4 Ways AP Automation Helps Controllers Navigate Uncertain Times
It is famously said that Ginger Rogers did everything Fred Astaire did but backwards and in high heels. You could say the same about today’s financial controller.
First, there's overseeing day-to-day AP tasks like managing cash, preparing financial statements, implementing controls, and coordinating with auditors. But controllers also have to do all this in an environment that’s more challenging than ever before. They’re now contending with remote work, fewer headcount, and rising fraud attempts. And all of these require more procedures and controls.
But many controllers, along with their CFOs, have been able to surmount these challenges by accelerating the digitization of their accounts payable and payments processes.
As PYMNTS points out: “While the push to digitize payments has been underway for years as companies have sought to make their payments operations faster and more efficient, the digitization projects have taken on a new urgency as companies have contended with a host of disruptions to their everyday operations during the pandemic.”
How AP Automation Helps Controllers
For controllers in real estate, the benefits of AP automation can be broadly grouped into four buckets:
- Easier cash management
- Timely execution of AP
- Easy audit management and reporting
- More fraud controls
1) Centralized Invoice Processing Makes it Easier to Manage Cash
AP automation helps controllers ensure invoice processing is swift, digital, and centralized. Gone are all the filing cabinets and stacks of invoices piled up on desks.
AP teams can process invoices - and store them - in one online software platform that’s easily searchable. With most AP automation software, users can search by invoice date, vendor, or amount. Everything is at their fingertips, whether the AP team processes 200 invoices a month or 15,000 invoices a month.
Plus, users can see the status of invoices in real-time – i.e., which invoices are pending approval and which invoices are submitted for payment. This makes month-end and year-end closes much more accurate, and helps controllers better monitor cash flow and plan for future purchases.
2) Timely Invoice Approvals and Payments
At the same time, AP automation also speeds up the readiness to pay and the time to pay.
Once an invoice has been ingested into the platform, it's automatically sent to the right approvers, as determined by previously established approval workflows.
Some companies, like Nexus AP automation, let authorized users (usually the controller) create approval workflows based on myriad different criteria such as region, dollar amount, over-budget amount, GL, etc. They can create new approval workflows by copying existing ones, and easily remove invoices from a workflow when things change. They can also identify approval bottlenecks.
All of this makes the controller’s job easier because all their invoices get processed accurately and quickly.
In fact, with Nexus, time-to-process an invoice (from invoice receipt to ready-to-pay status) takes an average of 4.4 days, almost a week faster than the 10-day industry average.
Plus, payment is faster too. By automating payments, there’s no need to track down approvers, cut manual paper checks, stuff them in envelopes, and slip them in the mail. It’s all online.
That can help speed up payments because it takes buyers about 50% less time to process them. Controllers can also make real-time decisions to issue swift payments to certain suppliers, if needed.
3) Easier Auditing and Reporting
When using AP automation, working with external auditors is more seamless because invoices have complete digital audit trails. The details of invoice approvals – who approved them and when – are easily accessible 24/7.
And, once an invoice is paid, it’s updated with remittance details providing an additional layer of detail for auditors.
Reporting is much easier too. Instead of culling through spreadsheets, it’s often as simple as clicking a few buttons to generate reports. In fact, Nexus users say they spend 90% less time creating reports.
With all this data at their fingertips, controllers can not only be the tactical record keeper but also the strategic drivers.
4) More Controls to Protect Against Fraud
Finally, AP automation offers more ways to mitigate fraud – for both invoices and payments.
With respect to invoice processing, AP automation software can identify – and send alerts about - duplicate invoices. Most systems also have audit log functionality, where controllers can see who changed a workflow, changed settings, created vendors, and performed many other tasks within the system.
With companies like Nexus, controllers can also require property managers, maintenance crews, and others to generate an electronic PO – directly within the AP automation software – before they make purchases. This not only helps reduce surprise purchases, but can assist with 3-way matching (purchase order-to receipt-to invoice). Through this process, AP employees will only pay an invoice if it has a corresponding purchase order and receipt.
AP automation can also help protect against payments fraud. Instead of sending paper checks (which are commonly targeted by bad actors), controllers can pay suppliers electronically with secure virtual cards – or one-time use credit cards that are sent to suppliers via email.
The supplier must then key the exact amount of the virtual card into their Point-of-Sale system, or the transaction will fail. When cleared, the money then transfers directly into the supplier’s bank account. Per the 2021 AFP Payments Fraud and Control Survey, virtual cards were subject to far less fraud attempts than ACH, wire transfers, and paper checks.
AP Automation Allows Controllers to Be More Proactive, Rather Than Reactive
Managing cash flow, enforcing procedures and controls, and ensuring compliance are no small feats, especially in today’s challenging environment. But AP automation can help controllers execute these primary responsibilities more quickly, securely, and accurately. Then, they’ll have additional bandwidth to focus on unforeseen issues. And opportunities.