Top AP Automation Practices

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    INSIGHTS

    The Top Ten AP Automation Best Practices

    o creating accurate detailed purchaseorders, businesses are able to optimize the bene ts o their automated AP

    process.Accurate purchase orders enablesmatching invoices to be passedstraight through or processing andpayment allowing or more time toocus on exceptions and discrepancy

    resolution. A suggestion to en orce this basic rule amongst employees

    is to include the practice as part o theEmployee Contract/Handbook.

    3. Separate unctional team

    responsibilities with clearcompliance controlsSarbanes-Oxley style compliance rules makesense or any medium to large company, whether or not it is publicly listed.The main thrust o SOX compliance, asapplied to AP processing, is to ensure that the

    Requisitioner , Goods Receiver , Approver , Payer arenot the same person . Companies that en orce the separationof these duties and combine this with a clear audit trail willensure they have minimized their audit exposure and can meet

    the disclosure and auditing mandates imposed upon them

    through regulatory bodies.

    4. Automate invoice matching orswi t and e cient processingThe terms 2-way, 3-way or 4-way match are o tenbandied about, but what do they mean to your company?Matching o the PO with the received invoice or POwith invoice and the goods received docket, makessense rom an accounting point o view but can presentproblems i a companys systems do not communicateand the in ormation is not available electronically or comparison. For 3-way matching to work properly, the

    The Accounts Payable (AP) processis one o the most consistently

    broken o all nancial processesin business today. As a resultmany organizations are looking

    to automate their AP processesin order to x this situation. APautomation however, is only

    the enabler o the x. In many cases the processes surrounding

    the unction o accounts payableneed to be addressed to take ulladvantage o potential savings created

    by AP automation. By adopting theseTop Ten Best Practices as an integralpart o their AP automation strategy,businesses can ensure that they areable to maximize the bene ts o APprocess automation.

    1. Centralized scan & process o all invoicesinto workfow on the day o receiptThis is the rst step in reducing the invoice process

    turnaround time resulting in substantial time and costsavings. Not only is the labor-intensive photocopyingand great paper chase eliminated, but immediatecapture o invoices allows visibility o real-time liability enabling more e ective cash fow monitoring and thepotential to maximi ze early payment discount options.

    2. Instil l a disciplined culture o accuratePurchase Order (PO) creation amongstemployeesMany organiza tions run with up to 90% o their invoicesbeing PO based. By streamlining processes and ensuring

    that stakeholders understand the relevance and impact

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    goods received module should be active in your ERPsystem. A 4-way match means that the recei ved goodshave been accepted and in many cases have moved to

    their nal destination (in addition to matching the PO,invoice and goods received docket), and this also makes it

    imperative that all components o the system are able tocommunicate and compare values. Automated matchingreduces the manual e ort required, and enables straight

    through processing where a match is achieved.

    5. Streamline and tailor yourexception processingStraight through processing as explained in point 2 allowsAP sta members to concentrate on exceptions. Non-matching invoices generate an automated response,either through an e-mail to Suppliers, or as a capability o workfow to speed discrepancy resolution. In an

    automated system the exception is presented immediately to the correct person designated to deal with theexception, thus reducing the time taken and streamlining

    the process.

    6. Simpli y the approval hierarchyo the organi z ationO ten approval hierarchies become complex andunrealistic as companies add layers and levels to createbullet proo protection at the expense o process

    time and reasonableness. Approvals should be done by appropriate management (the immediate manager o the

    originator, and the nex t level up where a cer tain dollar level is exceeded). By restric ting approvals to a maximumo 2 levels, coupled with realistic dollar limits, a smoothbut sa e approval fow can be achieved.

    7. Adjust business processes to giveapprovals priorityLike e-mail, workfow approvals should be a priority stepat the start o each day. Electronic approvals are muchlike e-mails in that they are presented in an inbox and canbe easily cleared daily in the same way that a manager deals with his e-mail. By scheduling this as a start-o -day

    process, approvals can be completed early and no longer be the onerous task that drags on rom day to day, week

    to week, in the paper bound world.

    8. Provide a supplier portal or sel -servicesupplier i nquiriesRemove 90% o the burden o supplier inquiries rom APsta members so that they can ocus on more strategicaspects o payables that require their expertise and reali zea aster AP cycle time. In this user-pays world allowinga supplier restricted access to a sa e area to inquire on

    the progress o their own invoices via the web, in their own time rame, makes complete sense and enhancesgreater supplier chain collaboration and service. Suppliersare very receptive to participating in a sel -service modeonce the business implication and nancial bene ts arecommunicated and understood by them.

    9. Train suppliers oninvoice structure requirementsCorrect invoicing enables prompt and accurate payment.

    Within payment terms this equates to better supplier relationships. Asking a supplier to comply with simpleguidelines in return or prompt payment within payment

    terms, can be the rst step in building stronger supplier relationships.

    10. Easy access and visibility to the Chart o Accounts or Cost Cent e r ManagersMake it simple and accurate or management to conductapprovals. Ensure that the coding and approval process isrelatively pain- ree by including easy access to drop downmenus to the standard Chart o Accounts or automaticcoding, or example.

    I these top ten best practices are applied to your AP system you will maximize the benefts o automation and helpprotect your investment in your ERP system. Want to learnmore? Visit www.readso t.com