Accounts payable automation, workflow, and e-invoicing have for long been a solution for common AP problems due to human errors. Despite the fact that AP automation can improve accounts payable and financial management significantly, many companies are still applying manual entry.
So why is this? Well, there are certain barriers to AP automation, thus understanding these obstacles is an important step in overcoming them.
Reluctance to adopt AP automation and obstacles in implementation
In 2012, research found out that companies refused adopting AP automation mainly because of a lack of budget. AP automation is perceived by companies as an unworthy investment as it costs too much time and effort to build a comprehensive and profitable system.
A lack of cooperation between vendors and companies with various standards and rules might hinder the successful implementation of AP automation as well. Not to mention the organisational change resistance when it comes to adopt the new system.
Even after the implementation of AP automation, a lack of understanding about its functionality and its system requirements often accounts for the reason why automation is not carried out smoothly.
As a result, accounts payable automation must be approached step-by-step, from basic foundations to advanced applications, however, companies usually try to skip these steps and jump directly to the highest level of AP automation, which can lead to even more mistakes and errors.
Effectively adopting AP automation
Understanding your current AP: Companies should be able to define and assess their current AP before developing their desired AP system. Investigating existing systems, studying current AP’s cost, and analysing inherent problems are important steps before setting goals for the new system. Companies should also pay attention to their policies on accounts payable workflow.
Implementing step-by-step: Reviewing each component of the AP process closely—for example, the way invoicing processes. Upon receiving an invoice, companies can control the process by adopting invoice scanning, enabling e-invoicing, and capturing information from invoice digital image.
This is a very basic application, without any heavy training requirements. A more advanced step would be to enable accounts payable workflow automation from invoice validation to approval, which should allow managers to track payment status, manage travel and entertainment expenses more easily, and improve financial transparency and visibility of liabilities.
Monitoring the transfer to AP automation: Establishing key performance indicators (KPIs) and use them frequently to monitor, measure, and enhance performance within AP. Conducting an insightful comparison between your company and others that are either in progress or have already automated is important in order to see what your company can be doing better, or what it is already doing right.
Managing changes: It is important to know who is being impacted by the change so as to support and provide adequate training for them. Moreover, you should attempt to identify and get key stakeholders from other departments and suppliers to be involved in this changing process in order to educate your whole supply chain about the new system.
Understanding the long-term values of your AP automation system: Make sure that your AP automation is flexible enough to adapt over time and can be integrated easily into other ERP and financial systems while still being able to meet regulatory requirements at the same time.
Choosing the right AP system for your company: Obviously there are many different choices for AP automation, thus being able to pick the right one for your organisation requires initial research from related reports, benchmarking, or conferences. Normally, companies are unaware of or lack of understanding about AP systems, invoicing process, and payment tools. Therefore, in order to best utilising your AP automation technologies, it is critical to acquire much knowledge in this field.
This is the last blog article of our series about accounts payable issues. Get the whitepaper “How to best manage accounts payable” for a more comprehensive view on this concerning matter.