Approvers will be able to see all this data at a glance as they determine whether to confirm or deny payment to a vendor.
Always ensure that every invoice matches a valid purchase order before sending it on for approval. Catching exceptions at this early stage, such as missing line items or incorrect PO numbers, will add speed to your process. You can validate automatically with a system that can read, sort and classify data based on machine learning properties. With human input for unusual or edge cases, approvers can easily receive information ready for immediate review and action.
What Is the Best Accounts Payable Automation Solution?
From saving time to saving money, there are clear advantages to automating. That’s why so many business leaders have already embraced these tools. Within a crowded market, however, selecting the best tools for your business can be as challenging as navigating the complexities of your daily workflow. Which option will offer the ideal solutions at the right price?
With the ReadSoft suite by Kofax, rapidly streamlining your existing operations is simpler than you can imagine. Designed for effortless scale, ReadSoft Invoices, Process Director, and ReadSoft Online™ offer critical functions for your business. Take this opportunity to consider what each option provides to your team.
The first step of the successful automation of AP and the approvals process is capturing the data that suppliers send you. Hand-keying information from invoices is time-consuming and error-prone. ReadSoft Invoices by Kofax provides you with a cutting-edge solution to this problem. Capable of handling even the highest invoice volume, this software uses machine learning and cognitive capture technology to “read” invoices.
With ReadSoft Invoices, you can intelligently capture accurate invoice data no matter how it enters your business with support for the following:
- PDFs, both full-text and image-only
- PNG/JPG type image files, such as scanned paperwork
- Emailed invoices
The result of this process is the immediate availability of accurate invoice data in your ERP. ReadSoft Invoices can even process data in languages other than English—perfect for teams working with suppliers across national boundaries.
ReadSoft Process Director
Kofax ReadSoft Process Director is your gateway to defining automated workflows that conform to your business’s established best practices. Designed around an intuitive software portal, AP directors can use this tool to eliminate many of the manual tasks that their teams face. Integrated with SAP solutions, Process Director makes it easy to identify and correct errors before they become problems later in the process. A gentle learning curve makes it easier to achieve buy-in from your team.
With Process Director, error-free invoices can move through the system with minimal friction. When your team captures them properly, many invoices can reach the approval stage with little to no human interaction. Invoices that do require additional attention go to the appropriate members of your team.
If your goal is to streamline and automate electronic accounts payable invoice approval, Process Director is an essential investment.
Built on top of the cloud computing power of Microsoft Azure, Kofax ReadSoft Online is the ideal choice for businesses working across multiple locations. Companies with complex AP challenges can benefit from the all-in-one SaaS solution that ReadSoft Online delivers.
Capable of achieving the same process improvements as offline solutions, ReadSoft is perfect for businesses that are not interested in making large investments in new hardware/software combos. By offloading the heavy-duty work to the cloud, your business maintains and improves its agility without the need for a complete overhaul of your existing solutions.
At the final stage before money leaves your accounts, your team must get approvals correct. Non-automated processes and traditional workflow sequences may work in ideal scenarios, but they can buckle under volume and be stifled by frequent errors. These concerns cost the business money and hamper the effectiveness of the AP team.
Electronic AP approval offers simplicity, speed and visibility throughout the process. Even non-PO invoices, such as employee expenses, are easier to manage in a digital environment with software powered by machine learning. With accessible solutions such as ReadSoft that are ready for immediate integration, you can easily overhaul your approvals process once you lay the groundwork.
Say goodbye to the hassle, stress and chaos of the manual accounts payable invoice approval process, and find out how to work like tomorrow with the best tools in business.