Business finance tools and technology have certainly come a long way. Especially in the last five years, with the adoption of cloud-based platforms and recent advancements in artificial intelligence.
Unfortunately, accounts payable is still viewed as the same paper-entrenched department of the '90s. And since AP is also perceived as a cost center, not much investment has been made in its infrastructure.
This is quite a shame, as many tools today have huge applications in the AP department, which can ultimately transform it into a money-making department.
Here are four popular accounting tools every accountant needs in accounts payable.
Created by Ryan Mason
OCR invoice scanning
Scanning invoices is a great start, but that's really the lowest common denominator in the paperless office initiative. OCR, or object character recognition, is the tool you really need.
Not only does it make the scanned invoice file size smaller (a text file is significantly smaller than an image), but it unlocks one vital and important feature—search.
Searchable OCR-converted invoices, then, allow the AP department to quickly and effortlessly find transactions by date, vendor, amount, or even item number. By converting the invoice into a computer-readable format, the accounting software can begin to glean insights from the data, unlocking intelligence.
Mac, PC, tablet, or smartphone—today's modern accountant needn't concern him or herself with any of this. That's precisely what a cloud-based arsenal of tools affords the accountant—the ability to work on any piece of hardware anywhere they may be at any time of day.
But that's just one of the advantages to these types of software solutions.
Another common feature of a cloud-based accounting system is its software-as-a-service—or SaaS—licensing. Instead of paying for off-the-shelf accounting software and its subsequent updates, modern AP departments can simply purchase access to a platform. This makes management easier, as it's handled by the licensing company. Upgrades are rolled out as they're made available and important financial data is always secured and backed up.
But the best feature that cloud-based software offers is its open-ended design. The implementation of APIs, or application program interfaces, allows data from one application to flow into another, which solves the huge data visibility problem created by insular locally-run software.
Data visibility & destroying silos
Payables knows when to pay a supplier. Receivables knows when to expect payment. Procurement knows alternative suppliers from which to source materials. And the warehouse staff knows what's on hand.
Unfortunately, the data generated from these departments are kept insular. This is known as data siloing—a problem that stifles insights and analytics.
Connecting these data silos is the precursor to business intelligence. Directing this stream of data to an ERP allows analysts and C-suites alike to make insightful decisions backed by data, which is especially pertinent when you've adopted—or are aspiring to—just-in-time business practices and ideologies.
AP is racing against the clock, working tirelessly to get payments authorized and sent out to suppliers. So when the phone rings and an accountant has to field a payment status call, valuable moments are lost in what otherwise should be spent performing AP's primary duty—paying suppliers.
These supplier payment portals are the self-service payment inquiry calls.
Suppliers log in to quickly check payment status. They can reference all past payments and compare them with invoice totals, matching receivables' totals. The supplier portal can also serve a valuable tool in referencing 1099s come year's end.
And that leaves AP staff with its undivided attention to pay suppliers on time—or better yet, sooner than expected to take advantage of discounts.
The best tool of all
Implementing any set of the tools mentioned above enables AP to shorten the time between invoice processing and payments. And once AP can shorten this payments workflow, it becomes eligible to dynamic discounting along with other forms of rebates.
Simply put, the faster an organization can go from invoice received, to processed, all the way to paid, the faster it can start saving.
And savings, after all, is one of the best tools a business can take advantage of.