The Evolution of Accounts Payable
Accounts Payable is a liability due to a specific creditor when you order goods or services without paying upfront in cash, meaning you have purchased goods on credit. Accounts Payable is not limited to specific businesses or industries, many individuals have payable accounts.
Accounts payable was primarily a paper-based feature where vendors would send their purchasers paper copies of their invoices directly in the post. Historically within a business, invoices would be shuffled through different departments for individuals to verify costs, cut checks, and send payment through the post in order to complete the approval process.
The Industrial Revolution…
Which began at the end of the 18th century, required the creation of a more sophisticated form of an invoice, which is when they began to refine the original model. This is when the invoice you typically see today which includes details of the purchaser and the vendor, date of issue, a description, and a list of goods, including quantity, prices, and so on was developed.
In the 1920s...
Web-based billing quickly became more precise and filled with features that made it almost unavoidable for businesses. The government has made the use of electronic invoicing mandatory in many countries with the advent of GST (goods and service tax) and other tax reforms. Today, the invoice generators available on the market have the ability to do everything from invoice management to expenses.
Further on, into the 1960s…
The first electronic data interchange (EDI) system was developed. And the age of electronic invoicing began. With EDI systems, companies and their trading partners could link and pass information. This enabled both parties to easily, paperlessly transfer documents such as invoices and PO’s.
By the 1970s…
When tech began to evolve, many employees had access to a computer, which automatically increased efficiency. AP professionals had the ability to accept invoices digitally, connect instantly via email, and chat with vendors around the world without using their phones. Overall, this allowed AP teams to build stronger relationships with suppliers, communicate effectively, and a more efficient accounts receivable process.
The AP automation software had a significant impact on invoice processing: workflows improved to increase their efficiency, accuracy, and time to pay.
As technology expanded…
And digital transactions increased, cybercrime grew as well. As the Internet grows, cybercriminals do not hesitate to build their methods to target brands, customers, and employees with relative impunity. Security teams need to respond by stepping up to the task and using automation and machine learning in creative ways that catch cybercriminals off-guard.
Security risks and compliance with strict, new legislation are two of the biggest challenges facing contemporary businesses, problems that can not be overlooked as digital transformation programs are undertaken by businesses. Automation will eliminate the pain associated with tasks such as security monitoring and data handling required to ensure compliance, allowing businesses to focus on the remainder of their digital transformation project.
And as AP automation evolves…
More companies continue to make the switch from manual digital AP and invoice processes. Many businesses started implementing AP automation to improve efficiency and lower costs. Some of the features of an automated AP system are:
- Reporting features allow individuals to analyse business metrics as well as contributing to their overall digital transformation.
- The ability to create approval workflows with multiple people and increase the chances of catching fraudulent invoices before payment is processed.
- Dashboards tracking team performance and productivity.
- Integration with your business's ERP, databases, and financial systems.
The user experience of these platforms has helped AP managers and their employees:
- Verify and process invoices more quickly all while alleviating errors, which ultimately cost money.
- Comprehensive AP automation software can help you with document management, which can be beneficial for auditing.
- Safeguarding against fraud by controlling which employees have access to invoice approval and the release of payments.
- Data can be imported and exported with real-time access.
- Companies can not operate without invoices, so they are always looking for tools and techniques to make the processes from their accounts receivable more effective and efficient.
One of the primary objectives of any phase of digital transformation is to increase efficiency in the workplace, and this is where automation will make a huge difference. An automated AP system can:
- Help modify the activities that humans perform so that they can concentrate on purposeful work, thereby increasing efficiency in the workplace.
- Provide a strategic efficiency, so businesses can use it to hammer out their unique pain points instead of being seen as a 'quick win'.
- Scalability is also another key advantage when automating workflows. This means that companies can establish where automation can make a difference and use only a few as a testing ground before they scale up their automation programs in the rest of the market.
- Save costs and create a fast ROI.
Successful companies today bring a digital mindset to the core of their strategy. Businesses can find creative ways to address conventional consumer demands through new applications, programs, and apps. By rethinking existing processes and moving to modern, agile approaches businesses can build the competitive edge they need to thrive.