As the United States transitions into 2021 with a full head of steam and the burden of 2020’s unique challenges, it has become apparent that organizations are facing an uphill battle. Industry leaders and analysts agree that automation has become a top priority to not only improve efficiency but also become more resilient. For most businesses, this starts in the Accounting department, where automation can unlock unprecedented invoice processing speeds while mitigating errors and generating an ROI of as much as 200 percent.
There are several types of automation that can be used to improve the Accounting department, including:
- Procurement Automation
- Payments Automation
- Accounts Payable Automation
Selecting the “right” solution depends on several factors, such as the scope of your AP operations, the core technologies you rely on, and the growth objectives that have been established for your company.
By failing to identify which type of automation is best suited to serve your business, you might miss out on some of the most important benefits that help you achieve true automation, often referred to as “touchless” or “straight-through” processing.
When it comes to automation, even the most minute detail matters. From the moment you start to perform your due diligence, you need to be wholly aware of your endgame. Are you trying to automate procurement specifically? Or does your organization want a solution that can automate Accounts Payable from start to finish? Can your solution also be used to automate Accounts Receivable? And what about other departments and business units?
Unfortunately, this article will not answer all of these questions — you will need to talk to an expert for that — but it will help you answer the most important question of all:
How Can My Business Automate Accounting Workflows?
As we mentioned earlier, Procurement Automation, Payments Automation, and Accounts Payable Automation are three technologies that can help the Accounting department become faster, more accurate, and resilient to business interruptions — all while reducing costs and freeing up assets for reallocation throughout the organization.
Procurement Automation and Payments Automation are considered “point solutions” that automate one function of the Accounts Payable process. For some companies, point solutions such as these can be a relatively inexpensive and effective solution for specific Accounting challenges. Accounts Payable Automation is considered an end-to-end solution because it automates the entire AP process. Accounts Payable Automation is inherently more complex but yields the greatest ROI in terms of operational improvements and long-term cost savings. By taking a closer look at these three types of automation, you can determine which is right for your business.
Procurement Automation is used to automate the first step in the procure-to-pay (P2P) process — procurement. Essentially, it helps organizations manage spending by consolidating vendors and products to a single platform to streamline purchasing. Users can compare prices and volume discounts manually, or automation can perform procurement according to programmed business rules. It also makes the process of following workflows, policies, and guidelines much simpler.
One of the most significant benefits of Procurement Automation is its ability to help you prevent unapproved purchases by taking out the element of randomness introduced by a human procurement professional. That said, this type of automation is somewhat limited in functionality and highly dependent on integrations with other applications that may require assistance from the vendor’s professional services team.
Whereas Procurement Automation handles the purchasing phase of the P2P process, Payments Automation deals with the latter half of this crucial process. Payments Automation helps to streamline payment completion and delivery. Whether your business makes payments via check, ACH, wire, or virtual card, Payments Automation can help improve efficiency and minimize erroneous payments.
When approached as a point solution, Payments Automation requires integration with other technologies, including Optical Character Recognition (OCR) software, AP Automation, and more. Some solutions depend on third parties to complete payments, leading to privacy concerns. When implemented properly, Payments Automation can lead to faster cycle times, cheaper transactions, fewer instances of fraud, increased visibility, and more.
Unfortunately, Payments Automation has a glaring weakness. Integration is spotty at best. Some users may need to login and logout of multiple systems to complete a payment, such as the Enterprise Resource Planning (ERP) system and any other platforms that are not seamlessly integrated with the solution. These concerns are largely addressed by Accounts Payable Automation, which considers the entire P2P process from start to finish.
Accounts Payable Automation
In today’s increasingly competitive markets, simply automating procurement or payments oftentimes falls short of an organization’s ultimate goal. The P2P cycle starts with procurement and ends with payment, but there are many workflow steps between these tasks. This is where Accounts Payable Automation truly shines, although a robust solution can also factor in procurement and payment, too.
AP Automation is highly dependent on integration. Your solution should integrate seamlessly with your core ERP system and any other technologies that help you collect, review, process, and pay invoices. Seamless doesn’t just mean “playing nice” with the various applications that keep your business running smoothly. Seamless integrations will allow users to control all aspects of Accounts Payable from a single platform. Therefore, if your solution allows you to process transactions in your native ERP system without accessing it directly, it is highly likely that it has been seamlessly integrated. Very few vendors offer this level of compatibility and integration, which is why Accounts Payable Automation is typically seen in enterprises where anything except touchless processing is simply too slow or erroneous to stay competitive.
Some vendors offer a single product marketed as Accounts Payable Automation Software (or similar). Others offer a single-source solution for all enterprise content, including (but not limited to) Accounts Payable documentation, as part of an Enterprise Content Management (ECM) system. There are some important distinctions between the two that must be considered before moving forward with a purchasing decision.
AP Automation as a Point Solution
Earlier, we mentioned that Procurement Automation and Payments Automation are considered point solutions. However, AP Automation can also be a point solution when the software focuses specifically on Accounts Payable and nothing else. These solutions might require you to realign your AP process with their preferred methodology to help automate AP from start to finish. From a cost perspective, these solutions might be less expensive upfront but prove more costly in the long haul due to a lack of control over the direction of the software and a high level of reliance on the vendor.
AP Automation as a Component of Your ECM System
When your organization utilizes AP Automation features as part of an Enterprise Content Management system, it is getting the most sophisticated and exhaustive feature set possible, meaning more robust integrations and capabilities from Day 1. As we mentioned above, some point solutions rely on other third-party solutions to achieve “true” automation. With ECM-based AP Automation, every step of your Accounts Payable process is supported with integrated technologies housed within a single platform. And while that single piece of technology is highly complex, this complexity is tucked away out of sight within a single user-friendly platform. For example, our Enterprise Content Management system covers all your bases, including:
- OCR Software to identify and capture invoices
- Document Management Software to store, manage, and review invoices
- Accounts Payable Automation to streamline AP-based workflows and eliminate manual processes like data entry and matching
- Records Management Software to execute automated compliance policies
Any enterprise is going to require all of these technologies in one form or another. Enterprise Content Management consolidates them into a single platform to make integration simple and avoid process inefficiencies.
Still Uncertain About Which Automation Solution Is Right for Your Organization?
Finding the right automation solution for your Accounting department is a crucial decision that will undoubtedly have long-term ramifications for your business. Although making a decision in a timely manner is important for accelerating the timetable on your automation project, it’s more important to find the right solution and move forward at a gradual pace to account for any potential pitfalls that may pop up during your due diligence. If you have questions about automation for your Accounting department, our experts are standing by to assist you — no commitment necessary.
Are you interested in learning more about the various types of automation that can help improve your Accounting department? Contact IntelliChief today to learn more about our award-winning automation solutions.