Introduction
Accounts payable employees pride themselves on their filing systems, ability to handle large volumes of paperwork, and efficient capturing of monthly invoices.
No one will dispute that they have earned their right to brag, but the truth is this method of working is no longer effective. Technological advancements are forcing a change, and we can either resist or go along with it.
Many companies have decided to go along with it. Since 2020, 70% of accounts payable (AP) departments have converted to a paperless system, and this number is increasing [1].
If you want to join this accounts payable revolution but are unsure where to start, stick around for a step-by-step guide to help you transition.
Challenges of the Current Paper-Driven System
Converting your accounts payable department over to a paperless system may seem daunting, but staying in the current pitfalls of a paper-driven system is worse. Here are some of the common challenges:
- Long working hours processing paper invoices
- Endless searching for documentation to answer queries
- Duplicate payments
- Handling and filing of paper invoices
- Writing and mailing of paper checks
- Storage space for filing systems
56% of businesses said that invoices were sent to the wrong place, and 36% were concerned with late payments due to process delays [2].
The manual payment process can have up to nine steps, whereas an automated process has five steps.
Example of a Paperless Accounts Payable Process
- Invoice received from the supplier
- Auto-population of electronic form
- Invoice approval form routed to the relevant authorization level, a digital signature used
- Confirmation emailed directly to the supplier
- Digital payment made at the scheduled time
Implementing a Paperless Accounts Payable System
The only way to overcome these challenges is to let technology take the difficulty out of the process. Here’s how you can implement a paperless AP system:
1. Find Out What's Not Working
Converting from a manual process to a paperless one requires mapping the desired AP workflow. Any gaps that exist will need to be addressed.
Hold a meeting to map out all AP processes and agree on the objectives of a paperless system. This step is crucial as it will reveal issues that could cause problems later on.
Involve the most experienced AP staff and those who can authorize changes to the workflow. This will facilitate a faster change process.
Some automation software provides pre-defined workflow templates. Choose software that fits well with your current process to reduce the need for costly customization.
2. Get Trusted, Forward-Thinking Employees Involved
Going paperless can be challenging, and the success of the transition depends on process champions who are excited by the prospect of paperless AP and can influence others to embrace the change.
These champions will see the benefits early and anticipate what is needed. Once they are on board, the rest of the AP team can be involved. Address valid concerns raised by affected employees, such as data capturers and filing clerks.
Their buy-in is essential to moving all paper invoices and documentation to a paperless system.
3. Review Automation Software Systems
An automated system is an investment. Review software for key functionalities that support your AP processes. Focus on areas such as:
-
Invoice Management:
Automation software should electronically capture, digitize, and store invoice information using AI, image recognition, and machine learning. It should also provide payment deadline notifications and automatic approval workflows. -
Integration with Accounting Software:
Integration with existing accounting systems like Xero or QuickBooks reduces manual processing. Look for software that draws information from your current system without needing a new platform. -
Access Controls:
Ensure settings allow you to define who can control AP workflows, view invoices, and submit payments. -
Detailed Reports:
Software should offer real-time data access via a dashboard for quick reports and monitoring cash flow changes.
4. Plan Every Step of Your Implementation
Document the implementation plan with deadlines and assign responsible persons. Stakeholders will appreciate a systematic approach to transitioning to paperless AP.
- Budget:
While converting to an automated system provides cost savings in the long term, upfront costs can impact the business. Ensure the budget is approved upfront to avoid later disappointments.
5. Convert Paper Documentation to Electronic Format
A paperless invoice processing system eliminates the need for physical document storage, reducing the risk of human error. Document scanning forms the basis of a digital document storage system, saving on operational costs.
6. Train Employees on New Processes
Although paper processes are time-consuming, employees may feel comfortable with them. Most automation software companies provide training for accounts payable teams. Patience is key as employees adjust to new processes. Providing manuals or electronic resources empowers them to troubleshoot problems.
7. Hold Weekly Meetings to Tackle Implementation Problems
Gather process champions, management, and the AP department weekly for at least the first two months of using the new processes. These meetings will encourage quick issue resolution and track the success of the implementation.
The Benefits of a Paperless Accounts Payable Process
If that’s not already appealing, here are additional reasons to convert to paperless accounts:
- Reduced use of printers, copiers, fax machines, and paper
- Real-time financial reporting for better decision-making
- More payments processed daily, reducing the need for manpower
- Improved vendor relationships through a vendor portal, allowing suppliers to track their invoices
- Increased efficiency by cutting down on duplicate work and error correction
- Enabled remote invoice processing and approval
- Reduced storage costs with electronic document management
With Payvy, vendor management becomes easy and reliable with multiple payment methods and a simple communication app.
Conclusion
Poorly managed AP automation can cause more problems than it solves, leading to payment errors and damaging vendor relationships. Nevertheless, 83% of accounting executives and business owners agree that adopting a paperless culture is essential for retaining a competitive edge.
Moving a business forward requires good processes, the cooperation of people, and excellent technology. We’ve covered them all in this article in the hope that you’ll embrace the challenge of transitioning to automation and leave manual accounts payable processes behind.