For a business to succeed, multiple transactions must occur daily to stay updated and functional. A company deals with various merchants to support its operations. Therefore, it’s integral not to miss any payment deadlines unless you want to ruin your business’ reputation in front of your business partners. Keeping track of all due payments and adjusting their payment status manually can be tiresome and prone to errors. That’s when an automated accounts payable system comes in.
Before we proceed, it’s essential to understand what accounts payable is. Accounts payable is a liability for a business, and it refers to the money owed by a company to other companies or suppliers. It does not include loans. As technology has advanced, there are currently many automated services that make it easier for a business to manage their finances. An automated accounts payable system has several advantages:
- Saves time:
Entering data into the digital ledger manually can be a time-consuming task, especially when the handler needs to wait for a confirmation of approval of payment before changing the status of an amount payable. The process of completing a payment manually would start with receiving an invoice, uploading relevant information into the accounts book, confirming the price, typing out an email to the beneficiary, and updating the payment status. The latency between these steps can cumulatively take up a lot of time.
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- Reduces error:
Manually entering invoice information into the ledger makes it possible for some entries to get altered mistakenly. Additionally, missing out on any payment update can result in a lot of confusion amongst the finance team. Another benefit of automating the accounting process is storing a digital copy of the invoice that a business can access at any time per the requirement.
- Saves money:
Although initially, automatic service would require some investment to upgrade to an automated system, in the long run, it would result in a lot of money getting saved. It would happen as less human power would be required to do the task. In other words, a business would need fewer employees for data-entry-related roles. Employees could use their skills more efficiently in other areas of business operations. Moreover, an automated payables system would automatically process periodic expenses and save you from getting penalized for late payments.
- Reduces human effort:
An automated system makes the account management process easier for the accounts manager. Additionally, it eliminates the mental burden of having to remember the due dates of other payments and, likewise, having to create reminders manually.
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- Safe & Secure:
Digital or paper-based ledgers are both susceptible to damage or theft. However, with an automated payables system, you can have multiple backups of the ledger stored electronically. Moreover, you can manage access to your register more conveniently as you’d be able to access it digitally, and will avail multiple benefits that an automated system brings along.
- More accessible:
Picture this situation- your company has five different finance teams, each is managing a specific group of payments. It could be a good idea to keep multiple ledgers, one for each team, but that may get confusing when certain costs don’t tally. There could be several reasons why such a situation might arise. A possible explanation may be that your data is not updated on time. This problem doesn’t exist with an automated system, as all payments are made timely and automatically once the invoice is uploaded and processed.
Other than the obvious advantages of reduced risk, faster processing, and greater accessibility, a passive benefit that isn’t much discussed is increased employee productivity. When your business upgrades to an automated system, it will eventually result in a healthier work environment for your employees.