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Looking for a software solution to help your accounts payable department avoid duplicate invoices, late payments, cash flow issues, lost invoices, and other common invoice processing challenges?
With accounts payable software, businesses can automate key aspects of the invoice processing workflow. These solutions aim to expedite back-end financial processing and reporting by reducing the accounts payable workload and the risk of human error and fraud.
In this guide, we'll cover:
How do small and midsize businesses use accounts payable software?
Accounts payable software automates the process of controlling and managing cash expenditures. These applications help improve cash management workflows, reduce administrative effort required for employees to track invoices, provide tools for capturing errors, and generate reports. Accounts payable solutions are designed to work with general ledger and accounting applications. Accounts payable software is related to accounting software and billing and invoicing software.
Over the past two decades, the types of accounts payable tools available have diversified into an array of spreadsheet applications and cloud-based enterprise resource planning (ERP) accounts payable tools.
Here are the types of accounts payable software that are most often used by small-business finance managers:
Traditional tools: Traditional account payable software is typically offered as one capability within a more traditional accounting software application that is based on older spreadsheet tools that required manual data entry. Advancements in storage devices such as hard drives and optical disks allow traditional accounting tools to be installed as stand-alone software on desktop computers. These tools are to be authorized through the purchase of a license.
SaaS tools: Advancements in cloud computing and high-speed internet connectivity have led to the emergence of Software-as-a-Service (SaaS) platforms for all types of business services, including cloud-based accounts payable tools.
ERP tools: Technological improvements in back-office operations have led to the development of enterprise resource planning tools. ERP tools integrate the core functions of a business, such as HR, finance, operations, etc., in one centralized system.
Accounts payable software helps businesses better manage their invoice and payment processing. Here are some of the ways that accounts payable software can benefit your business:
Provides low cost invoicing: Accounts payable solutions eliminate the need for companies to spend money on hard costs such as office and postage supplies. With accounts payable software, users can send and receive invoices electronically instead of distributing them via hard copy.
Reduces accounting risk: Since accounts payable software automates approval and payment workflows, false billing, duplicate payments, fraudulent transactions, and other forms of fraud can be easily tracked within the system. Accounts payable solutions also flag suspicious activity, providing companies the opportunity to mitigate risk before substantial financial losses occur.
Increases workflow visibility: Accounts payable invoicing systems let companies know where invoices are and who is managing them, shedding light on the many moving parts of the accounting process. Possessing a heightened visibility into company invoicing practices helps businesses prevent cash flow bottlenecks caused by under-reported expenses.
Promotes employee collaboration: With accounts payable systems, all authorized users will be able to access the invoicing records they need simultaneously. Accounts payable solutions allow employees to collaborate with each other on a centralized platform by sharing documents, receiving document clarifications and working through inaccuracies.
Streamlines the accounts payable workflow: Processing and reconciling invoices involves various activities that typically involve manual processing. Manual processing is prone to human error, and requires a significant amount of manpower. With account payable systems, companies can easily automate key aspects of invoice processing, streamlining the accounts payable workflow.
While evaluating accounts payable tools, make sure that the offered features match your specific business requirements. Here are some common features to look for:
Approval process control: Streamline and manage the process of granting permission to the correct parties throughout task progression.
Invoice processing: Create, process, execute, and manage supplier invoices throughout the payment process.
Vendor management: Track and store all vendor-related information, such as contacts, services offered, terms, etc.
Cash management: Manage the collection, handling, and usage of an organization's funds. Track all payments made/received and compare those to total income to analyze a companyʻs current financial standing.
Data extraction: Extract information from documents or websites and automatically import it into a database in a specified format.
Duplicate payment alert: Receive an automatic notification when the same payment is about to be initiated for the second time.
Electronic funds transfer: Transfer money electronically between two bank accounts.
Purchase order (PO) reconciliation: Verify that invoices comply with the terms of pre-issued purchase orders prior to issuing payments. Create digital purchase orders that can be directly emailed to your suppliers and vendors.
Reporting/analytics: Provide a detailed summary of your accounts payable-related finances, from invoice management to balance sheet details, to get an accurate picture of where things stand in real time.
Small and midsize businesses (SMBs) must remain in the good graces of both their customers and their suppliers to build a positive reputation. To do so, SMBs can use accounts payable systems to ensure that all invoices and payments are properly processed.
Typically, SMBs have tighter operations than large enterprises, leaving a small number of employees to tackle a large amount of invoice processing tasks as the business grows. Since accounts payable software automates various aspects of the invoicing process, small and midsize businesses can also use it to reduce labor costs, allowing employees to focus on more complex tasks instead of rote tasks that can be automated.
Since accounts payable is an integral part of any business, you may need your accounts payable software to integrate with other tools your business uses. Here are two important integrations to consider:
Sales and CRM tools: Integrate sales and CRM tools with account payable software to track customer bills and payments.
Digital payment wallets: Integrate digital payment wallets such as PayPal with accounts payable software solutions to efficiently facilitate online payment to vendors and suppliers.
Increased demand for cloud-based software: Like most software solutions, accounts payable software can either be deployed on-premise or via the cloud. Since more employees and businesses are working remotely or in a hybrid format, cloud-based accounts payable solutions more readily allow remote/hybrid workers to access the invoicing data they need to generate invoices and process payments no matter their location. Cloud-based solutions also streamline the collaboration process by allowing remote workers to seamlessly collaborate with in-person employees to complete accounts payable tasks such as working through invoicing inaccuracies.
Increased cybersecurity efforts: To protect business continuity, companies are beginning to place a greater emphasis on cybersecurity for accounts payable software. Accounts payable software users are often susceptible to malware attacks, phishing scams, and other malicious cyberattacks. In the future, accounts payable software vendors will be sure to offer stricter cybersecurity practices, including diligently checking for code vulnerabilities, deploying constant monitoring, extensively checking user credentials, and increasing endpoint security protocols.
Products evaluated for the pricing calculation were taken from GetApp’s Category Leaders report. The pricing ranges exclude freemium versions of the products. The features highlighted were identified based on their relevance and the percentage of products in GetApp’s directory that offer them.