It is but normal for small businesses to have liabilities as these help in managing the operation and cash flow. These liabilities are known as accounts payables which, when manually managed, might lead to errors, penalties, and waste of time.
Accounts payables (AP) are supplies, money, services, or products due for payment from suppliers, vendors, and other agencies. If handled in default, the business may suffer financially as this will come with penalties, late payment charges, and other fees. Defaulting on accounts payables can also be very damaging in terms of the business’s credibility. You can be tagged as a high-risk borrower and may not be granted a credit opportunity in the future.
Having substantial knowledge about accounts payables best practices and why it is beneficial to automate your monthly payments will help open up more profitable options for you and your trade.
Logically, everything you owe is considered account payable processed by the company's AP department. However, it is good to note certain categories of the debts you owe so you know which ones to prioritise most often depending on their due dates and terms of payment. Before looking for the best accounts payable automation solution, consider the following terms:
These are debts related to the business which cover supplies, raw materials, and other items under the purchase orders from other companies.
These are debts not related directly to the business but are necessary to run it. This may include utility bills, electrical installations, and minor repairs.
Probably the most attractive feature of doing business in Singapore is the low rates on corporate taxes. Singapore levies tax not on revenue but profits. However, the city-state may slap your business with penalties if tax payments are not done on time. Digital transformation in your AP team can systematize your tax payments.
Money borrowed is the most obvious type of AP. Loans, mortgages, lines of credit, and other forms of borrowing funds fall under this category.
AP automation is a system used to streamline and automate the process of consolidating invoices and making payments for each credit due. The AP automation software fuses machine learning software that integrates artificial intelligence with intelligent OCR or optical character recognition technologies.
Most businesses utilize this technology to increase their operational efficiencies through the benefits of AP automation.
Technology has tremendously changed the way we conduct business. From having your invoice sit on your desks waiting for approval, AP automation is a time-saving tool. The AP process can drastically overpower manual processes in reconciling your finances. You can set programmable reminders for the authorized employee to receive invoices and pay at the right time. Saving your time in the payable process is a benefit no amount of money could compensate.
Instead of an employee manually entering the data and filing the invoices, the system automatically does the job. Here are a few more advantages of using accounts payable automation:
Late payments come with penalties while most vendors grant discounts for companies that pay on or before their due date. Through automation, you can easily set the date for recurring payments.
Through the AP automation software, the entire company can have increased insight into the payables from a dashboard. You can easily track where the invoice is currently sitting and contact the person in charge for delays. Your employees can also check for missing or duplicate payments.
Most business owners experience lower instances of any human errors when using AP automation. The data entered into the system can be checked against the information indicated in the enterprise resource planning (ERP).
Invoice process automation can be easily integrated into your business's financial system including its database and ERP. You don't need to log in or log out from one application to another just to access the information you need.
Companies can assign AP staff who will be in charge of uploading invoices, approving them, and releasing the payment. In this process, business owners can easily track which employee from the AP team is responsible for the actions made against the accounts payable.
Aside from these, business owners can also take advantage of their credit cards when paying for a reliable SaaS provider for AP automation and digital invoice processing. Spenmo allows businesses to upload funds from the business credit limit to pay for the payables. This way, small businesses can centralize their payment system and easily keep track of where their money goes.
Invoice processing is probably one of the most crucial aspects of a business operation since services, materials, supplies and other necessities highly depend on your ability to pay. Most business owners may still need to realize how much money they are spending on manual invoice processing compared with the charges paid for any accounts payable automation software.
There is no exact amount set for processing paper invoices. However, finance teams can spend upwards of 60 hours handling different spreadsheets and manual payments of more than 200 invoices each month. Meanwhile, AP automation can expedite and simplify such processes within a few clicks.
Delays and inaccuracies are highly reduced in the AP automation solution. Aside from that, the rectification of errors, approvals, and payment releases are also managed efficiently. Thus, automation smoothens the workflow and hastens the routing of the invoice approval process.
The AP workflow does not reduce the steps in the invoice approval. the automated system still starts from receiving the invoice, verifying the invoice, checking for irregularities, approving the invoice, releasing the payment, and keeping a record of the transaction.
The audit trail follows the same invoice approval process and records the results of the transaction. However, the automaton process dramatically reduces the time spent on invoice data entry, approvals, and correction.
Eliminating the manual tasks involved in data entry improves the entire business process. Moreover, because the system is accessible and visible, the processes can be done immediately from one step to another, with timely notifications for all the designated approvers.
Business owners who take advantage of technology as an ally in their operations can eliminate the wastage from managing their manual accounts. Early payment discount is probably one of the most important benefits you can get from AP automation.
Instead of wasting money on fees, you can earn from paying your dues on time. You can leverage the available funds that you have without having to include penalties in your expense. Financial systems managed by the payable department will also be synchronized and integrated making it easier for all departments across the organization to verify and correct invoice data.
There is no doubt the AP process can improve business operation, cash flow, and financial systems. Business owners just need to choose the right SaaS provider to transform their paper invoices and integrate them into a streamlined digital payment cycle.