Accounts Payable Digital Transformation: An Imperative

Introduction

In recent days, innovation and digital transformation have become synonymous terms. This involves adopting and using digital technology, tools, and tactics to perform better business operations and create better customer experiences. Digital Transformation- Technology is used in innovation to increase efficiency, unlock new business opportunities, and compete in the market.

[The business entered rots and dies; and in a time of great change such as now, that rot is both swift and fatal.]

The management consultant, professor, and author Peter Drucker had already written in 1942 that the economy was an animal that would have been killed long ago.

In this blog, we will explore the significance and advantages of digitization in the accounts payable process.

But first, what is the accounts payable process?

It is the method by which an organization maintains meticulous records of its purchases and creditors. It consists of a succession of steps, including:

Receiving invoices from suppliers.

• Verifying their accuracy.
• Obtaining necessary approvals.
• Entering invoice information into the accounting system.
• Scheduling payments according to agreed-upon terms.
• Authorizing Payments
• Executing payments through the chosen methods
• Keep records for auditing purposes.
• Communicate with merchants.

An efficient accounts payable procedure is the lifeblood of any firm. It guarantees that payments are processed on schedule and accurately, and it fosters long-term vendor relationships. On the company side, it allows for more effective financial management, particularly working capital management.

Evolution of the accounts payable process

Traditionally, accounts payable were done manually and on paper. This was highly restricted, mainly leading to fraud and improper working. As a result, data entry errors and incorrect calculations increased, which led to many delays in the overall AP process, including physical document loss and damage, payment delays, incorrect payments, and little visibility into real-time information and financial analysis. This is what made scalability hazy.

On top of that, payables teams struggled with systemic document storage and retrieval, as well as communication and access limitations that hindered the overall efficiency of workflow and decision-making. These constraints prompted the requirement for computerized and programmed AP solutions.

Digitization and AP automation software offered the promise of not only replacing manual and paper-based operations, decreasing errors, and shortening the payables life cycle, but also integrating applications to improve overall efficiency and effectiveness.

Key elements of the Accounts Payable digital transformation:

• The first phase involves computerized invoicing. Digital formats enable bills to be prepared, transmitted, and received electronically, removing the need for physical documents and laborious data entry.
• The next step is document management systems. This will create a centralized platform for storing and retrieving invoices, purchase orders, receipts, and supporting documentation.
• With computerized billing and document management in place, a company has overcome its first challenge. It will immediately see simpler workflows, fewer errors, more data accuracy, and better fund visibility and control. All of these will let the company’s managers collaborate more fluidly across departments.
• It’s time to automate. The accounts payable process can be improved further by using tools like optical character recognition (OCR) to extract data from invoices and workflow tools that automatically route invoices for approval.
• The final step is data analysis and reporting. This includes the use of data analytics to identify important metrics such as invoice processing times, payment accuracy, vendor performance, and cash flow trends, allowing for continuous monitoring of processes, data-driven decision-making at the fine-grain level, addressing opportunities for process optimisation, improved cash flow management, and increased collaboration with vendors.

Accounts Payable Digital Transformation Roadmap

• Run an assessment of your current accounts payable processes to analyze deficiencies and where improvements can be made.
• Define the goals of the digital transformation program by prioritizing key targets, i.e., imperatives like cost savings, enhanced efficiency, and accuracy.
• Check out more accounts payable automation software options and solutions
• Based on your requirements and budget, select the correct technology partner.
• Develop trust with your citizens, justify the need for digitalization and automation products, and launch a transformation.
• Design an employee training roadmap to assure program success, as well as strategies for battling against resistance and adopting a positive outlook
• Specify measures and best practices for ensuring data integrity and regulatory compliance.
• Monitor processes for ongoing improvement while fine-tuning the digital transformation plan.

Discover how we can help your business.

Talk to Us

Velan, a prominent business process management company, provides comprehensive digitization and automated accounts payable services. With vast experience in finance and accounting services, our team of accounting specialists has been servicing clients worldwide for the past sixteen years, facilitating their digital transformation.

We have been able to provide great business outcomes for many of our clients. One such success story is the thorough re-design of the accounts payable process of a Netherlands-based CA working for 800+ clients, which boosted the firm’s processing accuracy and timeliness while preventing 160k euros in fraud. Our overall turnaround times went from 97% to 100% and invoice processing accuracy from 95% to 98%.

Contact us at [email protected] to discuss a similar digital transformation of your accounts payable function. Our sales staff will walk you through how our solutions can add value to your business and help it grow.