Both accounts payable and receivable are crucial components for the smooth financial flow of a company. As most accounting teams know all too well, manual payment procedures can be tedious and more prone to errors. Contacting relevant approvers, working through piles of paper invoices, and mailing checks are not only hectic but make audits painful. This is where NetSuite AP automation comes in. Also known as Accounts Payable automation, this technology provides an efficient and accurate way to handle this back-end accounting process.
By eliminating stacks of paper and manual, laborious processes, NetSuite accounts payable automation can improve business productivity. As a result, it can save you a lot of time and money. Even the relationship between your vendors and partners can considerably improve. While there are many benefits of this feature, it also has several other aspects that we’ll cover in this blog. Along with that, we’ll also look at the ways to scale up your business with NetSuite AP.
What is NetSuite AP Automation?
Do you know more than 30% of businesses have fully automated at least one business function? Out of these, accounts payable is the one task they have automated first. Although it sounds impressive, if you look at the number, the vast majority of companies are still manually operating this workflow.
Moreover, the $22 trillion B2B US payments market is witnessing a significant change due to an overwhelming increase in mobile work. Managing these invoices without digitizing the process has become next to impossible. This considerable change drives a big desire to shift to automated processes. And Accounts Payable of NetSuite can help do so. Here, the question arises what is AP automation?
Simply put, the basic work of NetSuite AP is to automate the review, approval, and payment procedure of vendor invoices. This software allows you to gain greater control over the complete procure-to-pay task. By streamlining various financial operations, it addresses issues like manual data entry and the risk of human error.
How is NetSuite AP Automation Profitable for Finance Teams?
Run by the NetSuite’s app SuiteBanking, AP automation can make the work of the accounting team a hell lot easier. First, they won’t have to deal with thousands of paperwork to get the vendor invoice approved by the stakeholders. Moreover, there is no need to mail individual suppliers checks, which is undoubtedly exhausting. Instead, NetSuite accounts payable automation simplifies and digitizes finance workflow in one platform. This is all what it does:
- Maintains detailed vendor records
- Creates purchase requests and manages them
- Matches vendor invoices to correct purchase orders automatically
- Eliminates the need to enter debits and credits manually
- Automates journal entries
- Ensures payments are recorded accurately
Key Things CEOs and CFOs Must Know About NetSuite Accounts Payable Automation
CEOs, CFOs, and other decision-makers of any business should understand the importance of AP Automation. The reason – is to save time and resources, and ultimately improve their cash flow. While CEOs want cost-effective and real-time metrics to make decisions, CFOs need access to data in real-time and in an easy-to-grasp format.
AP automation software can let them do that by automating key processes, making the workflow time-efficient. The software onboards suppliers electronically, screens vendors, captures invoices and reduces duplicate payments. As an outcome, the decision-makers spend less time on approval and more time on strategic matters that will yield a favorable ROI for them.
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How Does NetSuite AP Automation Work?
As mentioned above AP automation streamlines the order procurement to vendor payment procedure. The software converts the supplier’s invoices into a digitized format. Then, it pushes through the automatic that ends with paying suppliers. Here is the process of NetSuite AP Automation:
Step 1: Invoice Capturing
NetSuite AP can digitize the incoming invoices on the same day as the order is placed. It happens with Optical Character Recognition (OCR) technology, which scans paper-based invoices and converts them into digital data. Simultaneously, the software’s e-invoicing systems allow vendors to submit their invoices electronically, without the physical paper transactions.
Step 2: Matching and Verification
The system automatically compares and matches the captured invoice data against corresponding purchase orders and delivery receipts. This is to ensure the purchased terms agreed upon at the start and invoice items align perfectly. As a result, it also helps businesses to identify discrepancies or any mismatches so that only the correct ones move ahead for approval.
Step 3: Approval
At this stage, NetSuite accounts payable automation software routes the invoices to the relevant department for approval. However, it will be based on the pre-defined rules set by the organization like vendors, invoice amounts, etc. You can set reminders or alerts to expedite this process to:
- Ensure timely reviews
- Maintain a clear audit trail of all approval actions
- Prevent invoices from being overlooked
Step 4: Payment Execution
Once the concerned party approves an invoice, the AP system facilitates the payment process. It includes scheduling timely payments to maintain regular cash flow and executing the payment electronically without human interference. With this, businesses can ensure settlements on time, maintaining a positive relationship with vendors.
