How Can AP Automation Improve Your Business Productivity?

How Does AP Impact Productivity?

With technology evolving rapidly and the competition increasing with each passing day, many businesses now invest in software for accounts payable and receivable to streamline operations, improve efficiency, reduce costs, and gain a competitive edge. AP AR Automation software are beneficial to smoothen the process of many complex business functions that are crucial to business operations. Before diving into the benefits of accounts payable and accounts receivable automation benefits, let’s understand AR vs. AP.

Difference Between AP and AR

Knowing the difference between AP AR is vital for small business owners who want to understand their accounting process better. AR vs. AP are two sides of the same coin. Let’s learn what is AP and AR.

What is AP?

Accounts payable (also called business AP) is an account on your company’s general ledger representing amounts a company owes to its suppliers. In short, it’s the money your business owes to third parties.

What is AR?

Accounts receivable (also known as AR) refers to outstanding invoices the customers owe to your company.

Accounts Receivable Versus Accounts Payable

It is routine to compare the amounts of AP vs. AR as a part of liquidity analysis to check whether enough funds are coming in from receivables to pay for the amount of liability yet to be paid. This comparison of AR vs. AP is commonly made with the current ratio. However, the quick ratio may also be used. Other differences between accounts receivable versus accounts payable are as follows:

What is AP and AR Automation?

AR automation software helps optimize your company’s customer invoicing and payments processes. AR automation ensures that your customers pay for the goods or services they receive. This software is used to streamline the financial transactions taking place between your company and customers. On the other hand, AP automation is used for vendor invoicing and to help create a faster, cleaner, more cost-effective AP process flow. With AP automation, you don’t need paper receipts anymore. Automation lets you cut the manual AP tasks, increase visibility into spending, and control the costs.

Benefits of AP Automation

Below are the six benefits of AP automation to provide you with a better ap/ar experience.

1. Saves Time

In the past, people had to wait for approvals of the invoices as they would sit on desks for days or wait in email inboxes. However, today AP automation eliminates such delays, streamlining and fastening the entire approval process. Intuitive dashboards on the automation software give users a detailed, real-time view of invoice processing. At the same time, you can also set specific functions, so the appropriate person receives a timely invoice.

2. Reduces Cost

Best-in-class companies are now leveraging modern technology to streamline their AP processes. Result? The invoice processing costs came out to be five times lower than average. Business AP automation can save your labor costs and cut down on hard costs, such as office supplies and the cost of posting interoffice mails.

3. Better Accuracy

AP automation software can help reduce and protect you from some of the most common invoicing errors. You don’t have to key in invoice headers or type out item data manually. Furthermore, It also helps reduce the risk of duplicate or late payments or inadvertently overpaying invoices. An AP automation system alerts you to duplicates and overpayments and reminds you of due dates.

4. Improved Collaboration

Many people can collaborate on any particular payable through AP automation software in real-time. No matter where they are, everyone with a stake in an invoice can simultaneously access it to confirm or dispute charges, seek clarification, or explain discrepancies.

5. Prevent Accounting Risks

AP Automation software gives a detailed overview of the approvals and payments workflow. This helps reduce common accounts payable risks and fraud such as false billing, duplicate payments, and fraudulent transactions. The software can easily track these within the system. The software flags any suspicious activity, giving you the audit controls you need.

6. Easy Auditing

Make document management more accessible and boost your auditing processes with AP automation. You can link all documents and messages involved with each transaction through AP automation while matching invoices with receipts and purchase orders. This makes it easy to track audits, reduces the likelihood of missing paperwork, and ensures compliance with your quarterly or annual filings.

Conclusion

Now that you have a better understanding of AR vs. AP, you must automate the process. This will help you improve your business productivity without any increase in the cost and also save you from fraudulent transactions. After reading the Accounts Payable and Accounts Receivable automation benefits, you must use these automation softwares for a better, faster and accurate invoicing workflow.