Is your Accounts Payable (AP) Department overwhelmed by the mountain of paper invoices, stacks of receipts, and endless manual data entry? If you’re yearning for a more efficient and streamlined approach to your accounts payable, it’s time for you to consider the power of going paperless.

Imagine if you had a paperless Accounts Payable (AP) process where:

• All your invoices are effortlessly processed within just a few clicks
• All your documents are instantly accessible at your fingertips
• All your data seamlessly integrates with your accounting system

This is all possible with paperless accounts payable. In this blog, we will shed some light on this game-changing solution that can revolutionize your AP processes and liberate you from the stress of piles of paperwork.

What Is Paperless Accounts Payable?

Paperless Accounts Payable uses electronic documents to manage your accounts payable. Paperless accounts payable help you eliminate your need for paper invoices, purchase orders, and other documents that can help you save time and money and improve your accuracy.

In traditional accounts payable, various financial documents like invoices, purchase orders, receipts, and payment records are managed and processed manually on paper. However, paperless accounts payable replace these paper-based documents and manual tasks with electronic documents and automated workflows.

Why Does Your Business Need A Paperless Accounts Payable?

In today’s digital age, many businesses recognize the numerous advantages of transitioning to paperless accounts payable system.

Here are some of the reasons why your business needs paperless accounts payable:

• Eliminate Paperwork: By adopting automation solutions and eliminating paper invoices, your organization can streamline your payable process, reduce costs, and improve overall efficiency.
• Increased Efficiency: One of the reasons why your business needs paperless accounts payable is because of the increased efficiency it brings. Manual data entry and processing of paper documents can be very time-consuming and even prone to human error. By digitizing invoices and implementing an electronic payment process, your business can significantly reduce the risk of errors and delays, leading to faster and more accurate payment transactions.
• Significant Cost Savings: Do you know that manual processes can incur expenses related to paper documents, storage costs, and processing fees? If your company goes paperless, your business can finally eliminate these expenses and reduce your need for manual labor. Thus, resulting in cost reduction.
• Improved Cashflow Management: By automating your payment process and implementing an efficient approval process, your business can streamline your payable workflow, ensure timely payments, and even reduce your risk from duplicate payments or invoices that are lost.
• Environmental Friendly: Embracing a paperless accounts payable system aligns with environmental friendliness. By reducing your use of paper documents, your business can positively impact the environment by lowering the consumption of resources and reducing carbon dioxide emissions associated with paper production and transportation.

How To Implement Paperless Accounts Payable?

Transitioning your business to paperless accounting might seem like a daunting task. But with a well-structured plan and commitment, this process can be smooth and rewarding for your business.

Here are some of the essential steps for your business to successfully implement paperless accounting in your organization:

Evaluate Your Accounts Payable Process

Start by evaluating your accounts payable process and identify your pain points and inefficiencies related to paper-based tasks.

Determine the volume of the paper documents being handled and the associated costs. Assess the readiness of your team so you can embrace digital changes and ensure that your key stakeholders are on board with the transition.

When you understand your starting point, you can develop a clear vision for the paperless transformation and commit to making it a reality for your business.

Delegate Responsibilities To Your Team

Implementing a paperless accounting for your business requires teamwork and collaboration.

You must delegate responsibilities to your team members, who will be crucial in your transition process. Don’t hesitate to involve representatives from different departments, including finance, IT, and procurement, so that you can gain a diverse perspective on this transition.

Encourage open communication and address any concerns or resistance that team members may have about the change.

Set A Deadline In Transitioning Into Digitizing Your Paper Documents And Records

Start your process by digitizing paper documents and records.

Utilize your document scanning and imaging technologies to convert physical invoices, receipts, and other relevant documents into digital versions.

Create a central repository or cloud-based platform to store and organize your digitized files securely. When you set a firm deadline for completing your digitization process, you help create a sense of urgency and ensure your project stays on track.

Set Up Your Fraud Detection

With the transition to paperless accounting, you must establish robust fraud detection mechanisms. Implement strict authorization protocols for approving payments and ensure no duplicate invoices slip through the cracks. Adopting electronic payment methods and digital signatures can add an extra layer of security and prevent fraudulent activities for your business.

Enhance Your Data Visibility & Analysis

Your paperless accounts payable system offers the advantage of enhanced data visibility and analysis.

