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How to get started with Accounts Payable Automation

Accounts Payable Automation
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According to a recent report by the Institute of Finance & Management (IOFM), 86% of Accounts Payable (AP) teams claimed to have implemented at least some level of accounts payable automation in 2022, representing a significant increase from the 45% reported just a few years ago. This surge in the adoption of Accounts Payable automation is driven by several factors, including a shortage of skilled labor, high costs associated with hiring and training, remote work arrangements, supply chain disruptions, regulatory requirements, and the need to do more with less due to the perceived risk of a global economic recession in 2023.

However, the report also highlights a significant trend accelerating the adoption of Accounts Payable Automation – the practical application of Artificial Intelligence (AI). AI technologies such as machine learning, natural language processing, and robotic process automation have the potential to transform the way AP processes are managed, improving efficiency, accuracy, and compliance while reducing costs.

This article will provide a comprehensive guide to getting started with Accounts Payable automation, including an overview of the benefits of AI-led automated AP solutions. In addition, we will examine the critical considerations for selecting an AP automation solution.

Assessing Your Current AP Process

The first step in assessing your AP process is to map out the current process from start to finish. This will help you identify the various tasks, people, and systems involved in the process and the key metrics for measuring its effectiveness. Some of the key metrics that you need to monitor are

1) Avg time needed to process an invoice

2) Days payable outstanding

3)Invoice processed per FTE

4)Percentage of discounts lost

5 No discrepancies.

The blog: Accounts payable KPI dashboard explains all the metrics in detail.

Once you have mapped out your current process and identified your metrics, you can begin to identify areas for improvement.

Determining Your Needs

While implementing Accounts Payable automation may seem like a quick and easy solution, and it’s essential to take time with proper preparation. While modern automation systems can be implemented quickly, planning and preparing for the transition can result in better outcomes and long-term benefits.

Before diving into AP automation, defining your goal for automation is crucial. First, you need to know what you want to achieve – lower the cost/invoice, reduce FTEs, reduce DPO, and get early payment discounts. When you define your goals for accounts payable automation, you’ll have a better idea of what you’re looking for in AP automation software. Setting goals at the beginning will also give you a baseline for measuring your success as you roll out AP automation.

Review your existing process

There is a good chance that the current workflow used in your AP function isn’t efficient, and that’s why you are looking for a change. However, before implementing change, it’s essential to document what works and what does not.

Create process flow maps and look at key metrics like approval times and error rates, but don’t just focus on the AP process. Also, take into account the people working with your current system. The employees who work in AP every day will have feedback on what could be improved and may provide critical insight an outsider could overlook.

Defining the features required

Once you have defined your goals for accounts payable automation, the next step is to identify the specific features and functionalities you need in an automation software system to achieve those goals. This is an important step in the process, as it can help you avoid investing in software that may not meet your needs or provide the desired return on investment.

To identify the features and functionalities you need, it can be helpful to map out your current AP process and identify areas that could be more time-consuming, error-prone, or prone to bottlenecks.

One of the critical factors to consider when defining the features, you need is the level of integration with other systems you require. For example, if you currently use an enterprise resource planning (ERP) system, look for an Accounts Payable automation software system that can integrate with your existing ERP to streamline the overall process.

Some specific features to consider when evaluating AP automation software systems include:

  • Automated data capture and extraction
  • Supplier communication
  • Invoice routing and approval workflows
  • Real-time invoice tracking and reporting
  • Integration with existing ERP and accounting systems
  • Electronic payment processing capabilities
  • Global compliance
  • Artificial intelligence and machine learning capabilities for data analysis and process improvement.

Identifying the budget

It can be helpful to start by doing some research to get a sense of the costs associated with AP automation software systems. For example, you can look at industry benchmarks from IoFM, consult with vendors, or speak with other enterprises that have gone through the automation process. This can give you a rough idea of what you can expect to pay for the software, implementation, and ongoing support.

Once you have a general sense of the costs, you can assess your budget and resources. Consider factors such as your available capital, your anticipated return on investment, and any potential cost savings or efficiencies that the new system can deliver.

It is important to remember that while AP automation can be a significant investment, it can also deliver substantial cost savings and ROI over time. Know more about the ROI of AP automation investment.

By taking a strategic approach and carefully evaluating the costs and benefits of different options, you can select an AP automation system that meets your needs and delivers a strong ROI.

Choosing an Accounts Payable Automation Solution

Researching available solutions for Accounts Payable automation involves several key steps.

Compare the features:

One of the most important factors to consider when selecting an AP automation solution is its range of features and capabilities. Look for solutions that offer automated invoice processing, supplier communication, anomaly & fraud detection, Global compliance, and, most importantly, AI capabilities that will help streamline your AP process and improve accuracy.

Evaluate the ease of use:

Another important factor to consider is the solution’s ease of use. Look for solutions that are user-friendly and offer a clean, intuitive interface. You’ll want a solution that is easy for your AP team to learn and use without requiring extensive training or IT support.

Compare pricing:

AP automation solutions vary widely in pricing and payment structures. Look for solutions that offer transparent pricing and a range of payment options, such as monthly or annual subscriptions. When evaluating pricing, consider any additional costs, such as implementation and training fees.

Check reviews and references:

Before selecting a solution, read reviews and check references from other customers. Look for solutions with a proven track record of success and positive feedback from other businesses in your industry.

Consider scalability:

Finally, consider the scalability of the solution you choose. Look for a solution that can grow and adapt as your business needs change over time. Ideally, you’ll want a solution that can scale up or down to meet your changing needs without requiring significant additional investment.

Final Thoughts

Implementing accounts payable automation can bring significant benefits to your business. Time and motion studies conducted by Zycus suggest that AI has the potential to liberate up to 60% of the time currently expended on low-value work in Accounts Payable. But each company is unique in terms of its people, processes, and technology,

However, when selecting a solution, consider the scalability of the software. Ensure the solution can grow with your business and handle an increasing volume of invoices and payments over time. .

The Zycus AP Automation Solution targets holistic AP transformation and leverages the AI/machine learning capabilities of the Zycus Merlin AI platform. Key features and capabilities of the Zycus AI-led AP Automation Solution include:

  • Time and cost savings: A template-free approach that delivers improved rates of straight-through processing with high accuracy and relatively low total costs of ownership (TCO)
  • Better supplier communications: Automated email review and reply via AP Smart Desk that improves supplier satisfaction and strengthens buyer-supplier relationships with faster response times and no missed emails
  • Anomaly and fraud detection: Identification of potential fraud cases (duplicate invoice, phantom supplier, etc.) plus safeguards against phishing and spoofing
  • Global compliance: Consistent and up-to-date support for compliance around invoice content, e-invoice, and tax regulations.
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