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The “Great AP Automation Revolution” is under way — Don’t get left on the wrong side of history

Past efforts to automate accounts payable (AP) have been half-measures. AP teams, therefore, struggle to stay on top of company spending using archaic, disconnected systems. It’s no wonder accounting and finance professionals are skeptical of solutions that burn up their time on implementation and training, and then fall short on the value they deliver. But a revolution has finally begun — one that harnesses the power of modern product design to create a comprehensive solution that goes beyond basic AP to include all non-payroll spend.

Known as spend management, the best of these systems take full advantage of new technologies and can scale as your company grows. These technologies include deep integrations, access to multiple payment rails, real-time asynchronous communication, collaborative environments, and machine-learning implementations.

Those who sit on the sidelines of this revolution will continue to be buried in error-prone manual work and time-consuming processes — unavailable to play the higher-value, more strategic role they have trained to do and imagined for themselves. Those who get on board will experience a transformational shift across their entire organization.

A many-step process involving almost everyone in a company

Spending company money is a complex motion that becomes increasingly difficult as a business grows. That is not to say that any single part of it is a challenge — an employee can swipe a card, a manager can approve an expense, a department head can raise a purchase order, an accounting manager can book a transaction, and an AP manager can process a payment to the vendor — but all of these individual actions must be synchronized, and data must flow from one step to the next. Add to this the cascading complexity of growth as transaction volumes explode and company departments and legal entities multiply. By the time most businesses get to the mid-market and early-enterprise level, the purchasing process is chaotic, partly manual, time-consuming, involves several software tools, and contains unacceptable risks.

Shortcomings of past systems

Accountants have long worked with partial software solutions — 5- and 25-mile-long tracks laid down in various directions for a 100-mile journey. These segments require manual work to connect them to employees, vendors, customers and the general ledger. Nowhere is this more true than with AP, where a glut of siloed systems for expense management, corporate card programs, and bill-paying services get combined with communication software and nifty single-purpose tracking systems to manage a complex operation. The resulting process leaves companies with little visibility and control over an essential requirement of their success — to safely, effectively and efficiently deploy capital.

The breakthroughs of new technologies

Current systems are constrained by the limitations of the technology they were built on, and it is clear that new technology has opened the way for spend management. The advent of cloud computing has led to re-imagining collaboration, and the rise of APIs allows for cross-platform integrations. Collaboration and connectedness mean everyone is working from the same system that syncs with other systems in the organization. Take this simplified example:

A new employee is automatically provisioned onto the spend management system through an HRIS integration. The employee can log in to request a purchase from the same system that they also use to create the payment method (a virtual card). That same system secures and document approvals, categorizes the transaction, makes the payment, and syncs it to the GL. Everything happens in one place, whether you are the employee, the budget owner, the accounting manager, or the vendor — collaboration. The system connects (as needed) to other systems: your bank account, Slack, email, HRIS, travel software, FP&A systems, and, ultimately, to your GL — connectedness.

Layered on top of this are other innovations. Machine learning can automatically categorize a transaction and pull vital transaction and vendor data from email communication. OCR technology can automatically ingest the details from an invoice to save time and reduce errors. Of course, mobile technology means employees can take the entire system out on the road, where a lot of company spending occurs.

Trusting the revolution’s capacity to create a better world

The consolidation of all non-payroll spend has several benefits: employees have one consistent process, it gives easy real-time access to spending reports, it generates a full audit trail of all spending, and it provides a single command and control center to execute both domestic and international payments and optimize payment methods.

In addition to the benefits of consolidation, modern spend management also automates many processes often done manually. Some examples of automation with spend management are:

  • Approval workflows that tie to a company’s expense policies
  • Alerts when duplicate or fraudulent spending are suspected
  • Booking categorization
  • Amortization schedule creation
  • Syncing to the GL
  • Closing of cards when an employee leaves
  • Receipt compliance

These improvements over manual, or partially manual, processes that produce errors and can slow a company down are just part of the efficiencies offered by modern spend management.

Accounts payable is at once complicated and essential to a company’s success. The world that spend management creates is characterized by:

  • Better visibility and control
  • A significant reduction in manual tasks
  • Real-time reporting for all non-payroll spend at the company, department and subsidiary level
  • Happier employees and a healthy spend culture
  • A faster close
  • Reduced risks
  • A smooth, controlled process for the deployment of capital

Growing numbers are joining this revolution to overthrow the tyranny of an ineffectual system and replace it with a new one that works — spend management. In its wake, accounting professionals can claim their rightful place as strategic partners to their company’s success — a destiny they are, without doubt, better suited for.