Use data aggregation tools and reporting functionalities to gain insights into your financial processes. Analyze spending patterns, track payment cycles, and identify cost savings and process improvement opportunities. Data-driven decisions can help your business experience better financial management and strategic planning.

Set Up Your Workflow To Meet Your Objectives

Take full advantage of the digital capabilities by streamlining your accounts payable workflow.

Implement automated approval workflows to expedite your invoice processing. Set up reminders and notifications to ensure timely actions on pending tasks. Emphasize electronic collaboration tools to facilitate communication among your team members.

When you optimize your paperless accounts payable process, you increase your efficiency, reduce errors and free up valuable time for more strategic tasks within your business.

Paper-based Vs. Paperless Accounts Payable

In this section, let’s understand the difference between paper-based from paperless accounts payable.

Paper-based accounts payable refers to the traditional way of managing accounts payable. This involves your business receiving invoices in paper form, where you manually enter the details into your accounting system, then print your checks to pay your invoices.

On the other hand, paperless accounts payable uses electronic documents to manage your accounts payable process. This eliminates the need for your business for paper invoices, purchase orders, and other documents. Paperless accounts payable can save your business time and money and help you improve your accuracy.

Let’s dive into the advantages and disadvantages of paper-based accounts payable from paperless accounts payable.

Paper-based Accounts Payable

Advantages

• Familiarity: Many businesses are accustomed to processes based on paperwork, making it easier for employees to understand and adapt.
• Physical Records: Some individuals prefer tangible documents to provide security and ease of access.
• Low Technology Dependency: Limited reliance on advanced technology may suit small businesses with minimal IT infrastructure.

Disadvantages

• Inefficiency: Manual processes can be time-consuming, leading to delays in invoice processing and payments.
• Increased Errors: Manual data entry is susceptible to human errors, resulting in incorrect information and potential payment discrepancies.
• Higher Costs: The cost of paper, printing, storage, and postage adds up, contributing to increased operational expenses.
• Limited Accessibility: Accessing paper documents remotely can be challenging and time-consuming.

Paperless Accounts Payable

Advantages

• Improved Efficiency: Automation speeds up invoice processing, approvals, and payment cycles, reducing the time it takes for your organization to complete tasks.
• Enhanced Accuracy: Automated data extraction minimizes errors, leading to more precise financial records and reduced risk of duplicate payments.
• Cost Savings: Over time, eliminating paper usage and associated expenses leads to significant cost savings.
• Remote Accessibility: Cloud-based systems allow authorized personnel within your business to access documents and manage processes from anywhere, promoting remote work capabilities.
• Better Compliance: Paperless systems maintain a comprehensive audit trail, ensuring better compliance with regulatory requirements.

Disadvantages

• Initial Implementation: Transitioning to a paperless system requires upfront investment in technology and employee training within your company.
• Security Concerns: Digital systems may face cybersecurity risks if you do not adequately protect them against data breaches.
• Learning Curve: Your employees may require time to adapt to the new digital platform, potentially causing temporary disruptions within your company processes.

Steps To A Paperless Accounts Payable Workflow

Transitioning your business from a paper-based accounts payable process to a paperless one can bring numerous benefits, including increased efficiency, reduced errors, and cost savings.

You must have a systematic approach to implement a paperless accounts payable workflow for your business. This will help the adoption of automation solutions become easier.

Here are the key steps to a paperless accounts payable workflow:

Step 1: Determine Your Goals For Going Paperless

Start by identifying the specific objectives you want to achieve by adopting a paperless accounts payable system.

Some common goals include:

• Streamlining invoice processing
• Reducing manual errors
• Improving data accessibility
• Cutting operational costs

Clear goals will guide your implementation strategy and help you measure your success in the transition.

Step 2: Choose The Software That Fits You Best

Considering numerous paperless accounts payable software options, you must carefully evaluate your business requirements.

Choose a solution that will align with your needs. Look for features such as automated invoice processing, digital document storage, a user-friendly interface, optical character recognition (OCR), and integration capabilities with your existing accounting systems.

Step 3: Choose A Software Package That Fits Your Budget

You must consider the cost of software, implementation, and ongoing maintenance when you select a paperless accounts payable solution.

You must compare different packages and provides to find the best value for your budget while fulfilling your requirement.

