Accounts receivable (AR) and accounts payable (AP) are important components of any company's financial flow, and optimizing the processes associated with these two concepts is crucial for enhancing the productivity and profitability of a business.
While the former refers to the money that the clients and customers owe your business, accounts payable (AP) refers to a sum of money that a business owes its suppliers, and is considered a current financial obligation of the company.
This is essentially credit; your company receives the goods or services now, with the promise that it will pay for said goods and services sometime in the future, and the terms and conditions of this repayment are often imposed by the creditors.
These terms have to be honored and adhered to by your business while making payments for the goods and services provided unless it incurs fees and financial penalties, which constitute a financial loss. As most businesses prefer to remain on good terms with their suppliers, defaults or delays in payment often happen due to clerical error or due to poorly optimized and unorganized financial systems used by the business, rather than sheer unwillingness to pay.
Fortunately, this can be alleviated by relying on NetSuite AP automation functionality, which automatically evaluates, approves, and pays vendor bills, thus increasing your business' AP process efficiency. In this guide, we'll discuss what NetSuite AP automation is, why you should implement it, and how its implementation benefits your business.
Optimization is the best friend of efficiency and growth, and NetSuite automation capabilities provide some of the most useful benefits to the entire AP process, regardless of the industry in which you operate. You'll find a more comprehensive breakdown below:
The AP process isn't overly complex, but it is time-consuming and often tedious. Automating this process saves the business and employees a lot of time that could be spent more effectively on driving growth or analyzing important data for more efficient decision-making.
However, NetSuite does more than just AP automation; it also helps you generate AP reports with the amount due, due date, and payment method for your financial department to approve so that the platform can execute a timely payment.
The manual management of APs is very tedious and time-consuming, which makes it more prone to human error, further underscoring the importance of AP process automation and optimization. Automation simply alleviates the massive time investment and mental power required for AP management, thus alleviating the issues associated with the process.
For example, it can automatically generate a payment report upon receiving an invoice from your suppliers, calculate all the necessary fees, and automatically update the transactions to the general ledger, saving time and eliminating the need for error-prone data entry.
NetSuite AP provides a fast and secure way to process invoices and pay your suppliers. The payments are further scheduled via cash, check, credit card, or electronic transfers, including recurring payments, such as utilities or subscriptions, that usually fall within predefined pay periods.
Precision eliminates duplicate payments or late payments and thus reduces loss that is often associated with fees and penalties. The platform can refer to external and internal systems and databases, reducing the accounting errors to an absolute minimum.
Thanks to comprehensive report generation, NetSuite grants insight into the overall financial health of your business and how any of the AP processes could be optimized further for more growth and profitability.
NetSuite AP automation comes with several distinct features that make it appealing to all businesses looking to optimize their operational and administrative processes, including financial operations.
Automated invoicing is a feature that's most appealing to business owners and accountants because it eliminates the need to gather and go through a ton of paperwork.
NetSuite’s cloud-based software has the ability to gather all the necessary documents related to different invoices, such as the order quality details, and automatically generate an invoice. This enhances the efficiency and accuracy of the entire invoicing process and reduces the errors and problems that typically occur during manual invoicing.
Another feature of Netsuite AP automation is the ability to capture and record invoices. The platform looks for specific data in various parts and domains, including a third-party tool it's integrated with, thus eliminating the need for entering and recording the data manually and thus reflecting the actual status of the order or its invoice.
This is particularly useful because automation scans and records each invoice at every step during the entire AP process. This also includes order details and all other data that are associated with the vendor or supplier associated with the invoice. This level of evacuees provides you with the ability to cross-check and reference the data from various invoices with a great deal of accuracy.
Managing invoices is a very time-consuming job. Approving each and every invoice isn't really that easy, especially if the orders are repetitive, as these tasks are much easier to lose track of. This can lead to late payments and defaults, which is something a business should avoid at all costs.
Fortunately, NetSuite offers a rather comprehensive invoice approval system, which allows you to implement different filters and restrictions associated with different invoices. Ultimately, you can set the process up in a way that requires a manual review of an automatically generated invoice before that invoice is sent for processing and payment.
The latter doesn't fully automate the AP invoice approval process, but it significantly makes invoice management and payment management easier.
The NetSuite accounting platform allows you to automate payments to all or individual vendors. It operates similarly to approvals in the sense that you can set various filters and limitations to the payment processes as well. This provides quick settlements for either specific invoice amounts or specific vendors.
If any invoice either surpasses or neglects a pre-set filter or a limitation, the system will send it to the appropriate department for review and approval before the payment process is executed. This allows for much easier management.
NetSuite features a user-configurable dashboard that provides a comprehensive overview of all your business operations, including tracking open purchase orders, managing invoices that await approval, invoice due dates, and scheduling payments for your accounts payable. However, the dashboard also offers other real-time data that can help with faster and more efficient data-based decision-making.
Accelerate Efficiency: AP automation revolutionizes invoice processing by significantly reducing manual tasks and streamlining workflows. This results in faster approval cycles and timely payments, allowing staff to focus on higher-value activities such as payment data analysis rather than manual data entry.
Enhance Financial Precision: By minimizing human error, automation ensures consistent and reliable financial data management. Accurate data is crucial for sound financial decision-making, compliance, and building trust with stakeholders. Prompt and predictable payments also improve your reputation and strengthen supplier relationships.
Achieve Cost Savings: Automation reduces overhead costs related to manual invoice handling, error corrections, and delayed payments. By cutting down on manual labor hours, delivery expenses, and other AP related costs, businesses can reallocate savings to growth initiatives and other critical functions, enhancing competitiveness.
Boost Financial Visibility: AP automation provides a real-time, consolidated view of the entire payables process, offering transparency and insight into financial obligations and transactions. This visibility empowers financial leaders to make proactive, strategic decisions based on actionable insights.
Strengthen Fraud Prevention: Equipped with advanced monitoring features, automation systems detect and flag anomalies or suspicious activities, making audits and compliance efforts more efficient. Built-in security measures help identify potential fraud, safeguarding assets and maintaining financial integrity.
AP automation is a vital tool for modern businesses looking to optimize their financial operations. By implementing this technology, organizations can achieve substantial efficiency gains, cost savings, and strategic advantages, positioning themselves for sustained success and growth.
NetSuite cloud-based software solutions provide businesses with a number of benefits that allow them to better manage their finances, including account payables, which enhance their efficiency, minimize their losses, and drive up profits and growth.
If you're interested in upgrading your financial operations by automating your accounting and your account payable processes through the use of a comprehensive enterprise resource planning solution, contact ScaleNorth today.
