The AP approval process is the workflow for getting authorization to pay vendor invoices (with credit payment terms) that are included in accounts payable before being paid. Automating the accounts payable approval process in your company is essential because it saves significant time, reduces costs, improves cash flow management, strengthens internal controls, and improves supplier satisfaction.
Benefits of Streamlining AP Invoice Approval Workflow
Your business will experience time and cost savings and avoid problems and frustrations when it implements a streamlined electronic AP approval system for authorizing invoice payments in accounts payable instead of using a manual accounts payable approval process.
Time and Cost Savings from Streamlining AP Invoice Approval Workflow
When your company streamlines AP invoice approval workflow, it avoids the excess costs, time drains, and frustrations of a manual AP invoice approval process from:
- Extra, time-consuming steps in the AP invoice approval workflow
- Missing and lost paper documents
- Repetitive follow-up with approvers
- Answering many incoming vendor calls and emails about payment status when invoices aren’t approved on time for payment
Streamlining AP invoice approval workflow starts with an understanding of the inefficient manual approval process that currently exists vs. using software productivity from AP automation, with its automated steps, rules, routing, and other built-in efficiencies. In contrast to the manual accounts payable approval process for vendor invoices, AP automation software provides streamlined electronic AP approval.
Inefficient Workflows in a Manual Accounts Payable Approval Process
In a manual payment approval process, your accounts payable staff may route paper documents including matched invoices, purchase orders, and receiving documents, to each applicable invoice approver. However, these AP invoice approval process documents don’t come from the same source or get created at the same time.
Manual AP invoice approval workflow may mean using temporary file folders in file cabinets to accumulate paper documents in a set that’s stapled to the invoice and manually checked for line-item matching. (Documents are first manually verified and matched by the accounts payable department, coded for accounting, and keyed into the accounting or ERP system to record them before invoices are routed to approvers in the AP approval process.)
If this is your company’s paper-based legacy system for the AP invoice approval process, you’ll have additional business costs for warehouse storage to archive paper records. Add time for finding the invoice you’re looking for in boxes of stored records when it’s income tax audit time in later years. And hope the needed invoice hasn’t been lost by then. (If your company uses a scanning service to scan paper invoices for digital archiving, add that type of cost instead.)
Problems of a Manual Vendor Invoice Approval Process
A manual vendor invoice approval process for accounts payable has inherent problems that take time and cost money to solve:
- Who is the approver for this particular invoice? Will an additional approval from a second authorized person be required in the payment approval process for invoices above a specified amount?
- Is this approver physically available in the office to approve invoices supported by other paper documents?
- Will the approver immediately approve the invoices or will the AP staff waste time manually sending out reminders as part of its invoice approval process?
- Will paper invoices and matching documents get lost during this AP approval process?
- The accounts payable department will have to contact the vendor when invoices are missing. This problem delays invoice processing, including the AP invoice approval process.
- Will a vendor continue shipping products on time to your business when its payments are significantly late because of a delayed invoice approval process?
- Will your company incur expensive late payment fees from the vendor or miss earning early payment discounts offered by the vendor in its 2/10, net 30 invoice payment terms?
How to Automate the Accounts Payable Approval Process
With software for AP automation, including automated digital invoice capture and invoice processing with electronic AP approval, your business streamlines its AP invoice approval workflow and saves time and money by avoiding the problems of a slow and error-prone manual invoice approval system.
To understand how to automate the accounts payable approval process, consider how to use AP automation software to streamline your company’s AP approval of trade payables. Then experience a big-picture glimpse into the entire accounts payable workflow in Flow (by Nanonets), an AP automation software.
Using AP Automation Software to Streamline AP Approvals
AP automation software includes processes for AP approval. With Nanonet’s Flow, an AP automation software product, your business can gain efficiency to save at least eight hours per week in its AP approval process, using AI (artificial intelligence) and robotic process automation (RPA) technology. Your business won’t need to constantly prepare follow-up emails or use payables staff to communicate with approvers during the accounts payable approval process.
For AP approval, Flow lets you add specific approvers for accounts payable invoices or use AI-driven, rules-based automated approvals. The automated spend and payables software is fully customisable for performing company approvals in its AP invoice approval workflow. Company policy is embedded into the system with these automated rules for AP approval routing to authorized approvers and built-in approver notifications.
Nanonets, a cloud-based system with digital invoice capture, enables electronic AP approval using email, Slack, or the online software. For the payment approval process, approvers can quickly approve vendor invoices and employee receipts spending from anywhere.
Overview of Accounts Payable Workflow in an AP Automation Software
Flow AP automation software by Nanonets lets your business streamline its accounts payable workflow processes and improve efficiency. The Flow software uses a dashboard menu for:
Flow automation software used for accounts payable management will:
- Automatically receive, electronically read, and capture invoice data by line item with AI
- Quickly process invoices for on-time payment
- Create and use automated rules for enabling the electronic payment approval process for invoices, add an approver, and automate routing to designated approvers to complete their invoice approvals.
- Autosync approved and coded invoices to your accounting software
- Let you pay an approved vendor invoice (using an integrated payment partner)
To import invoices into the Flow AP automation system, vendors can automatically import them via email or shared drives or upload invoices directly into Flow through Add an Invoice. Flow reads the invoices using AI automation technology and captures the invoice data by line item for vendor invoice management, review, approval, recording, and payment.
Invoice processing for accounts payable includes the following steps:
- Invoice receipt
- Invoice verification
- 3-way matching of invoices with purchase orders and receiving documents
- Invoice payment approval in the accounts payable approval process
- Invoice payment.
Consider invoice processing as a set of workflow steps for the entire invoice-to-pay process in accounts payable. Invoice processing enhances internal controls to detect and flag error exceptions and enforces the separation of duties for invoice processing and invoice approval. In this article, we focus on the AP approval step of invoice processing.
With software for AP automation, including automated digital invoice capture and invoice processing with electronic AP approval, your business streamlines its AP invoice approval workflow and saves time and money by avoiding the problems of a slow and error-prone manual invoice approval system. To start improving your company’s AP approval workflow, take a product tour or view a demo of the AP automation solution, Flow by Nanonets.