Step 4: Implementation & Integration

Streamline your document management by digitizing paper documents and converting incoming invoices through advanced scanning or OCR technology.

Implementing automation software eliminates the cumbersome manual data entry process and optimizes your payable workflow.

To ensure seamless integration, ensure your paperless accounts payable solution will be seamlessly integrated with your existing accounting software and facilitate smooth data transfer and reconciliation.

Enhance the efficiency of your invoice approval process with an electronic system. Our automated routing and tracking of invoices will minimize the risk of errors and delays, ensuring a smooth and efficient approval workflow.

Step 5: Set Up User Accounts

Once you have chosen the software, set up user accounts for your team members involved in the accounts payable process. Assign appropriate permissions and roles to ensure the right level of access for each user.

Provide thorough training to the payable teams involved in the new system and processes. You must emphasize the importance of accuracy and adherence to the digital workflow.

Step 6: Track Your Progress and Measure Success

As you implement the paperless accounts payable workflow, continuously monitor your progress toward achieving your goals.

Use key performance indicators (KPIs) such as processing time, error rates, and cost savings to measure the success of your transition.

Regularly review your data and adjust as needed to optimize the workflow further.

Step 7: Continuous Improvement

You must regularly review and refine your paperless accounts payable workflow to optimize efficiency.

Leverage your analytics and tools providing metrics, provided by your chosen automation software so you can monitor your performance and identify areas for improvement.

What Are The Benefits Of Going Paperless In Your Accounts Payable?

Going paperless in your accounts payable offers a wide range of benefits that can significantly improve the efficiency and sustainability of your financial processes. Here are some of the key advantages of switching to paperless accounts payable:

• Lower processing costs: By eliminating the need for physical paper handling, printing, and postage, your business can reduce the overall processing costs associated with the accounts payable process. This includes savings on supplies, labor, and time spent on manual tasks.
• Easy accessibility of records: Your digital documents can be stored and organized in a centralized electronic system, making it convenient for your team to access and retrieve information quickly. This enhances collaboration and enables authorized personnel to access necessary data from anywhere, facilitating remote work and improving productivity.
• Reduced storage costs: Paperless accounts payable reduces the need for physical file storage, freeing up office space and cutting costs related to document storage, archiving, and retrieval for your business.
• Faster processing: Automation and electronic workflows streamline your accounts payable process, leading to faster invoice approvals, payments, and reconciliation. An efficiency of this caliber can help you improve supplier relationships, potentially leading to better terms and discounts.
• Eliminating lost files: Digital records are less prone to misplacement or loss than physical paper documents. With proper backup and secure storage, your business can ensure the safety and continuity of your financial data.
• Increased organizational control: Paperless accounts payable systems provide better tracking and auditing capabilities. You can monitor the status of invoices, track approvals, and maintain a clear audit trail, promoting transparency and compliance.
• Environmental friendliness: Adopting paperless practices aligns with sustainability goals, reducing the consumption of paper, ink, and other resources. This allows your business to contribute to a more environmentally friendly approach to business operations.

How To Select The Right Paperless Accounting Software?

When selecting the right paperless accounting software for your business, you must consider several key factors. These factors will help your business ensure that your chosen software meets your specific needs and helps you streamline your accounts payable processes.

Electronic Invoice Receipt

One essential factor to consider is the availability of electronic invoice receipts as a channel, where invoices are electronically transferred from the supplier to the buyer, eliminating the need for paper or PDF copies.

With this method, the invoice metadata, such as invoice number, amount, and line details, is sent electronically by the supplier. This approach works exceptionally well when you have an approved purchase order against which the supplier issues the invoice.

The major advantage of this touchless process is its efficiency. The invoices are transferred using an agreed-upon protocol between the buyer and supplier, and the invoicing system sends notifications to relevant team members. Furthermore, the software allows the invoice to be routed according to your accounts payable process.

There are two common protocols used for electronic data transfer:

1. EDI (Electronic Data Interchange): The buyer and supplier must implement this protocol to exchange data seamlessly.
2. cXML (commerce eXtensible Markup Language): A widely used protocol for exchanging invoice data and supplier information.

When evaluating AP automation tools, ensure they support both these protocols to avoid the need for developing additional infrastructure for invoice data exchange. This compatibility will save resources and streamline your accounts payable operations effectively.

