There are hundreds of accounts payable automation systems on the market today–so which is right for your business? To help you find the best accounts payable solution, we’ve conducted research on a wide range of products to put together a collection of our best AP software.
Accounts payable software provides the ledger and related software functionality for managing money owed by an organization to creditors. These solutions provide a coordinated system for ensuring AP automation for tasks such as invoice processing, payables approvals, and executing payments. Software allows you to completely streamline accounting business processes, bypassing manual data entry which can take hours or days to complete.
Key financial benefits from using an AP management solution include the ability to:
Accounts payable can also be used as a subset of a larger accounting software solutions for managing financial data. The available features tie in closely with other core accounting modules, such as accounts receivable and a general ledger.
Managing expenses is a task that every business, government agency, church, non-profit, or school faces. Accounts payable is the best way for every type of organization to control expenses and, if applicable, increase sales. This guide provides a practical how-to for selecting the right AP software to cut unnecessary costs and create efficiency in payables processing.
Automated accounting solutions provide many useful benefits to businesses of all types, from new startups to midsize companies to global enterprises:
The traditional approval process takes time, requiring checking and double-checking all along the way. Complete AP automation helps save time while increasing accuracy due to reduced human error. Fortunately, software offers real-time monitoring for greater control over AP processes, streamlining workflow to let you focus on having better record keeping.
Electronic payments made through AP software are just a few examples of how accounts payable software can reduce your operating costs. For instance, many accounts payable solutions now include support for Automated Clearing House (ACH) payments for more direct transactions between financial institutions. ACH payment processing reduces the time and costs of physically printing and mailing checks. Companies may also rely on ACH and other forms of electronic payment to reduce instances of human error and fraud.
Reporting features in account payables programs can dramatically improve your cash management capabilities by analyzing historic and real-time key performance indicators (KPIs). Track invoice approval rates, changes in bank accounts, or other performance factors based specifically on your business needs.
The right reporting tools can improve your payables efficiency. For example, aging reports can allow users to report on past due payment records by the number of days they are outstanding, allowing the team to prioritize payments. Strong automation software improves the efficiency of your AP teams by reducing the time needed to issue checks and prepare month/year-end reports. AP automation eliminates vendor late fees and reduces common errors such as duplicate payments. Fewer opportunities for human errors upfront means less time spent making corrections as AP teams process invoices or balance the books.
Customer relationship management (CRM) is another element AP departments need to consider when handling payments between vendors, suppliers, and clients. Keep records of various vendors and suppliers, from basic contact information to payment history. Improved vendor relations are a frequent outcome of better accounts payable software capabilities.
AP reports provide information on how much your firm is buying and from whom, helping you decide whether to consolidate purchases to fewer vendors and gain price breaks or move purchases to alternate vendors if better pricing or terms are available. This up-to-date information forms the starting point to negotiate with vendors for better payment terms and purchase price. Some vendors even offer discounts for early payment, and accounts payable software lets you arrange automatic payments to meet these deadlines.
Finally, accounts payable software helps to determine the legitimacy of vendor invoices to avoid common payment scams. This starts with AP positive pay support tools which prevent financial institutions from paying fraudulent checks by uploading records of authorized payments for cross-verification against known bank accounts or financial records.
Accounts payable software provides the tools necessary to drive down costs, increase productivity, improve cash management and improve vendor relations. Understanding the software options is critical to finding the best software program for your business.
The size of your organization, your existing information system environment and your particular functional requirements will determine which AP software option is right for you. In fact, accounts payable functionality is often part of a larger accounting or ERP system. Understanding all your options can help you make the right call on a new software integration.
Accounts Payable is one of the core functionalities included with any version of QuickBooks. QuickBooks allows AP workflows to be input through two workflows:
Before selecting an AP software to integrate into your business process, consider what sort of modules you need most:
The most fundamental part of the payables process is recording the entry and cutting of the check. The level of automation at this stage will reduce the time you spend managing your accounts payable. When considering different accounts payable options, you’ll want to evaluate whether each has the ability to populate check fields, schedule batch check prints, and prepare the actual mailing of these payments.
There are many important reports in accounts payable. The ability to report on your accounts payable entries can have a significant impact on helping you to tighten your cash flow. Perhaps most importantly, your accounts payable module needs to clearly show you which payments have been made, which have been made but have not yet cleared, and which have been processed.
Your AP module won’t only track individual payments - it can manage an ongoing vendor database. The precise way each software package handles the vendor list will vary. You’ll want to make sure that the software supports all the vendor information you need to keep on hand, such as contact info, addresses, vendor terms, payment details, and other data
No one likes to think they’ve lost money through errors or fraud, yet audits often turn up evidence that this has happened. Your accounts payable software should include controls to identify the authenticity of each payment by associating each payment record with the original purchase order and/or the vendor bill helps reduce errors and fraud.
Whenever you make non-payroll payments to non-corporate entities at some point. As the payee, your AP module should allow you to flag these payments and create the necessary paperwork for 1099 tax forms.
Other accounts payable software modules to consider:
Accounts payable transactions don’t occur in a vacuum; they’re part of larger business processes. Most importantly, your Accounts Payable module should efficiently deliver the payables ledger information regarding current liabilities to the balance sheet located in the general ledger. In many integrated accounting systems, this happens in real time. If integration isn’t possible, make sure the Accounts Payable module exports data to the general ledger in a format that it can interpret.
Another key integration point is with the purchase order module. Integration with the Purchase Order module is important as both Accounts Payable and Purchase Order processes benefit from mutual access to the master vendor list. Bank reconciliation functionality may also be contained in its own application. If this is the case, integration is critical to identify which payments have been made and to reconcile the Accounts Payable and bank records.
While accounts payable software provides many benefits to businesses, there are still a few specific pain points to address when seeking AP software.
Too much or little coverage: Not every company needs an all-encompassing AP solution. Every organization should make sure their software can handle the volume of invoices they deal with each month, as well as save the necessary data on the vendors they have a relationship with. Starting out, small businesses in particular may have only a few invoices here and there . An expensive, full service AP software won’t be a good fit for them. In contrast, a growing business will need an AP system which can scale as they grow.
Converting to automatic digital systems from manual paper methods: A HelpSystems report found that companies process an average of 290,667 invoices each year, with 58% of these invoices arriving by U.S. mail. Manual AP processes can cost $35 more than the same work done through automated processes.
Human error and fraud: The Association for Financial Professionals found in 2016 that 74% of surveyed organizations were victims of payments fraud, which has grown from 61% back in 2013. This makes it more important than ever to spot fraudulent activity before it spirals out of control. Preventative measures to reduce your chance of fraud include switching to electronic payments, reconciling checking accounts promptly, storing paper blank check stock under lock and key, and using a centralized check writing review process.
As one of the fundamental parts of business, accounts payable solutions have seen a lot of growth over the years. Some recent trends include: