4 Reasons Why AP Automation is Good for Your Business

Paying vendors and suppliers on time is vital for a business. Accounts payable (AP) is an important part of a business through which it manages its financial dues to suppliers for availing of their goods and services. Management of the AP process is critical to the smooth functioning of a company. Many businesses still use manual AP processing which is slow, tedious, and prone to errors. Automation of the AP process will help you efficiently manage all operations and reduce friction that can negatively impact your brand.

What is Accounts Payable Automation?

In simple terms, it is the process of digitizing all areas of the accounts payable process. This helps the AP team to streamline and manage invoices, payment processes, and other accounting work using tech and software. With AP automation, you can send, receive, and process e-invoices automatically. Plus, you can manage approvals, and process payments through a single platform. This gives you full visibility and better control over all your financial processes.

Automation speeds up the entire payable process and gets rid of errors and the likelihood of fraud. There are different types of AP automation solutions, each with its own USP. Some are simple, user-friendly ones while others may have additional features based on the specific needs of a business.

How Does Accounts Payable Automation Work?

AP automation uses AI and machine learning for end-to-end management of your invoicing and payment processes. Businesses can automate their accounts payable process by using AP software. AP software uses machine learning and OCR (optical character recognition) to convert an invoice into a standard digital format. This is then pushed through a digital workflow to ensure easy integration with other departments. This is followed by purchase order matching, routing for approval, and finally paying the suppliers.

IDP (intelligent document processing) is also used to accurately analyze documents like invoices, receipts, and reports and convert the data into structured, usable info. The info. is then classified using AI. Once validated, it is categorized and stored in existing databases. This allows for enhanced monitoring and reporting, which, in turn, helps with compliance, auditing, and forecasting.

Benefits of AP Automation for Your Business

Accounts Payable automation enables a business to save time and cut costs, improve its efficiency, and gain an edge over competitors. It streamlines the whole accounting process and leads to better collaboration between different teams. Automating the AP process also helps a business gather intelligent data which can then be used for more strategic planning.
Here’s a closer look at the top 4 benefits of AP automation:

1. Deters Invoice Fraud
When fraudsters claim to be genuine vendors and send you a fake invoice or notify you about changes in their account details, it is known as invoice fraud. With these false details, they create a sense of urgency and often coerce businesses to transfer funds. This results in an instant loss of funds and so it becomes a high risk for any business. Accounts Payable automation includes robust security features to protect sensitive data. This helps to reduce the risk of data breaches and payment-related fraud.

It increases visibility and makes it easier to monitor and track invoices and the payment history of a client. It uses two-way or three-way matching to let you match purchase orders for goods received which gives you a count of real invoices from real suppliers. Moreover, with options like e-invoicing, it gets even easier to ensure full accuracy of the info. AP automation also makes it easy to communicate with vendors and suppliers and ensures there is regular interaction between you and them.

Learn more: 5 Ways to Prevent Invoice Fraud

2. Better Visibility & Control of Data
Besides erasing manual errors and speeding up the payment process, automation also provides you with better visibility and control of data. You get access to real-time data about the entire workflow including invoice status, payment history, billing records, etc. This makes it easier to search, verify, and audit the data – which is also helpful for meeting compliance requirements. With data analytics and a common dashboard for monitoring the info, different departments find it easy to interoperate. They can then easily spot, and address any issue, and in turn, improve their performance. AP automation also helps streamline the approval process. This ensures invoices are approved and payments are cleared on time.

Learn more: Here’s Why Payments Analytics is Good for Your Brand

3. Enhanced Customer Experience
A solid customer relationship is essential for a business to grow. Good customer relations are based on consistent and great service besides trust and mutual respect. Accounts Payable automation improves the customer experience by making it easier for you to pay your clients on time. With AP automation, invoice processing becomes fast and accurate. So, you can pay your clients on time, and safely avoid late payment fees and credit holds. Further, features like a common, user-friendly communication portal provide a connected solution to improve collaboration and ensure near-real-time communication with all suppliers. This makes it easier to share, track, and monitor documents, handle grievances, or make any changes to the existing data. Suppliers get full visibility and can manage their details from the same unified platform.

4. Better Security & Compliance
Businesses in the EU need to comply with different laws and regulations to ensure full data security and prevent payment fraud. Non-compliance can result in hefty fines, and may even compel a business to shut down. When you are compliant with these laws your payments become fast and secure. Plus, you save audit costs, and you protect your customers and your business from all types of payment risks. AP automation software comes with strong in-built security features that ensure end-to-end encryption of sensitive data. Maximized security, better visibility of data, and ease of data management ensure all compliance requirements are fully met.

You might also like:
How to Secure Your Payments in 2023
Avoid Late Payments with Accounts Receivable Automation

Speed Up Your AP Automation with Novalnet

From in-depth insights to high-end fintech services, working with a trusted partner like Novalnet can speed up your AP automation in all the right ways.

We are a global PSP with extensive experience in helping Europe’s leading brands process payments. Our technology helps you to accept and send payments globally in 125+ currencies in 150+ automated country-specific payment methods. Set up your payments within minutes with minimal coding using our instant payment plug-ins. Or use our AI-based risk management solutions and advanced analytics to design the best payment experiences for your customers, all in a fully secure and compliant environment.

Give us a call today to know more.

Jose Augustine

Jose Augustine is the Chief Business Development Officer at Novalnet with extensive experience in European payment industry and a knowledge powerhouse.