5 Steps to Accounts Payable Process Improvement
Published on:26 September 2024
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Managing accounts payable (AP) can feel like you’re juggling too many things at once. From invoices piling up to chasing down approvals, there’s a lot that can slow you down.
The good news? You don’t have to keep dealing with delays, errors, or missed payments.
By making a few key improvements to your AP process, you can streamline workflows, reduce costs, and keep things running smoothly.
Let’s walk through five steps that can help improve your accounts payable process and make your team’s life a lot easier.
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Why Accounts Payable Process Improvement Matters
Improving the accounts payable process is important because it strengthens business performance.
When AP processes are manual and inefficient, it can lead to missed payments, unhappy suppliers, and wasted time. Over time, these inefficiencies hurt your business—slowing down growth and costing more than you realize.
An improved AP process not only saves time and money, but it also strengthens relationships with vendors by ensuring payments are made on time. Plus, it provides your finance team with better visibility and control over company spend.
The result? Fewer headaches, more efficiency, and peace of mind.
Read also: Top 7 Accounts Payable KPIs for Measuring Success
5 Steps to Accounts Payable Process Improvement
Ready to boost your AP efficiency? Here are five steps to take your AP process from clunky and slow to smooth and streamlined.
Step 1: Automate Invoice Data Capture
One of the most time-consuming aspects of managing accounts payable is manual data entry. AP teams often spend countless hours inputting invoice details into the system, which not only takes time but is also prone to human error. Mistakes like incorrect amounts or missed invoices can lead to payment delays or inaccurate financial reporting.
Automating your invoice data capture is an excellent first step toward accounts payable process improvement. With automation tools that use Optical Character Recognition (OCR), invoices—whether paper or electronic—can be scanned and processed without the need for manual input. This ensures accuracy and speeds up the process significantly.
Key benefits:
- Reduced human error
- Faster invoice processing
- More accurate financial data
Step 2: Standardize Approval Workflows
Nothing slows down the AP process more than chasing down approvals. Whether it’s emailing invoices to department heads or sending physical copies for signatures, delays can quickly add up. Without a clear system in place, invoices can sit in someone’s inbox for days, causing late payments and missed deadlines.
A great way to improve this is by automating and standardizing approval workflows. Using AP automation software, you can set up rules that automatically route invoices to the correct approvers.
If someone doesn’t approve an invoice in a timely manner, they’ll receive reminders until it’s handled. This helps avoid bottlenecks and ensures that invoices move through the process smoothly and efficiently.
Key benefits:
- Faster approvals
- Reduced payment delays
- Streamlined communication between teams
Step 3: Implement Three-Way Matching
One of the most effective ways to prevent payment errors is through three-way matching. This method ensures that the invoice matches both the purchase order (PO) and the goods receipt before any payment is made. If the details don’t match, the system automatically flags the discrepancy, allowing your team to resolve the issue before processing payment.
Manually matching invoices to POs can be extremely time-consuming, especially when dealing with large volumes. By automating the three-way matching process, you’ll speed up verification and reduce the risk of overpayments, duplicate payments, or paying for goods that were never received.
Key benefits:
- Increased accuracy in payments
- Reduced risk of fraud or overpayment
- Quicker resolution of discrepancies
Step 4: Switch to Digital Payments
In a world where almost everything has gone digital, it’s surprising how many companies still rely on paper checks for their payments. While some vendors may prefer this method, it’s inefficient, costly, and more susceptible to fraud.
By switching to digital payment methods such as ACH transfers, virtual cards, or electronic funds transfers (EFTs), you can make the payment process faster and more secure. Digital payments provide greater transparency since you can track the status of payments in real time and confirm that funds were received on time. Plus, digital payments can help reduce the cost of processing each payment and the risk of check fraud.
Key benefits:
- Faster payment processing
- Lower costs
- Reduced risk of fraud
Step 5: Use Data to Drive Continuous Improvement
Improving your accounts payable process isn’t a one-time task—it’s an ongoing effort. And the best way to continuously optimize your AP workflow is by analyzing data.
Many AP automation tools come with built-in reporting and analytics features that allow you to track key metrics such as invoice processing times, payment delays, and vendor performance.
By reviewing this data, you can identify bottlenecks in the process, such as specific departments that are slow to approve invoices or vendors that consistently offer early payment discounts. With these insights, you can make informed decisions that further improve your AP process.
Key benefits:
- Greater visibility into AP performance
- Ability to identify and address bottlenecks
- Informed decision-making based on real data
To Sum It Up
Achieving accounts payable process improvement doesn’t have to be complicated. By automating invoice data capture, standardizing approval workflows, implementing three-way matching, switching to digital payments, and using data to drive continuous improvement, you can streamline your AP process and avoid many of the common issues that slow down accounts payable teams.
These steps will not only help your team work more efficiently but also strengthen your relationships with vendors by ensuring that payments are timely and accurate.
Ready to Improve Your AP Process?
If you’re ready to take the next step in AP process improvement, consider adopting AP automation software like Rillion. With Rillion, you can automate tedious manual tasks, gain better visibility into your approval workflows, and reduce payment delays—all while maintaining control over your financial data.
Book a demo today and see how Rillion can help transform your AP department into a well-oiled machine.
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