A New Guide to Accounts Payable Batch Processing

The functions performed by finance professionals can quickly be overwhelming for them, regardless of the business type. Batch processing is an alternative in some situations. Invoice processing may be challenging at times because real-time invoice processing consists of multiple steps and is, thus, cumbersome. It would be overwhelming if the AP department processed, paid, and adjusted every invoice separately. What makes it even more time-consuming is that usually, small to medium businesses receive about 100 or more invoices per month! A fantastic alternative to traditional invoice processing (manual) is accounts payable batch processing. Usually, organizations like some banks and other institutions process transactions after their business closes.

The basics of AP batch processing

Before getting into the details of invoice processing, let’s look into the meaning of this practical approach to invoice processing. Simply put, with accounts payable batch processing, businesses can:  

• Manage invoices in bulk
• Process B2B (business-to-business) payments in bulk
• Adjust invoices in bulk

Real-time invoice processing necessitates separate entries per invoice on accounting journals. Businesses can effectively group each invoice, adjustment, and payment into batches with AP batch processing. These batches (both small and large) of invoices will, in turn, get processed as a single payment to each supplier.

The step-by-step breakdown of batch processing

The general steps of AP batch processing include:

• First potential batches (both small and large) of invoices, payments, or adjustments get created. Then they’re reviewed for possible mismatches. These batches get ready for submission, which will happen at a single point in time. It helps with time savings and cost savings.
• The batches then get posted within the invoice automation software of the company. Once posted, the batches link to the accounting system’s general ledger.
• General ledger transaction reports and AP posting journals, then back up the batches.

When shouldn’t accounts payable batch processing be used?

Here are scenarios when one must not use invoice management processes through AP batch processing:

• If a payment has to be made by the company to a high-profile vendor who needs immediate payment.
• Quick-turnaround deals
• Mission-critical deals
• High-dollar transactions that mandate special attention

Invoice management shouldn’t be done through batch processing in the scenarios mentioned above. The reason is that processing in batches is a bit slower than real-time processing. Invoices move slightly slower and take a bit longer to settle. So, it’s best to avoid the risk of the invoice getting delayed or lost in the batches.  

AP batch processing: The benefits

The benefits include:

• Cost-savings and time-savings

A 2019 report by the State of ePayables showed that the average cost of manually processing an invoice is about $12-$30. As invoice management happens in batches with AP batch processing, the time-saving and cost-saving benefits are prominent and undeniable. Making payments for invoices in large enough batches through payment methods like ACH can significantly cut costs.

• More predictable payment cycles

Many suppliers and vendors struggle to maintain positive cash flow and operate on tight margins, primarily if they work for businesses with manual invoice management systems. With AP batch processing, businesses can keep consistent and timely payment cycles for their suppliers. The trust between suppliers and companies also improves. Businesses can also benefit because batch processing allows businesses to project their credit needs and cash flow.

• Better data viability and cleaner bookkeeping

The accounting records maintained by sub-ledgers and general ledgers can become cleaner and more condensed with batch processing. The process is beneficial for effective invoice management and audit preparedness.  

Businesses can operate efficiently with this new invoice automation and management software like GetMyInvoices, which streamlines invoice management by automatically downloading invoices from portals and integrating with third-party systems like accounting or ERP systems.

 

Discover GetMyInvoices today.