Step 5: Reconciliation and Reporting
After executing the payments to vendors, NetSuite carries out an automated reconciliation process. It checks bank statements if the payments received are reflected or not. As the process of reconciliation is automated, it eliminates manual cross-checking that could lead to errors. Accordingly, the software also generates detailed reports on various parameters like:
- Vendor performances
- Spending patterns
- Potential cost-saving opportunities
Basic Capabilities of AP Automation Software
Till now, we have learned that NetSuite accounts payable automation software simplifies and automates your entire AP process by removing manual tasks. It provides a fast and secure way to process vendor invoices and pay bills in one platform. Now, let’s discuss key AP automation features:
1. Accounts Payable Dashboard: NetSuite AP dashboard is user-friendly where you find all the business KPIs and necessary alerts. Here, you can see key information in real time, including open purchase orders, due dates of invoices, approval pending for invoices, and others.
2. Purchase Orders: You can create and track purchase requests easily with NetSuite AP automation. Furthermore, you can automatically submit them to the concerned departments for review. Once approved, they’ll be converted to purchase orders. This AP automation feature helps companies avoid duplicate payments or overpayments, reducing invoice fraud risks.
3. Vendor Records: Maintaining a separate Excel sheet for collecting vendor data is futile as NetSuite AP automatically creates a detailed record of all suppliers. It may include:
- a) Contact number
- b) Email address
- c) Basic information
- d) Past payments
- e) Purchase orders
- f) Credit memos
4. Invoice Management: Simply email or drag and drop vendor invoices into Netsuite. By managing the bills this way, you can save a considerable amount of your time.
5. Payments: You can schedule vendor payments via check, cash, credit, or electronic transfer with the help of Netsuite accounts payable automation. You will receive automatic alerts before the due date or you can apply custom rules to get early-payment discounts.
6. Reporting: Another one of AP Automation features is reporting and analytics. NetSuite’s standard reports, custom reports, or data collected through saved searches help businesses analyze their finance. You can ask for detailed analysis by filtering out location, department, expense category, or other criteria.
What Are the Benefits of NetSuite AP Automation?
Before we jump onto knowing NetSuite AP automation benefits, let’s go over the challenges it solves:
- Data entry becomes time-consuming for staff members
- Human error in invoices, payments received, reconciliation, etc.
- Discrepancies in financial statements
- Delays in invoice approval and paying vendors
- Misses early payment discounts
- Difficulty in managing and tracking invoices
It’s now obvious that NetSuite Accounts Payable automation will help tackle these challenges. So, here we go, mentioned below are the benefits of this system:
- Time-saving: By automating repetitive tasks, AP automation frees up valuable time for staff so they put focus on more strategic activities.
- Increased Accuracy: NetSuite AP Automation minimises the risk of human error that comes with manual data entry. This efficiency leads to minimal discrepancies and accuracy in financial statements.
- Improved Efficiency: NetSuite’s automated workflows streamline the entire AP process, which results in improved productivity of any business.
- Reduced Costs: Manual processing leads to increased costs to manage various resources. AP automation eliminates the associated overhead rather it optimizes the workflow for your business.
- Built-in Compliance: The AP automation system comes with built-in features that further enhance the business workflow. Audit trails and validation rules are some of them that can help mitigate compliance risk while providing a secure auditable AP environment.
How to Choose the Best Accounts Payable Software For Your Business?
Selecting the best accounts payable (AP) software for an organization requires careful consideration of several key parameters. They need to ensure that the chosen software aligns with the organization’s needs. Here are three important parameters to consider:
- Integration Capabilities: Look for AP software that seamlessly integrates with your existing systems to ensure smooth data flow across different departments. Also, to minimize manual data entry. NetSuite AP is a prominent choice because it offers robust integration capabilities with other NetSuite modules. Moreover, it allows for a cohesive and efficient financial management ecosystem.
- Automation Features: Evaluate the automation capabilities of various AP software. Check what they are offering like data entry, invoice processing, approval workflows, and payment scheduling. The software should automate repetitive tasks and improve efficiency while maintaining accuracy. NetSuite AP stands out for its advanced automation features. It provides automated invoice matching, approval routing, payment schedules, etc.
