Modernize Your Accounting Department: Pay Yourself a Dividend with Automated A/P Processes

Manufacturers continue to increase their technological capabilities and knowledge but many still rely on paper to complete accounts payable (A/P) tasks. If you’re among them, it may be time to reconsider.

It’s no secret that the fastest way to damage a good relationship with your suppliers is to miss payments or pay the wrong amount. And it’s equally frustrating to make duplicate payments or find that liabilities haven’t been recorded — particularly in light of the Sarbanes-Oxley Act.

You can, of course, add more staff, but that won’t improve the processes they use to comply with financial reporting requirements. A good automated A/P system, however, can streamline the entire process, from receiving invoices through paying them.

What an A/P system can do

Automated A/P systems can boost accuracy, eliminate delays in payment transmissions and reduce the potential for lost paperwork. They also can improve supplier relationships, increase efficiency, boost productivity and, frequently, reduce staffing requirements.

Understanding your needs

Before you invest in an automated A/P system, you need to understand what you’d like it to do. Review your current manual processes as well as any other systems — such as enterprise resource planning (ERP) — that you’ll need to integrate.

Recognize that the system you select should eliminate manual data entry as much as possible, using imaging or scanning technology and electronic invoice integration. It also should allow you to pull information from your ERP system or your financial system’s master files.

In addition, it should allow users to see the original invoice when necessary and track what actions have been taken and by whom.

Picking the right functions

Choose an A/P system that allows you to program individual vendors’ payment policies and that will alert your staff to pay invoices in time to take advantage of discounts offered for prompt payment. At the same time, know up front how much effort is involved to support such functions.

It’s also important to know what reporting capabilities are included. Can you program the system to limit access to approved users? Can you easily monitor unrecorded liabilities, such as purchases that aren’t made with purchase orders? Can you readily and accurately forecast cash flow requirements?

Another consideration should be how the A/P system can help you document internal controls and comply with regulatory requirements. You should expect increased visibility, timeliness and accuracy with all financial reports, and you may also see better cash control and management capabilities.

Finally, ensure whatever system you purchase automates the full range of the tasks you use in your A/P processes. Customization can be time consuming and costly, so look for a system that doesn’t require much effort to do so. If you buy parts or services from foreign suppliers, find out how the system handles foreign invoices and payments.

Savings count

If you’ve left A/P automation out of your technological improvements, you may be doing a great deal of unnecessary work. Simply reviewing your existing processes may bring to light outdated or even archaic procedures that you must address. Automating your processes can make that much easier — and bulk up your bottom line at the same time.

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