Supplier Portal For Vendor Invoices

Selecting the right paperless accounting software involves considering the availability of a supplier portal, which offers essential supplier self-service functionalities. The supplier portal becomes particularly valuable when suppliers lack the necessary infrastructure to support electronic invoices.

Suppliers gain access to a web portal through their unique login credentials in this supplier self-service model. Within the portal, they can view open Purchase Orders (POs) and conveniently submit corresponding invoices. This process is often called “PO flip,” which transforms a PO into an invoice with the attached document.

The supplier portal approach proves highly effective as it enables the receipt of electronic invoices while relieving suppliers of any burden of investing in IT infrastructure for invoice submission.

A crucial aspect of successful adoption is ensuring that vendors are not charged any fees for using the portal. When suppliers are not burdened with additional costs, the adoption rate of the supplier portal increases, leading to greater efficiency and seamless collaboration between your organization and its suppliers.

Automating Invoice Capture Workflow

In the quest for complete automation in the accounts payable process, streamlining invoice capture becomes crucial to achieving a paperless accounting environment. Here’s how you can select the right paperless accounting software that enables efficient invoice capture:

1. The transition from paper to email: To eliminate paper invoices, set up a designated email address, such as invoices@yourcompany.com, solely dedicated to receiving electronic invoices from vendors.
2. Inform vendors and internal stakeholders: Ensure all vendor correspondence includes the new email address for invoice submissions. Inform internal teams and request them to forward any invoices they receive to this designated email.
3. Make electronic invoicing a requirement: Include clear instructions on purchase orders, specifying that the company will only process payments for vendors who submit invoices electronically via the designated email address. This reinforces the need for electronic invoicing adoption.
4. Encourage vendor adaptation: Continuously remind vendors about the new process and emphasize the importance of adhering to electronic invoicing to facilitate smoother operations.
5. Address exceptions: While the goal is to achieve 80% of invoices through email capture, recognize that certain non-Purchase Order (PO) invoices, such as those from government agencies and utilities, may still arrive in paper format. Be prepared to process these exceptions manually.

By effectively transitioning to email-based invoice capture, you can significantly reduce paper usage and take a substantial step towards a fully paperless accounts payable process. The right paperless accounting software should support and optimize this invoice capture method, enabling seamless automation from invoice receipt to payment, thereby enhancing efficiency and accuracy in your accounts payable workflow.

Three-Way Matching Invoice

An ideal accounts payable software should offer automatic three-way matching, where the AP automation solution effortlessly matches the three critical documents – purchase order, receipt, and invoice – and identifies any discrepancies.

For instance, in the case of a missing receipt exception, the system automatically generates an email to the respective stakeholder who ordered the product, seeking confirmation of receipt. This automated follow-up minimizes manual intervention and enhances efficiency.

Similarly, when encountering a pricing exception where the invoice price differs from the purchase order amount, the software provides two resolution options:

1. Setting a tolerance level: The system can be configured to accept small deviations within a specified tolerance level, reducing the number of exceptions raised.
2. Routing for review: The software can route the invoice to a designated buyer to review and confirm the price change, ensuring proper validation.

An effective invoice approval workflow ensures that any price exception requests are efficiently directed to the relevant person for timely resolution.

Choosing a paperless accounting software that offers seamless and automated three-way matching can significantly reduce manual efforts, improve accuracy, and expedite invoice approval, enhancing accounts payable efficiency.

Invoice Approval Workflow

An essential aspect to consider when selecting the right paperless accounting software is its robust invoice approval system, which plays a vital role in the overall AP automation solution.

Invoice approval workflows are designed to automate routing invoices to various stakeholders for a thorough review. Here are two scenarios where an effective invoice approval workflow software proves indispensable:

Invoice Exception

When invoice details don’t match the corresponding purchase order, a workflow is needed to route these exceptions to the appropriate personnel for resolution.

With the approval workflow, you can precisely define who should review the invoice in case of an exception.

The invoice can be sent to the order contact for organizations without a dedicated procurement team, usually, the employee who created the purchase order.

Alternatively, suppose a procurement team or buyer is in place. In that case, they should receive the invoice for handling the exception, working directly with the vendor to resolve pricing discrepancies or other issues.

