Accounts Payable Primary Goals for 2024

Introduction

?I saw a poll on the LinkedIn Accounts Payable Forum that got me thinking about this topic. I was amazed that 46% of people taking the survey were looking to implement technology solutions in their Accounts Payable department. And 32% are looking for ways to streamline their invoice processing. That seemed like a large number. Were that many people unsatisfied with their current technology for AP? And their invoice capture process?

So, I conducted my own poll on the LinkedIn Accounts Payable Managers group. And I found a similar response. 31% were looking to Implement New Technology and 39% looking to streamline invoice processing.

If your goals and objectives for your AP department are like the ones from these surveys, then you are in luck. In this article, I will discuss the results of the poll and make recommendations on how you would realize your goals this year to improve your accounts payable process.

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Goal 1 - Streamline Invoice Processing 46%

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The most popular goal for improving the Accounts Payable department was streamlining invoice processing.

When I talk to people in accounts payable, they say that the three time-consuming things that they deal with invoice processing are invoice capture, invoice approvals, and data entry into the accounting system. Streamlining invoice processing involves implementing automated invoice capture technology, which can extract data from invoices and upload it directly into the accounting system. This reduces the need for manual data entry and minimizes errors.

Additionally, utilizing electronic invoicing processing and approval systems can help streamline the approval process, reducing the time and effort required for invoice approvals. By digitizing the approval process, invoices can be routed directly to the appropriate approver, reducing delays, and improving efficiency.

Overall, the goal of streamlining invoice processing is to reduce the time and effort required for manual tasks, improve accuracy, and increase the speed of processing invoices. This ultimately leads to cost savings, improved cash flow management, and better supplier relationships.

Invoice Capture

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When people talk about invoice capture, what they mean is capturing the important information from the invoice. Typically, the AP clerk manually enters this data. The information includes date, invoice number, invoice date, due date, vendor name, vendor ID, PO number, and invoice total.

This is very time-consuming, any idea how many hours a day you spend doing data entry? According to a study by the Institute of Management Accountants (IMA): The IMA's 2022 Accounts Payable Survey found that accounts payable departments spend an average of 70% of their time on data entry.

Invoice Capture Recommendations

I recommend that you consider an AI-based invoice capture software solution. A good solution will reduce data entry by 80% or more.

What a huge money-saver that would be!

You can see our solution at https://www.hemingwaysolutions.net/accounts-payable-automation-software/

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Invoice Approvals

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Another AP task that is time-consuming and very frustrating for the AP staff is getting approvals for invoices so that they can be paid. This process often delays the payment of invoices as the AP staff must round up the appropriate people to approve invoices.

That is where AP automation software comes into play. The system is set up to know which invoices need approval and who needs to approve them. Even if you have a complicated multiple-level process.

The system routes the invoice to the appropriate team members at the proper time, sends out reminders, and can also expedite invoices that are not approved in the allocated time.

This is a big help to reduce the stress in the AP department and goes a long way in improving job satisfaction.

See Hemingway Solutions AP approval solution https://www.hemingwaysolutions.net/accounts-payable-automation-software/

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Data Entry - Accounting System

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Another time-consuming task in the accounting department is entering the data captured from the invoices into the ERP system. In a study by the Institute of Financial Accountants, they found that 65% of AP staff time was spent doing data entry.

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Another study by the Institute of Management Accountants found that the average employee in the accounts payable department spends about an average of 70% of their time doing data entry.

In some organizations, AP clerks end up entering the data twice, once for approvals and then finally into the accounting system. And that is very frustrating for an accounting person.

This seems like a waste of talented people's time.

But, if you implement a good AP automation software, the accounting staff only needs to verify that the data was captured and coded correctly. The system will upload the invoice data to the accounting system using the system’s API, CSV file import, or robotic process automation.

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Goal 2 - Implement Technology Solutions 32%

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If a company is looking to implement technology solutions for Accounts Payable, they probably are looking for the same things we talked about in Goal 1 with the addition of looking for a new ERP system.

I wanted to validate if that was plausible, so, I did some research, and in a study in 2020, they found that 13% of the organizations surveyed were looking to replace or upgrade their ERP system. So, I think it is safe to say that my assumptions are correct, over half of the people who said this was their most important goal, are looking for technology to help streamline their invoice capture and automation process and save time for their accounts payable team.

Goal 3 - Enhance Payment Accuracy 12%

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12% of the people taking this survey said that they wanted to focus on improving payment accuracy. And I believe that is quite accurate as I talk to people in the industry.

I recently talked to an IT person who has the same goal. They recently had a huge payment made to the wrong company via ACH. This was an expensive mistake and hurt the credibility of the organization. But I was wondering if errors are common in most organizations.

I found a few sources that provide statistics on the percentage of invoice payments that contain errors. According to a survey conducted by APQC, even top-performing organizations report that nearly 0.8% of their annual disbursements are duplicate or erroneous. Another source, Practical Solutions, reports that 61% of late invoice payments occur because of incorrect invoices, while 11% of customers receive no invoice payment in the first place.

It’s important to note that these statistics are not necessarily representative of all organizations and industries. However, they do suggest that errors in invoice payments are not uncommon.

I think that several factors cause errors in invoice processing. The first factor is that many organizations rely on manual data entry for capturing data from invoices. We all know that it is easy to mistype a number. And the second factor is related. Your AP team is busy doing mundane tasks and doesn't find the time to verify that the numbers are captured correctly.

Implementing a good invoice capture solution will ensure that the vendor invoices are captured correctly.

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Goal 4 - Optimize Vendor Management 11%

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When people talk about vendor management, two things come to mind, paying them on time and taking advantage of any early payment discounts.

Pay Vendors in a Timely Manner

?This is probably the best thing that you can do to have a good relationship with your vendors. When I owned an IT company called Software Tailors, we paid our invoices as soon as they were received. Even if they were not due. Some people thought I was crazy. But I learned that if there was a product shortage, I knew I was going to get my product first. And if there was a warranty issue, my vendors bent over backward to make sure I was taken care of.

It didn't cost me that much extra to pay promptly, but it sure did improve my relationship with my vendors.

Take Advantage of Discounts

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In some industries, there are opportunities for discounts. Whether it is for paying early, attending some type of training, or watching for coupons and sales prices.

In my IT company, there were opportunities for discounts if I had an engineer take a vendor training class. All of this takes time to manage, but in some cases, it can result in big cost savings.

What is the Solution?

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Most of the accounts payable goals for 2024 are achievable if they implement an accounts payable automation system with AI OCR invoice capture capability. The AP automation can:

·???????? help save time.

·???????? improve internal controls.

·???????? help get invoices paid on time.

·???????? reduce stress on the finance team.

·???????? improve vendor relationships.

·???????? greatly reduce busy work for the accounts payable clerks.

·???????? will help you achieve your specific goals.

·???????? allow you to reduce manual processes.

·???????? and allow your team to focus on more strategic tasks.

If you are interested in learning more about this solution, you can find more details here: https://www.hemingwaysolutions.net/accounts-payable-automation-software/

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