Tired of wading through invoices and chasing down late payments? Ever wonder if there’s a better way than hours of tedious data entry and piles of paper? Isn’t it frustrating that so much time is wasted on boring accounts payable and receivable tasks, time that could be spent on more strategic activities?
What if you could lower processing costs, reduce errors, and really improve cash flow without the hassle? If you’ve been pondering on these questions, then let us discuss how following AP/AR automation best practices can transform your AP/AR functions from drudgery to a streamlined, effective powerhouse.
Why AP/AR Automation Best Practices Are Essential Today
The old way of handling accounts receivable and accounts payable can feel like trying to fight the tide all the time. Think about it: paper invoices accumulated and misplaced, painstaking manual entry leading to infuriating errors that take forever to fix, and waiting forever for funds to come in or go out, with little timely insight into where things actually are. It’s slow, it’s costly, and let’s be real, it’s an enormous waste of your team’s time and effort.
In business, depending on those old-fashioned, cumbersome processes simply isn’t feasible anymore. Companies are seeing more transactions, requiring quicker turnarounds and more accuracy and transparency from their finance organizations. That’s why transitioning to financial process automation is no longer a nice-to-have; it’s becoming downright critical for survival and prosperity.
Rolling out automation isn’t just about writing software to replace manual steps, it’s about changing the core nature of how your finance department operates. With automation of repeat tasks, you free up your people from tedium and data entry, letting them use that time for higher-value, higher-impact tasks like looking over financial data, actively working cash flow, cultivating vendor relationships, and finding improvement opportunities. Receiving these benefits on a regular basis, though, is not a given. It really does depend on knowing and properly applying successful AP/AR automation best practices, making the software do your bidding, rather than vice versa.
Core Accounts Payable Automation Best Practices
Businesses need to rethink how they manage payables to streamline cash flow and reduce inefficiencies. These core AP/AR automation best practices make it easier to gain control and clarity.
Digitalizing Invoice Capture
Eliminate drowning in paperwork! A key pillar of AP/AR automation best practices is the immediate digitization of invoices via technologies like OCR. It automatically reads invoice data, eliminating a tremendous amount of tedious manual typing. Less typing means much fewer errors and much faster initiation of the processing cycle. It really cleans up the AP’s messy beginning.
Automated Approval Workflows can be set up
Fed up with waiting an eternity for signatures? Automated approval workflows are a total game-changer in AP/AR automation best practices. You can configure rules so invoices automatically route to the right person depending on criteria like vendor or amount. This speeds up approvals dramatically, keeps everyone on track, and provides a clear audit trail without anyone having to physically chase down sign-offs.
Automating Payments
Payment doesn’t have to be a manual process, either. A best practice in AP/AR automation basics is a shift to electronic methods like ACH or virtual cards. Automating payment directly from your system improves accuracy by reducing manual data entry errors and greatly improves security compared to working with physical checks. It’s faster, safer, and more efficient for everyone involved.
Integrating with Your ERP System
For total financial harmony, your AP automation shouldn’t live in isolation. A top AP/AR automation best practice is to integrate it tightly with your core ERP or accounting system. Seamless integration ensures all invoice and payment data automatically posts to your general ledger, providing real-time visibility, accurate reporting, and a single view of your financial standing without the hassle of manual data transfers.
Key Accounts Receivable Automation Best Practices
Now, let’s address the funds coming in. Automating accounts receivable in order to maximize them is key to good cash flow. Here are some leading strategies.
Automating Invoice Generation and Delivery
Say goodbye to manually creating and emailing every single invoice. One of the most critical elements of AP/AR automation best practices is setting up your system to email invoices on finished orders or milestones automatically. Then send them out right away via email or a customer portal. Invoices go out earlier and more reliably, which triggers the payment cycle sooner.
Implementing Automated Payment Reminders
Pursuing late payments manually is not anyone’s ideal task. Having automatic payment reminders performed is a key part of best practices in AP/AR automation. You can have courteous reminders go out automatically before, on, and after the due date. This significantly increases your collection effectiveness without requiring daily follow-up calls and emails by hand.
Enabling Online Payments
Make your customers’ payments simple! To enable multiple online payment conveniences like credit cards, ACH, or digital wallets is an AP/AR automation best practice. The faster and simpler you can get paid electronically by your customers, the faster cash hits your bank account, greatly speeding up your entire cash collection process.
Automating Cash Application
Matching incoming payments to related open invoices can be a painstaking paper jigsaw puzzle. Automating cash applications is an excellent AP/AR automation best practice. The software uses rules and data matching to automatically match payments received electronically to the corresponding invoices, dramatically reducing the time and effort required by manual reconciliation and clearing open receivables much faster.
Overarching Financial Process Automation Strategies
Beyond AP or AR tasks, efficient automation entails a broader strategy. The following are master strategies that are crucial to overcoming your financial processes:
Mapping and Optimizing Existing Workflows
Before automating, know what you’re automating! One of the first things you need to do when implementing AP/AR automation best practices is chart out your existing manual processes to identify where the slowdowns and bottlenecks occur. Then, after you visualize where everything comes to a grinding halt, you can create much more streamlined, efficient workflows before ever introducing technology. Don’t simply automate mess.
Selecting the Right Technology Solution
Choosing the right software is crucial. When investigating AP/AR automation best practices, evaluate solutions available carefully on functionality, scalability (how well they will grow with you), and will they play well with what you have today (integration). Decide whether a scalable cloud solution or an on-premise solution is most suitable for your business needs, as well as your ability to handle it.
Prioritizing Data Security and Compliance
Handling sensitive financial data makes security a must-have. Perhaps one of the most critical elements of AP/AR automation best practices is ensuring that your solution provider maintains good security protocols in place and helps you stay compliant with relevant regulations. Protecting your company’s and your vendors’/customers’ financial data should always be a priority.
Training Your Team
Technology only works if individuals are aware of how to utilize it! Key AP/AR automation best practices involve comprehensive training for your finance staff. Make sure they know the new tools and procedures. This facilitates seamless adoption, eliminates frustration, and enables your employees to maximize the automation to concentrate on more strategic, high-value work instead of getting stuck in manual processes.
Measuring Success and Continuous Improvement
Automation is not a “set it and forget it” situation. To get the most out of AP/AR automation best practices, you need to track results and keep refining your strategy.
- Key KPIs for AP/AR Automation: Cost per invoice, days outstanding, and error rates clearly show what is working—and what is not. These KPIs validate your AP/AR automation best practices.
- Getting Feedback from the Finance Team: Your finance team identifies with the system on a daily basis. Their feedback is gold when it comes to identifying areas of pain or potential improvement opportunities. Continuous feedback ensures that your AP/AR automation best practices keep getting better.
- Staying Current with New Financial Process Automation Trends: Financial process automation software constantly evolves. Staying current with new features and industry trends enables you to fine-tune your AP/AR automation best practices and stay current.
In Conclusion
So, what’s the takeaway here? By embracing and implementing AP/AR automation best practices to the fullest, you’re not just automating processes; you’re actually transforming your financial operations. You move from being handicapped by human error, delay, and lack of visibility to achieving breathtaking efficiency and accuracy on both your payables and receivables.
This shift makes your precious team available to work on strategic tasks, providing deeper financial insights and contributing more to your business’s growth. If you’re willing to look beyond transaction management and start leveraging finance as a strategic tool, implementing these automation best practices is your next step.
To talk about how to tailor these solutions to your specific needs, if you are a buyer, a supplier, or looking for other financial process improvements, we encourage you to have the professionals at FAUREE call you for a consultation. They can help you proceed with implementing the right financial automation solutions for your business.