The importance of maintaining records in accounts payable is unparalleled. Precise Accounts Payable process documentation has several benefits. The accounts payable process is one that is responsible for paying suppliers and vendors for goods and services availed of by any business and is a key metric for managing revenues. One of the stand-out benefits of good AP documentation is maximizing the accuracy to avoid errors and frauds that can cause significant financial damage to companies. Here, you will learn about common components of AP process documentation and the 3 top practices for optimizing AP process documentation.
Before getting into the optimization of the documentation process, let’s first look into the most common types of documents that the AP department likely handles:
Purchase orders, popularly referred to as POs, are the first documents generated in the whole AP documentation process. POs are invaluable to the AP documentation process because they function as indispensable records in the documentation process.
A receipt report is physical evidence that a business has received what it was supposed to receive and that the AP process documentation is getting executed is shown by. Although receipt reports are undoubtedly important to businesses, it is often difficult for businesses to group these reports with other important process documentation documents.
The problem is even more likely to happen if hard copies of the receipt reports exist. It means that AP department specialists have to identify the receipt reports and group them.
Invoices are common at any point within the P2P process. There are some vendors who send invoices at the time of purchase, while other vendors hold off until delivery. The invoice type may be analog or paper, emailed or mailed. It depends on the vendor and the company standards.
Research by PYMNTS in 2020 has shown that approximately 46.4% of AP professionals are interested in implementing digital invoice solutions into B2B operations. Irrespective of the format, a solid invoice management system is necessary for effective documentation.
Here are the top 3 ways to optimize AP process documentation:
A three-way matching is when receipt reports, invoices, and purchase orders get grouped to prove a transaction’s validity.
Three-way matching is effective because businesses can avoid paying fake invoices and undelivered services or goods. However, three-way matching can be highly cumbersome for companies that follow manual AP process documentation.
There are several issues in accounts payable processes concerning paper documents. There are high chances of physical documents easily getting misplaced or even destroyed. The higher cost and time associated with manual AP processes are also undeniable. All such issues make the overall process of handling paper documents in AP quite inefficient.
However, with AP automation, digitization and management of documents have become very easy and convenient. Software tools like OCR (optical character recognition) get used for scanning documents like POs, receipt reports, and invoices into the automation systems of businesses.
Apart from document storage manually or through digitization, there is a third document storage option. Businesses have to adhere to very high standards of reporting (AP documents) for regulatory reasons, liability, and other reasons. Usage of the cloud for document storage is highly appealing to companies. It is secure, easily accessible, and cost-effective.
Consider implementing either of the three ways mentioned above to optimize your company’s accounts payable process documentation.
See the benefits of automated invoice management:
Better overview. Less accounting work. More time for your ideas.