The Evolution of the modern Accounts Payable: the dynamics of future tech in your organization
Automation in broad terms, is simply taking any repetitive manual process and having a system run it with minimal human intervention. This is a concept technology that is employed in pretty much every industry now, and seems to only keep growing in potential with the advent of AI and Machine Learning.
So, what does Automation mean in the Accounts Payable process? How can it impact and at what levels does this technology create change in the process? Is it all positive, or are there any pitfalls we may have to look out for?
Understanding what Automation can do and how this tech can be leveraged to positively impact your business is key to optimizing your internal processes and P&L sheet. Even if proponents of these technologies say this is the weapon of the future of business, you need to be in the know of how to wield such powerful weaponry, and also know what exactly how it can help you. Especially so, in the AP process; the AP process is fragile at best, with any small slip leading to complete chaos and anarchy. The entire workflow might come to a standstill if we introduce something that does not serve the purpose, or worse, creates showstoppers.
To understand this, and to see where it fits into your system, we need to first understand the levels of automation possible. You need to understand the different things you can do with automation in the AP process.
The possibilities of AP Automation
Level 1: Non-Existent
This is a no-brainer, but still needs to be discussed, since it sets context to AP Automation. There are organizations across the world who still dwell in the dark ages of AP processes, where there is no automation, and only a lot of paperwork. These organizations still work with hard copy invoices and 90-day payment terms. All the difficulties of the AP process are still out there, from manual data entry, to heavy paper-trails, to routing and rerouting of invoices, buried invoices, human errors, hand-signed checks, physical mailing systems (snail mail), hand deliveries, security issues, check fraud, etc., The list is never exhaustive, as there is no dearth of opportunity for slip ups. This is where AP automation can positively impact the most, but you need to be careful with the pace of adoption.
If you are here, at this level, you need to get in touch with some expert help to set up AP automation for your business.
(You need Denali, Stat!)
Level 2: Infancy
At this level, organizations are still working with paper trails, but are looking forward to digitized records. Organizations at this level are a little more matured with their IT infrastructure and are considering digital transformation as a potential breakthrough point for their business. At this level, you are probably scanning paper invoices into an AP software that runs only on the local network. At this level, you are probably using email and chat to get approvals and or clarifications. You are still using slightly outdated systems to run your process workflows. You are still manually entering data, and where your software permits scanning the documents for verifiable proof of costs. You are still in the grey zone between paper trails and complete digitalization. There is still a lot of human intervention involved, which ultimately leads to more errors. There is still very little, if no, automation happening at this point.
Level 3: Adolescence
At this level of growth, we are talking about the adoption of automation to an acceptable level. Organizations found here start seeing the many benefits of using automation, but fail to see how it can all come together. For instance, teams are at this level able to not just scan paper records, but are also able to extract the data and use the data, in GL code. Sounds fun right? So manual data entry is unnecessary at this level, and AP staffers don’t have to worry about human errors anymore. So at this level, the extracted data is also run through an accounting software, helping the AP department to easily work on calculations, remit payments and create reports. At this level there is a lot of efficiency and speed, but obviously, there is a much more that we can do. Processes although automated still take time, and if there is flag for wrong data, staffers still have to manually sift through the invoices to ensure there are no forced errors. At this level too, there is quite a lot of opportunity for fraudulent activities. And there is not a lot of visibility, control or agility at this level.
Level 4: Maturity
At this level, you’re now master of the AP process, and wielding AP automation and integrations, you are able to keep the vendor handshake healthy. There is no more scanning of documents, because vendors are able to upload the data directly onto your system, since your software is a robust, secure, cloud-based, multi-tenant solution, that has a secure portal for invoice upload. Security issues are non-existent, as there are multiple layers of security protocols that are embedded into the software by the software provider. Everything is connected and you don’t have any need for a paper trail, anywhere. Workflows are predefined and intuitive, and can be configured as is necessary. Approvals are simply done on a button click, with eSignatures and digital authorizations. All mundane activities such as routing the invoices to the right desks, to calculating the costs and verifying calculations are now automated, with zero need for human intervention. At this point, the entire AP process runs like clockwork and AP staffers can focus their time and energy on more strategic decisions.
There are no more invoice backlogs. No more bottlenecks. There is space and time to breathe.
There are self-driving cars and super-fast personal transport pods. There are sentient robotic beings that play chess and laugh at your jokes. There are so many technological advancements right now, and for the first time in a long time, the AP process, is on the same page.
Are you, on the same page?