Invoice Review for Services

Invoices are often submitted for each completed milestone when engaging a vendor for services that involve multiple milestones, such as hiring a software development firm to build a company website.

Before making a payment, the AP department needs assurance that the delivered milestone aligns with the agreed-upon scope.

This invoice review workflow ensures that service invoices are thoroughly examined and validated before processing payment.

An effective invoice approval system streamlines communication, expedites issue resolution, and ensures accuracy in the accounts payable process. By choosing paperless accounting software with robust approval workflows; your organization can achieve greater efficiency and control over invoice processing, leading to improved financial operations and vendor management.

Non-PO Invoices

While having purchase orders for all expenses is a best practice, there will inevitably be instances where invoices lack a corresponding purchase order. This can happen if the vendor forgets to include the PO number on the invoice or if a purchase order was not issued for the transaction, especially in legal services cases.

To effectively manage non-PO invoices, a robust non-PO invoice workflow is essential. This workflow enables seamless invoice routing for approval before marking it as ready for payment. Incorporating this feature into your chosen paperless accounting software ensures that all invoices, whether PO-related or non-PO, go through a proper approval process before processing payment.

A dedicated non-PO invoice workflow helps maintain financial control, allows managers to review expenses before approval, and ensures compliance with internal financial procedures. It also streamlines the handling of non-PO invoices, reducing the risk of unauthorized or incorrect payments and enhancing overall accounts payable efficiency. When selecting your paperless accounting software, prioritizing this feature will contribute significantly to the smooth management of invoices and strengthen your financial processes.

Email Notification

Selecting the right paperless accounting software involves considering its email notification capabilities, crucial in informing the AP team about invoice approval requests and other essential activities. Here are various types of automatic email notifications that a robust system should offer:

1. Missing Receipt Notification: When an invoice is submitted without a corresponding receipt, the system should automatically generate an email notification to alert the relevant personnel about the missing receipt. This prompts a review and ensures that all necessary documentation is complete before proceeding with the payment approval.
2. Price Discrepancy Notification: If an invoice amount differs from the purchase order price, the system should promptly send an email notification highlighting the discrepancy. This allows the appropriate stakeholders to review the variance and resolve any pricing issues before approval.
3. Approval Request for Non-PO Invoices: When a non-purchase order (non-PO) invoice requires approval, the system should automatically send approval request emails to the designated personnel. This ensures that non-PO invoices are properly reviewed and approved before processing payment.

These automatic email notifications streamline communication and enhance the efficiency of the accounts payable process. They help the AP team prioritize critical tasks, expedite issue resolution, and facilitate smooth stakeholder collaboration.

Summary Reminders

While real-time emails for approvals are effective, it’s common for managers to get caught up in their daily tasks and overlook approving invoices promptly. To address this, automatic reminders, such as summary reminders, prove highly beneficial. With summary reminders, the system sends a daily summary of all pending items that require approval.

This convenient approach allows department heads or managers to view and approve multiple invoice requests simultaneously, ensuring timely actions and avoiding delays in the approval process. The daily summary reminders serve as gentle prompts, keeping approvals on track and improving overall efficiency in the accounts payable workflow.

Approval Dashboard

Users can access a comprehensive view of all pending approval requests with the approval dashboard. This allows for easy tracking and monitoring of the approval process. Instead of navigating through multiple screens or emails, users can quickly review each request and approve them one at a time from this centralized interface.

The approval dashboard streamlines the approval workflow, providing a user-friendly experience and ensuring no requests are overlooked or delayed. This centralized approach enhances efficiency and transparency, allowing users to stay on top of their approval tasks and maintain smooth financial operations.

By selecting a paperless accounting software with an intuitive and accessible approval dashboard, your organization can achieve greater control over the approval process, reduce processing times, and improve overall accountability and accuracy in invoice and payment management.

 

Mobile App Notification

When considering the right paperless accounting software, it’s essential to prioritize mobile app functionality, particularly automatic alerts and notifications.

You ensure no approval requests go unnoticed by enabling automatic alerts and notifications on the mobile app. The ProcureDesk mobile app offers seamless access for approvers to review and approve invoice requests while on the go.

The mobile app provides real-time notifications, ensuring approvers receive instant alerts when a new approval request is sent. This allows for prompt and efficient action, even when approvers are away from their desks or on the move.

