Are you a paper pusher?
That’s the number 1 problem with paper—it’s preventing you from being all that you could be.
Over the last decade, it has become increasingly apparent that automating accounts payable processes can significantly improve an organization’s overall financial operations. Automation adds substantial value to accounts payable, including:
- Real-time visibility into performance and financial status
- Increased accuracy
- Better compliance with tax laws and industry regulations.
The problem with paper is that it doesn’t facilitate any of those benefits. Making the case against paper is just another way to make a case for AP automation. And it all comes down to AP best practices.
Accounts Payable Best Practices
Back in 2013, Mary S. Schaeffer published a seminal, 194-page work entitled 101 Best Practices for Accounts Payable. Nothing quite as comprehensive has been published in the past five years. And even though accounting rules and regulations do change, Schaeffer’s book has remained the gold standard.
Of course, AP automation software solutions incorporate best practices. But the people running the software still need to know the underlying tenets. Here are several basics to guide the process:
- Always pay from original invoices.
- Before paying any vendor, be sure there is a W-9 on file for them. Having a W-9 on file will save a lot of hassle at year-end when you need to prepare 1099s. Fines for not complying with 1099 reporting requirements can be hefty.
- Make sure you have a policy governing how invoice numbers are entered. If you have clerks using their own rules about entering invoice numbers (like what to do with leading zeros), it will be difficult to track down anything. Also, having a policy helps if there isn’t an invoice number.
- The person entering the invoice should be different from the person approving the invoice, who also should be different from the person signing the check.
- All invoices should be logged through to the accounting department before being sent out for approval(s).
- In order to create an audit trail, invoices should be entered individually as opposed to a batch entry.
Accounts Payable Automation
When exploring AP automation, cost reduction is usually the first thing that comes to mind for most finance professionals. Companies can reduce their AP and payment processing costs up to 60% with automation, eliminating all the manual tasks associated with paper invoices and checks in the process. Automation cuts out labor-intensive, error-prone tasks like invoice entry, scanning, receipt and purchase order matching, coding, correcting errors, and the entire process of migrating data from AP into the main accounting system.
In AvidXchange’s eBook, “The Problem with Paper: A Case for Automating Accounting Payable,” they take a deep dive into exactly how automation will improve each area of the AP process. There are entire sections dedicated to “How AP Automation Benefits AP Managers,” “How AP Automation Benefits Controllers,” and “How AP Automation Benefits CFOs.”
Interested in automating your payables and creating efficiencies for your AP team? Our automation specialists will create a customized demo and walk you through the streamlined workflow of an automated AP process.