What is the Accounts Payable Process and how RPA can help?
Executing finance and accounting processes, specifically accounts payable (A/P), poses a significant pain point for many businesses across various industries. Even in today’s technologically advanced business world, many accounting departments still rely on manual employee involvement and paper invoices in order to process payments. At the same time, many other companies depend on outsourcing to BPOs in order to have their finance processes transacted.
A/P processes are repetitive, time-consuming and typically require high levels of involvement from employees. As such, robotic process automation (RPA) is an excellent fit for the automation of A/P processes. But even so, recent research by Basware and MasterCard indicates only 20% of companies use automation software internally to alleviate their accounts payable headaches. While RPA isn’t a one-size-fits-all solution for all companies, the technology has the ability to help companies streamline their financial tasks in order create enhanced efficiency and operational control.
With this in mind, let’s consider the benefits - and challenges - of implementing a RPA solution to automate financial tasks, as well as the role BPOs can play in this process.
Challenges and benefits of automation A/P with RPA
As with the implementation of every new technology, there are doubts regarding the capabilities and success rates of RPA for A/P activities, especially because financial processes are so critical to the overall functionality of companies, particularly those in variant-rich industries. While RPA is making significant impacts in the automation of activities by companies worldwide, a recent Oracle whitepaper entitled “Process Automation for Accounts Payable” points to some of the challenges that RPA technology will face in transforming A/P activities. Some of these challenges include:
Non-standard invoicing: Invoices that companies receive from their suppliers sometimes still arrive in multiple different formats: as a paper copy, a Word document, a PDF email attachment, or a fax. Because invoice formats are not always standardized, it is often a challenge for companies and automation software to handle them in the same way each time.
Unstructured data: A company’s finance team is responsible for transferring the data from various invoice formats into the company’s database. The A/P staff is also responsible for manually dealing with any discrepancies between the bill of lading, purchase order, and invoice as well as approving payments. Because the data in these invoices is typically unstructured, this manual transfer process is time-consuming, prone to errors, and can be difficult for certain automation softwares to handle.
Despite these obstacles, there have been recent significant improvements in the capabilities of RPA, especially in terms of optical character recognition (OCR) and automated approval/exception resolution. Improved OCR, for example, has allowed companies to allow software robots to interpret and handle scans of paper invoices in a much more efficient manner. As a result of these developments, there has been an increased ability to handle invoice discrepancies and even paper documents without as much employee involvement. This means that RPA technology can deliver even more improvements to the efficiency of A/P processes to promote positive business outcomes and competitive advantages. Some of the benefits include:
Automated reconciliation of matching errors: A large, time-consuming burden for a company’s A/P staff is error reconciliation. This can include discrepancies in purchase amount or vendor contact information between various essential documents, such as invoices and purchase orders. By automating most of this manual matching, robotic software robots can reduce the amount of oversight and exception handling that this required by employees. This means that employees will be able to focus on more critical finance responsibilities, such as budgeting and planning.
High scalability: Accounts payable workflows designed with RPA can be replicated or reused across different business departments and between locations, meaning that quick scalability can be easily achieved. In addition, the number of active robots can be scaled up or down with little to no additional cost. Scaling the robotic workforce is a critical component of meeting more permanent company growth or to temporarily meet increases or decreases in A/P activity.
Quick account closure: Because it depends on input from multiple employees, closing the books each month, quarter, and year can be a time-consuming process. However, RPA software can be used to automate data input, error reconciliation, and some of the decision-making required by a company’s finance staff. Not only does the use of software robots reduce the number of errors made in closing accounts, it also means that account closure can be completed much more quickly and without as much human intervention.
Accounts Payable Automation for business process outsourcers (BPOs)
Many deployed RPA software robots around the world today are crunching A/P automated transactions. And while RPA alone isn’t a perfect cure in any automation scenario, it can have transforming impacts on how companies typically handle their finances. For the multiple benefits described, RPA is becoming an increasingly suitable option for companies, and even business process outsourcers (BPOs), that want to streamline A/P processes and their broader service offerings. Let’s consider how BPOs are benefitting, and can benefit even further, from RPA in the automation of back office processes:
Ability to take on more clients: Rather than relying on manual employee labor, BPOs themselves are using RPA in order to automate the services that their clients used to process in-house. Because they are able to execute their clients’ processes more quickly and accurately, BPOs can use RPA to effectively sustain growth and address more clients.
Improved service offerings: By supplementing human labor with RPA, BPOs are able to boost their workforce at a much lower maintenance cost. RPA allows BPOs to provider services at a reduced costs, great speeds, and with improved accuracy. This ultimately means that BPOs will be able to produce better quality work for clients.
While it has been suggested that RPA has the capacity to replace BPOs by allowing companies to efficiently execute their own processes, this brings one important consideration to mind: What can BPOs do to navigate this challenge and continue to maintain a competitive advantage? To even further boost their position in the increasingly technological marketplace, BPOs should consider the benefits of providing out-of-the-box RPA A/P solutions to companies. Not only would this reduce overhead costs and expand their offerings for the BPO providers themselves, but it would also be a highly attractive to the small to medium-sized business that might not have the infrastructure to support the full RPA implementation process themselves.
As you can see, for companies and BPOs alike, RPA is making great strides in the automation of A/P processes and is helping to drive increased efficiency of these crucial finance-related activities. Whether we consider a company that must still deal with non-standardized invoices or one that has already transitioned to fully electronic invoicing formats, RPA is positioning these organizations to attain accelerated invoice processing and reduced operational costs. While some challenges still exist in attaining full automation of these processes, increasing advances to RPA technology are allowing companies, big and small, to move past these obstacles more quickly than ever before and leverage these benefits into competitive advantages for long-term, sustainable growth.
This is a companion discussion topic for the original entry at https://www.uipath.com/blog/industry-solutions/accounts-payable-ap-automation-with-rpa