With the convenience of the mobile app and its real-time capabilities, invoice approvers can stay on top of their tasks and maintain a streamlined approval process. No longer bound by the constraints of a desktop computer, they can efficiently handle approval requests anytime and anywhere, enhancing overall agility and responsiveness in the accounts payable workflow.

By selecting paperless accounting software that offers a feature-rich mobile app with automatic alerts and real-time notifications, your organization can ensure timely approvals, reduce delays, and optimize the efficiency of your approval processes.

 

Integration With Accounting Systems

Selecting the right paperless accounting software involves considering seamless integration between the invoice approval system and your accounting software as a crucial factor.

While an invoice approval system streamlines the process of creating and approving supplier invoices, automatically synchronizing these invoices with your accounting system is equally important. This integration eliminates the need to create duplicate invoices in your accounting software, saving time and reducing manual data entry.

ProcureDesk offers real-time data sync with various accounting systems, such as QuickBooks, Xero, Netsuite, and Sage Intacct. Through this integration, all master data, including charts of accounts and suppliers, is automatically pulled into ProcureDesk, ensuring consistency and accuracy across both systems.

Once an invoice is created and approved by the relevant stakeholders in ProcureDesk, it seamlessly transfers to the accounting system for further processing. Likewise, when you make a payment to the vendor, the payment status of the invoice is sent back to the invoice approval system, providing visibility to employees. This transparency reduces inquiries to the accounts payable team, as employees can easily check the payment status.

Choosing a paperless accounting software with robust integration capabilities can foster a more efficient and connected accounts payable process, minimize data discrepancies, and enhance overall financial management within your organization.

FAQs

Can Accounts Payable Be Paperless?

Yes, accounts payable can be paperless. This means that all invoices, receipts, and other documents related to accounts payable are stored and processed electronically. This can save your business time and money, and it can also help you to improve efficiency and accuracy.

What Is The Cost Of Going Paperless?

The cost of going paperless will vary depending on the size of your business and the specific software and services you choose.

However, the cost of going paperless is relatively low, and the benefits can far outweigh the costs.

Is Going Paperless For Your Accounts Payable Secure?

Yes, going paperless for your accounts payable can be secure. Using a secure electronic document management system protects your invoices and other documents from unauthorized access. You can also implement additional security measures, such as two-factor authentication, to further protect your data.

What Is The Impact Of Going Paperless To The Environment?

Going paperless can have a positive impact on the environment. By eliminating the need for paper invoices, receipts, and other documents, your business can help to reduce deforestation, conserve water, and reduce pollution.

What Are Paperless Vendor Payments?

Paperless vendor payments are payments made electronically rather than by paper checks. This can be done through various methods, such as ACH transfers, wire transfers, and credit cards.

What Are The Benefits Of Paperless Vendor Payments?

There are many benefits to using paperless vendor payments. These benefits include:

• Speed: Paperless payments can be processed much faster than paper checks. This can help your business improve its cash flow and avoid penalties for payments not made on time.
• Accuracy: Paperless payments are less likely to be lost or delayed than paper checks. This can help you avoid errors and make your payments on time.
• Security: Paperless payments are more secure than paper checks. When your business makes a paperless payment, your financial information is protected by encryption and other security measures.
• Cost savings: Paperless payments can save you money on printing, postage, and processing fees.

How To Implement Paperless Vendor Payments?

There are a few steps involved in implementing paperless vendor payments. These steps include:

1. Choose a payment processing provider: Many different payment processing providers are available, so you must choose one that is right for your business.
2. Set up your payment accounts: Once you have chosen a payment processing provider, you must set up your payment accounts. This includes providing your bank account information and credit card information.
3. Notify your vendors: Once you have set up your payment accounts, you must notify your vendors that you will be making paperless payments.
4. Start making payments: Once your vendors have been notified, you can start making paperless payments.

The Bottomline

The traditional approach to accounts payable with cumbersome paperwork and manual data entry is now a thing of the past.

It’s about time your business embraces the paperless accounts payable revolution so you can finally offer a transformative solution to enhance your Accounts Payable Process.

With innovative software solutions like ProcureDesk, you can unlock the full potential of paperless accounts payable. Simplify and optimize your entire AP workflow, reduce errors, and free your team from the shackles of paperwork and manual work.