Categories

Accounts Payable Workflow Automation

Is Automated Reconciliation the Future of Accounts Payable

“Invoice Processing. Approval process. Payment processing.”

These are the three essential steps in the accounts payable process.

In financial management, the accounts payable process is the heart of cash flow management.

It is an undeniable fact that handling accounts payable process takes massive time and effort. The truth is, traditional accounts payable process has changed, and businesses are utilizing the power of the automation to enhance scalability as the business grows.

Without a doubt, Accounts Payable Automation has taken over the wheel. Because a stat from Pymnts.com state that 84% of companies who have fully automated have witnessed increased cash flow and savings.

To help curtail the challenges with the existing accounts payable process, we want to show you how automated reconciliation does wonders for your business. If you are little aware about automated reconciliation and don’t know where to start, then this blog would be an eye-opening guide.

Therefore, sit tight throughout this blog to learn about AP automation, its significant benefits, and how it works for versatile businesses.

What is Automated reconciliation?

Automated reconciliation is a technology-driven process that streamlines the matching of financial transactions and balances across various accounts or systems. It involves importing data from sources like bank statements and accounting software, where transactions are automatically compared to identify matches. Discrepancies are flagged for review, while the system generates reports summarizing the reconciliation process.

Explore Our AP Automation Use Cases | Schedule Free Demo WhatsApp

The Benefits of Automated AP Reconciliation

1. Reduce Invoice Processing Time by 70%

Removes the burden of performing time consuming tasks such as preparing invoices and approving payments, leading to shorter processing periods. By implementing automation, employees do not have to get lost in the paperwork performing low-level tasks.

2. Reduce Operational Costs by Up to 20%

Shifting towards an automation system is likely to render cost savings to a great extent. With reduced use of paper, less printing, storage, and postage costs are incurred by the organizations. Furthermore, less manual processes imply minimal labor costs hence businesses can focus on other strategic activities.

3. Eliminate Data Entry Errors by Up to 90%.

This kind of data entry is prone to a great level of human error. The automation increases the chances of invoice data capture correctly and also improves the consistent processing of invoices. That means financial data will be more streamlined and the risk of unnecessary losses like overpayment or payment of repeated invoices will be reduced.

4. Enhance On-time payments by 50%

By implementing automation process, organizations can ensure that they receive their payments on time. This not only reduces the occurrence of late payment but increases the chances of early payment discounts. When the payment records are smooth, it makes it easier for businesses to work with their vendors and suppliers in a lively way.

5. Increase Financial Visibility by 30%.

Automation tools often come equipped with reporting and analytics capabilities. This enables organizations to gain real-time insights into their financial health, including cash flow, spending patterns, and outstanding invoices. Enhanced visibility aids in better financial planning and decision-making.

6. Decrease Compliance Issues by 25%

Maintaining accurate records is essential for compliance with financial regulations and audit requirements. Automated systems help organizations keep track of invoices, approvals, and payments, ensuring a clear audit trail. This makes it easier to demonstrate compliance during audits and mitigates the risk of financial discrepancies.

7. Handle 50% More Invoices Without Extra Staff.

As businesses grow, their invoice volume typically increases. Accounts payable automation provides a scalable solution that can handle growing demands without necessitating a proportional increase in staff or resources. This adaptability is vital for companies looking to expand without compromising efficiency.

8. Improve Vendor Satisfaction by 40%

Timely and accurate payments contribute to stronger relationships with vendors. When suppliers can rely on prompt payments, it fosters trust and collaboration, which can lead to more favorable terms and better service in the long run.

Explore Our AP Automation Use Cases | Schedule Free Demo WhatsApp

How Automated Reconciliation Works?

1. Data Collection

Financial data from various sources such as bank statements, invoices, and accounting systems are automatically imported into the reconciliation software.

2. Transaction Matching

The system matches transactions occurring in a number of the accounts or systems based on set similar characteristics such as amount, date and transaction description.

3. Exception Identification

Unmatched items or errors which require attention are all noted for further analysis. These may include change of amount, absence of some items or difference in time when these reclining occurred.

4. Review and Resolution

Finance teams can review the flagged discrepancies, investigate the reasons for mismatches, and make necessary adjustments or corrections.

5. Reporting

The system generates comprehensive reports that summarize the reconciliation results, including matched transactions, exceptions, and overall account balances.

6. Audit Trail Maintenance

All reconciliation activities are logged, creating a clear audit trail that can be referenced for compliance and internal reviews.

7. Continuous Monitoring

The system can provide ongoing monitoring of transactions, enabling organizations to identify discrepancies quickly as they occur.

8. Integration

Automated reconciliation tools often integrate with existing financial systems, ensuring a smooth flow of data and enhancing overall financial management.

Explore Our AP Automation Use Cases | Schedule Free Demo WhatsApp

Final Words

Handling the accounts payable process could be a challenging task for CFOs, CEOs, managers. And even business owners struggle to track progress by monitoring multiple sheets along with accounting software, or ERP systems.

But with automated reconciliation, it’s never complicated anymore.

Automation is crucial to the success of any business. It’s one of the most important processes in every stage of your AP process.

So, don’t underestimate the value of automation. Whether you don’t have idea about automation or thinking of Automating your Accounts Payable process, you’d be surprised with flabbergasting impact with implementing reconciliation automation.

Curious to automate your accounts payable process?

iSQUARE is here to lighten your financial management challenge. Eager to take the plunge? Schedule a Demo to catch-up with our team of experts!