How to Implement a Paperless Accounts Payable Automation Systems

The idea of going paperless in accounts payable (AP) might sound like a big leap for your small business or accounting firm, but the benefits make it worth the effort. Not only can it save you time and reduce errors, but it can also give you a real edge over competitors. If you’re tired of sifting through piles of paper invoices and chasing after misplaced receipts, implementing a paperless AP automation system is a game-changer. In this blog, we’ll walk you through an actionable approach to setting up a streamlined, paperless AP system that works for your business, without the overwhelm. 

Why make the switch? 

Before diving into the how-to, let’s take a look at why this transition is crucial. Businesses that use AP automation experience a 79% reduction in processing costs compared to those relying on paper-based methods. The data speaks for itself: switching to automation not only saves you money but also speeds up the entire accounts payable process, improving cash flow management and reducing human error. 

A paperless AP system can cut invoice processing time by up to 60%. That means no more tedious filing and searching for missing documents or trying to recall details from a hand-written note. Instead, everything is neatly stored in a system that’s searchable and easy to manage. 

Step 1: Choose the right paperless AP solution 

The first step in going paperless is choosing an automation platform that suits your needs. There are plenty of options available, but for small businesses or accounting firms, it’s crucial to find a solution that fits both your budget and scalability needs. 

Multiple platforms offer cloud-based solutions that make the transition easy by integrating seamlessly with your existing financial software. Look for systems that provide: 

• Easy invoice capture and data extraction: Optical Character Recognition (OCR) technology can automatically extract important data like invoice amounts, dates, and vendor information. 

• Real-time payments: Ensure that payments are processed instantly without having to wait for days. 

• Customizable approval workflows: Set up user roles and thresholds for payment approvals, making it easier for teams to manage large volumes of invoices. 

A paperless AP system should make your life easier, not add complexity, so be sure to choose a solution that has intuitive interfaces and support resources. 

Step 2: Set up digital invoice collection 

The next step is getting all of your invoices into the system. If your business or accounting firm still receives paper invoices, it’s time to transition to digital formats. 

Here’s a simple plan: 

• Encourage vendors to submit digital invoices: Start by requesting that all your vendors send invoices via email or through modern payment platforms like Forwardly. Many vendors already offer this, but it’s important to get everyone on the same page. 
• Set up an invoice capture system: Use a system to automatically capture and extract information from incoming invoices, whether they’re sent via email, fax, or uploaded directly to the platform. 
• Digitize any remaining paper invoices: If you receive physical invoices, scan them into your system using a document management tool or OCR technology. 

Step 3: Automate invoice approval workflows 

Once invoices are in the system, the next step is automating the approval process. Instead of having to pass invoices around manually for approvals, your paperless AP system can streamline the entire workflow. 

• Set approval thresholds: Define approval limits for different team members. For instance, invoices under $500 might only require manager approval, while invoices over $5000 need higher-level approvals. 
• Define user roles: Set up user permissions to determine who can approve, edit, or reject invoices at each stage. This keeps everyone accountable and ensures proper segregation of duties. 
• Integrate With your accounting software: Ensure that your paperless AP system integrates with your existing accounting software (e.g., QuickBooks, Xero) for seamless data flow. 

Businesses using automated AP workflows report a 50% reduction in invoice approval time. The smoother this process is, the quicker you’ll be able to catch discrepancies and prevent errors. 

Step 4: Set Up Automated Payments 

Now that your invoices are processed, it’s time to set up automated payments. The beauty of a paperless AP system is that you can automate not just approvals but also payments. 

• Schedule payments: Set up recurring payments for regular vendors, or schedule payments based on due dates, so you never miss an invoice deadline. You can automate payments via ACH, debit, or credit card, depending on what works best for your vendors. 
• Set notifications: Create automatic notifications to alert you when payments are due, ensuring that you’re always on top of your cash flow without having to manually check invoices. 

Step 5: Train your team and monitor the transition 

The final piece of the puzzle is ensuring that your team is on board and trained to use the new system. After all, even the best software is only effective if your team knows how to use it. 

• Provide training: Offer hands-on training for your team to ensure everyone understands how to submit, approve, and track invoices. Most automation platforms offer training materials or live sessions to walk you through the system. 
• Monitor the transition: During the first few months, monitor how the system is working and keep an eye on potential bottlenecks or inefficiencies. Make sure you have access to real-time reporting and insights so you can make adjustments as needed. 

Step 6: Reap the benefits 

After a few months of using a paperless AP automation system, you’ll start to see the significant benefits: 

• Time savings: You’ll spend less time manually entering data and tracking down invoices, allowing you to focus on strategic activities that grow your business. 
• Error reduction: With automation handling the data entry, the chances of human error are significantly reduced, making your AP process more accurate. 
• Cost savings: By eliminating paper-based processes and improving efficiency, you can lower operational costs and reduce late payment penalties. 
• Improved cash flow: By automating payments and approvals, you can improve payment cycles, freeing up cash that can be used for other business needs. 

Implementing a paperless AP automation system doesn’t have to be overwhelming. With the right tools and a clear strategy, you can make the transition smoothly, and your business will be set up for greater efficiency and financial control. At Forwardly, we specialize in helping small businesses and accounting firms streamline their AP processes with easy-to-use automation solutions. By automating your accounts payable, you’ll not only save time and money but also gain a competitive advantage that sets you up for long-term success. 

Ready to get started? Reach out to learn more about how Forwardly’s paperless AP solutions can help your business thrive!