With more than 20 years of accounts payable (AP) experience in various roles, I’ve witnessed firsthand the transition from paper-based processes to completely automated AP and payment processes.
I know how hard it can be for those of us in the accounting space to warm up to the idea of implementing new systems and practices, especially when it sounds like there could be a large learning curve or lack of control attached to something like an automated service. But I also know how tedious, frustrating and inefficient the old way of manually maneuvering through the AP pipeline is in comparison to using automated tools, especially when closing out the month or year.
Here are four ways I’ve seen AP automation change the game and bring benefits to accounting teams during year-end close.
1. Saving Time Can Save Money
The biggest benefit of automation on year-end close is cost savings. You can put money back in the company’s bank account by taking people that are doing data, filing, and other mundane tasks and giving them an opportunity to do things like account reconciliation, analysis or a final review of your vendor database.
Accounting departments have so much going on during year-end. You’re trying to close the month and close the books, but you’re also trying to prepare yourself for the 1099 process. I remember spending my New Year’s Eve in the office many times – being there until 8 or 9 p.m. to make sure everything was wrapped up. There was too much to do, too little time to do it, and it could be too tough to determine where to even start. That was life before automation.
Now, instead of spending their time (and thus, the company’s money) stuffing envelopes, mailing chec and hunting down approvers, automation makes the process efficient and frees up an accounting team to focus on more important, high-level tasks that help the company. Plus, there are hard cost savings associated with cutting back on the amount of physical materials you burn through during year-end, like printing paper, ink, stamps, envelopes and other supplies that stack up with all the manual efforts you could replace by automating.
2. Eliminating Paper Increases Accuracy and Efficiency
I mentioned paper as a hard cost, but the benefit to eliminating its presence in the accounts payable process extends well beyond the wallet.
Eliminating paper wherever possible is a huge help, especially for year-end, because the AP department is tasked with accounting for every single invoice for the calendar year and ensuring they are entered correctly into the accounting system. Those that we don’t get entered, we must accrue. When you’re working with paper, that becomes a major pain, as it adds inefficiencies to the process. When you’re trying to manually route invoices for approval – walking them down the hall or sending a scanned copy in an email – you’re adding a lot of time to the process and increasing the odds of a document getting misplaced. It’s critical they’re all accounted for, so having everything in an automated system where you have complete visibility has drastically changed the year-end process.
I used to have piles of invoices sitting around that I would have to account for and accrue in a spreadsheet. With automation, all the invoice images are available in the portal. No longer do you have to run around the office, chasing down approvers, to see who has what. You can tell exactly where an invoice is, and we can easily ensure they’re all getting synced back over to our accounting system.
The reporting provided by an AP automation solution like AvidXchange Invoice is a huge benefit too. I used to keep up with everything in Excel spreadsheets, but now I can run a report out of AvidXchange Invoice that shows me all the invoices that have been received but haven’t been coded, so I can tell if I need to accrue for them or not. I can run a report, export that to Excel and tailor it to my journal entry template and get it into the general ledger.
3. Automation Makes the Audit Process Less Scary
We used to dread the audit process. When auditors visit, they may spend 2-3 days or more looking at AP disbursements. They need to see a random sampling of invoices, proof of payment, etc. The AP department spends a lot of time pulling all these things out of filing cabinets, and sometimes – if an invoice was filed wrong for instance – these paper documents can be misplaced, and that’s a bad thing. With an AP automation solution, we can give auditors read-only access, and they can pull up invoice images as well as the cleared check image. Everything’s right there for them in the portal now. And because the automation efficiencies helped you increase the accuracy of your accounting, you can have even more faith in your information. It’s improved the life of the auditor by making his or her job easier, which should make your life easier in return..
4. A Better System Can Boost Morale
I think I’ve made the point by now that during the typical year-end close, you’re working long days, overwhelmed by deadlines. Morale can get pretty low pretty quickly.
I remember some of the ways we’d try to rally together and fight off that fading morale. We would have a “Pizza Night” and things like that. We’d throw a “We Survived Year-End” party to wrap up the whole experience. One year we even got t-shirts!
But the easiest way to boost morale during year-end close, which can then help improve the mood during the rest of the year, is by exposing the team to all these benefits of automation. Not only can automation make things less painful, but some members of the AP team could even take more time off around year-end that wasn’t previously available because of the time we saved during the closing process. Saving time and money, focusing on more important work and ensuring the invoice and payments processes are done more efficiently and accurately than ever are clear benefits. So are a few extra vacation days to help sweeten the deal.
Schedule a demo today to see how AvidXchange’s automation solution can help your company’s quest to remain calm, cool, collected, cost-efficient and of course, accurate, during year-end close.
The post 4 Ways AP Automation Can Help Accounting Teams During Year-End Close appeared first on AvidXchange.