Managing accounts payable (AP) with manual methods can be a burden for any organization. Using outdated systems instead of bill approvals software often leads to inefficiencies, errors, and delays. For instance, research shows that nearly 44% of companies still receive invoices by fax, and 62% rely on manual processes for approvals. These outdated methods not only slow down operations but also increase the risk of errors and compliance issues.
As companies scale, these inefficiencies become more pronounced. A study revealed that manual bill processing costs businesses an average of $12-$30 per bill, while automation can reduce this to as low as $3. With the growing demand for efficiency, more organizations are re-evaluating their AP workflows and exploring automation as a way to optimize operations.
What is bill approval in accounts payable?
For businesses handling bills, accounts payable solutions ensure that each bill accurately reflects the services or goods received and is billed correctly. Approval in accounts payable ensures all stakeholders, including the AP team, the billed department, and other reviewers, have validated the bill using a structured process.
Once a bill is verified, it is marked as "approved" and ready for payment. Examples of when bill may not be approved include duplicate entries, incorrect billing amounts, line item errors, and discrepancies with purchase orders.
What are manual processes for internal approvals for bill payments?
Handling accounts payable manually, without modern AP automation tools, often involves time-intensive steps prone to errors. Organizations relying on manual processes typically:
- Receive paper-based invoices that must be routed to the correct department.
- Enter invoice data manually into ERP systems or accounting software.
- Forward invoices to designated approvers, often through email, slack or internal communication channels.
- Send queried invoices back for corrections, causing additional delays.
- Submit approved invoices for bookkeeping and eventual payment processing.
This approach can create a cascade of inefficiencies. Relying on outdated systems slows down operations, increases the risk of errors, and makes it difficult for businesses to maintain smooth supplier relationships.
Common pain points of manual approvals
Manual bill processing presents several challenges as organizations scale:
- Delayed approvals: Bottlenecks from paper workflows and emails delay payments, affecting vendor relationships and losing early payment discounts.
- Data entry errors: Manual data entry often results in typos or discrepancies, leading to disputes and risks.
- Limited visibility: Tracking bill statuses without centralized systems consumes time, complicates audits, and slows down approvals.
- Compliance risks: Lack of proper documentation increases penalties and risks of failing SOX or GDPR audits due to incomplete audit trails.
These inefficiencies collectively undermine organizational agility and drive up costs. Manual accounts payable processes not only hinder operational efficiency, but also strain vendor relationships.
Why relying on manual internal bill approvals is unsustainable?
Does your AP team struggle with delayed approvals or duplicate payments? Manual workflows demand significant time and effort, often leading to errors, missed deadlines, and strained vendor relationships. For companies managing hundreds of vendors and payment cycles, these inefficiencies only grow, making manual processes unsustainable. Some issues could be:
- Duplicate payments: Without proper checks, duplicate payments can occur.
- Missed deadlines: Delays in approvals may result in late fees or strained vendor relationships.
- Lack of tracking: Difficulty tracking bills across departments reduces accountability and transparency.
Organizations stuck with manual systems risk falling behind competitors who leverage automation to scale effectively.
What is the automated bill approval process?
Approving bills through an automated workflow is a game-changer for accounts payable processes. Unlike manual methods, automated workflows are faster, more transparent, and error-resistant. Automation streamlines business processes and simplifies AP operations while providing accountability, transparency, and accessibility.
Key features of automated bills approval systems include:
- Streamlined AP management: Manage everything in one platform - from bill uploads to bill approvals and payment processing.
- Efficient matching: Automated matching ensures quick validation of bills against purchase orders and receiving reports.
- Customizable workflows: Approvals are routed to the right team members, ensuring accuracy and accountability.
Automation eliminates bottlenecks, reduces the risk of manual errors, and enhances efficiency.
How the automated bill approval process benefits mid-market companies
Automation brings tangible benefits to mid-market companies striving for efficiency and growth:
- Lower processing costs: Automating bill workflows significantly reduces the costs associated with manual data entry and approvals.
- Faster processing times: Automation accelerates the entire AP process, from data capture to final payment, saving time and resources.
- Reduced bill exceptions: Automated three-way matching minimizes discrepancies and reduces the need for manual intervention.
- Enhanced compliance: Secure audit trails and accurate records ensure SOX compliance to regulatory standards, reducing risks.
- Improved vendor relationships: Faster and accurate payments help build trust with suppliers and strengthen partnerships.
When to move from manual AP approvals to automated AP approvals
Shifting from manual to automated accounts payable processes can propel businesses toward enhanced efficiency and financial accuracy. Here are key indicators that it might be time to make the switch:
- High volume of payments: Managing over 100 payments monthly can overwhelm manual processes and delay approvals.
- Recurring errors: Frequent delays or mistakes in bills or approvals signal the need for an automated system to reduce human error.
- Vendor dissatisfaction: Delayed payments may strain relationships with suppliers. Automation ensures timely payments and opens opportunities for early payment discounts.
By recognizing these signs, companies can determine the right time to transition and unlock the full potential of their AP operations with automation.
How can Finofo help automate your internal approvals and controls for bills processing?
Finofo simplifies accounts payable by offering a tailored platform that adapts to your organization’s specific approval and payment workflows. Its flexibility allows you to create multi-level approvals and custom rules, ensuring that every payment is processed accurately and efficiently.
For businesses managing a high volume of bills, Finofo streamlines the process with its bulk payment feature. This enables you to group multiple bills , send them for approval automatically, and execute payments in a single click, saving time and reducing administrative effort.
With Finofo, you can:
- Eliminate approval delays: Automated workflows ensure bills move seamlessly through the approval chain, reducing bottlenecks and saving hours of manual effort.
- Stay audit-ready: Maintain a comprehensive, audit-ready trail of approvals effortlessly, meeting compliance standards like SOX with ease.
- Streamline AP operations: Free up your finance team to focus on strategic initiatives, instead of repetitive tasks and chasing approvals.
Additionally, the platform’s mobile-friendly interface empowers your team to review and approve bills on the go, ensuring workflows stay uninterrupted. With real-time visibility and secure audit trails, Finofo ensures compliance with regulatory standards, making audits stress-free.
Ready to transform your AP process? Start your 21-day free Finofo trial and see it in action.
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