- Scalability and Customization: Do not forget to consider the scalability and customization options of the AP software.; So that you can accommodate the evolving needs of your organization. The software should be flexible enough to adapt to changing business requirements. Here, NetSuite AP automation offers robust scalability and customization capabilities that allow organizations to tailor the software to their specific workflows. Additionally, as part of the larger NetSuite ERP platform, it can scale with the organization as it expands into new markets.
- Security and Compliance: Look for software to safeguard sensitive financial data. Features like role-based access controls, encryption, audit trails, and compliance with industry standards are the ones to look for. NetSuite Accounts Payable provides robust security measures, helping organizations maintain the integrity of their data.
How Does NetSuite AP Automation Match Invoices?
Invoice matching is an important process in NetSuite accounts payable (AP) where they are compared against purchase orders and other documents. There are the following two ways through which NetSuite AP matches invoices:
- 2-Way Matching: In this process, invoices are matched against only purchase orders to check whether prices and quantities billed by the supplier are correct.
- 3-Way Matching: It involves comparing invoices not only to purchase orders (POs) but also with receiving reports. This further validates the fact that the goods or services specified in the PO were actually received.
Industries Using NetSuite AP Automation
Several industries can benefit from using NetSuite Accounts Payable automation, including but not limited to:
- Retail
- Manufacturing
- Wholesale Distribution
- E-commerce
- Professional Services
- Software and Technology
- Healthcare
- Hospitality and Tourism
- Financial Services
- Nonprofit Organizations
Top Accounts Payable Tasks to Automate
Here are some of the tasks you can automate with NetSuite AP automation:
- Data Entry: Automate capturing data from source documents to reduce errors and speed up processing.
- Invoice Matching: Automatically match invoices to supporting documents like purchase orders for faster and more accurate processing.
- Coding Invoices: Set rules to automatically assign the correct general ledger code, eliminating manual errors and inconsistencies.
- Approval Routing: Electronic routing of documents to approvers speeds up the process and provides better tracking.
- Payment Scheduling and Execution: Automate payment processes to ensure timely and accurate payments, avoiding delays and errors.
- Vendor Management: Maintain vendor details, track communication, and ensure compliance with contract terms through automated systems.
- Expense Reporting and Reimbursement: Capture receipts, categorize expenses, and route them for approval to streamline reimbursement processes.
- Fraud Detection: Use advanced algorithms to monitor transactions and flag suspicious activities, enhancing security against AP fraud.
- Reconciliation: Automation tools can reconcile bank statements with recorded payments, identifying discrepancies and ensuring accurate records.
- Tax Compliance and Reporting: Automated solutions calculate tax liabilities, generate required reports, and reduce the risk of non-compliance penalties.
- Analytics and Reporting: Gain insights into AP processes, identifying areas for optimization and improving overall efficiency.
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Scaling with NetSuite AP Automation
Scaling with NetSuite AP automation means using the system to its highest potential. As it streamlines accounts payable tasks like processing invoices and making payments, it makes a business more efficient. When your company expands, NetSuite AP automation can handle increasing volumes of transactions as well as suppliers. It can perform similar functions like providing real-time visibility into finances and integrating with other systems easily.
Moreover, you can tailor NetSuite AP automation to suit your needs. This scalability ensures that your processes remain smooth while it supports your business growth every step of the way.
Advanced Capabilities: How to Maximize the Value of NetSuite AP Automation?
By far you’ve understood that there are many advantages of NetSuite accounts payable automation software. However, do you know the ways to maximize its potential? If not, here are some techniques:
- Customizing the software to fit your business needs
- Integrating NetSuite AP with other modules
- Optimizing the workflows by identifying bottlenecks
- Collaborating with suppliers to build strong relationships
- Reporting and analyzing financial reports to look for areas of improvement
- Staying compliant with regulatory requirements to mitigate financial risks
Final Thought: AP Automation Is the Way Forward
If you want to say goodbye to duplicate invoices, late payments, and invoice-vendor mismatching, then NetSuite AP automation is your answer. With it, your team will spend less time on invoice processing and manual entry and put more effort into value-added tasks. Rest assured, NetSuite accounts payable automation will take your business forward, even when it expands.
Do you have any questions related to NetSuite AP automation? Contact our NetSuite experts to solve your query immediately.
