Streamlining Your Account Payables Process: Dost’s Guidelines for Automation
Dost as SaaS model
What is a SaaS?
Software as a service (SaaS) is a software distribution model in which a cloud provider hosts applications and makes them available to end users over the internet. in this way, users can use software applications over the internet without needing to install or manage the software on their own computers.
Saas model has revolutionized the way of doing business in 2 major aspects:
- Scalability and Flexibility: With SaaS, businesses can easily scale their operations up or down based on their needs, without the need for significant infrastructure investments
- Accessibility and Collaboration: SaaS solutions are cloud-based, which enables easy accessibility from anywhere with an internet connection. Additionally, SaaS platforms offer collaboration features that allow teams to work together seamlessly, enabling real-time communication, document sharing, and simultaneous access to information
On-Premise Software vs. SaaS in Accounts Payable Management: How SaaS Improves the Process
In contrast to the previously described model, on-premise software refers to a traditional software deployment model where the software is installed and hosted locally on the organization’s own servers or infrastructure.
The alternative to SaaS in the account payable field, unless a company is still managing everything manually and on paper, is indeed on-premise Software!
The AP management on-premise system differs from SaaS in four main aspects, and certain limitations become apparent:
The on-premise system requires local installation and setup, limiting accessibility to on-site locations. Users can only access the system within the organization’s network. Saas, being cloud-based, offers accessibility from any location with an internet connection. Users can access the system through web browsers or dedicated applications, enabling remote work and collaboration.
With an on-premise system, companies are responsible for managing their own hardware, servers, and infrastructure. This includes system updates, backups, and addressing technical issues. SaaS eliminates that need, as the provider handles all hardware, software, and maintenance tasks. Updates, backups, and technical support are managed by the SaaS provider, reducing the burden on the company
Scaling an on-premise system requires additional investment in hardware and infrastructure. Customization options may also be limited, requiring extensive development efforts and time. On the other hand, SaaS provides scalability and flexibility, allowing companies to easily adjust their subscription plans based on their needs. Customization options are often available through configuration settings, reducing development efforts and enabling faster implementation.
On-premise systems typically involve significant upfront costs: licenses, hardware, implementation, and ongoing maintenance expenses. Companies bear the responsibility for hardware upgrades and system updates. The panorama changes with SaaS: SaaS operates on a subscription-based model, spreading costs over time. Upfront expenses are minimized, and ongoing costs cover system access, maintenance, and support
How Dost utilizes AI for extracting and processing data
What are the typical steps when one is receiving an invoice to pay?
When receiving an invoice to pay, there are several typical steps involved in the process. Here are the common steps:
- Receipt of the Invoice: The invoice is received from the vendor either physically or electronically, such as via email or through an electronic invoicing system.
- Review and Verification: The invoice is reviewed for accuracy and completeness. This is basically an information check: vendor information, invoice number, date, and payment terms. The invoice is also verified against purchase orders, contracts, or agreements to ensure the charges are valid.
- Data Entry and Recording: The invoice information is entered into the accounting system or accounts payable software. This process involves the so-called “data extraction process”: extracting relevant information from an invoice and entering it into the current system (ERP).
- Approval: If necessary, the invoice goes through an approval process, where designated individuals or departments review and authorize the payment.
The invoice-to-pay process involves steps such as receiving, reviewing, entering data, approving, making payments, and maintaining records. Potential problems can include errors, missing information, duplicates, manual processing inefficiencies, lack of visibility, and security risks. Automation and electronic invoicing systems are increasingly adopted to mitigate these challenges.
How this process can be improved?
Centralization of invoices
Centralizing invoices involves consolidating all incoming invoices from different sources into a single, unified system or platform for efficient management and processing. Normally, the various suppliers you interact with send invoices via email, messaging apps, or platforms like Google Drive. Dost allows you to synchronize all these sources of invoice data reception and receive them directly within the software. This way, you avoid wasting time gathering invoices and also reduce the risk of missing any invoices.
Automate data extraction with AI
AI algorithms, such as Natural Language Processing (NLP) and Machine Learning (ML), are applied to extract relevant information from the recognized text. These algorithms use pattern matching, rule-based approaches, and machine learning models trained on invoice data to identify and extract specific fields like invoice numbers, vendor details, dates, line items, and payment amounts. The key differentiating factor is that this technology can comprehend both the structure and content of the document, which sets it apart from traditional OCR systems that solely focus on optical character recognition.
OCRs and AI data extraction: a quick comparison
- Advanced algorithms analyze the structure and content of the document.
- Understands the context and meaning of the information.
- Provides higher accuracy in extracting data, even from complex formats.
- Can handle unstructured data and extract relevant information.
- Relies on optical character recognition to convert scanned or printed text into machine-readable text.
- Limited to recognizing and extracting text only.
- Less effective in handling complex formats or unstructured data.
- May require additional manual intervention to validate and correct extracted data.
Overall, AI extraction offers more advanced capabilities, higher accuracy, and better handling of complex data compared to OCR-based extraction methods.
Why you should adopt a tool for streamlining your accounts payables?
Here are the benefits of the four points we mentioned:
- Centralized repository for vendor Invoice management: By utilizing a centralized repository in a SaaS solution for accounts payable, businesses can experience several benefits. These include:
- Easy Access and Organization: Digital invoices can be captured and stored in one location, making it convenient for accounting teams to access and search for invoices when needed.
- Reduced Physical Storage: Storing invoices electronically eliminates the need for physical storage space, reducing costs associated with paper-based record-keeping.
- Improved Document Security: Digital invoices can be securely stored and protected from loss, damage, or unauthorized access.
- Faster Retrieval: With a centralized repository, searching and retrieving invoices becomes faster and more efficient, eliminating the time-consuming task of sifting through physical documents.
- Automated data extraction: The benefits of automated data extraction from invoices using AI-powered technologies include:
- Improved accuracy: Automated data extraction reduces the likelihood of errors that can occur during manual data entry, ensuring that invoice information is accurately captured.
- Time savings: Manual data entry can be a labor-intensive task, but AI-driven data extraction speeds up the process, freeing up time for accounting teams to focus on more strategic activities.
- Efficiency and consistency: Automated data extraction provides consistent and standardized data, avoiding discrepancies that can arise from manual data entry.
- Streamlined and automated workflows: The advantages of setting up automated workflows for invoice approvals and payment processing are:
- Faster processing: Automated workflows eliminate the need for manual hand-offs and physical routing of invoices, reducing processing time and ensuring timely payments.
- Improved accountability: Automated workflows track and record each step of the approval process, providing transparency and accountability for all stakeholders involved.
- Reduced errors: Automated workflows minimize the risk of human errors, such as misplaced invoices or delays in approvals.
- Efficient resource allocation: With automated workflows, accounting teams can allocate their time and resources more efficiently, focusing on exceptions or complex cases rather than routine tasks.
- Enhanced vendor management: Leveraging a centralized database of vendor information offers several benefits, including:
- Improved communication: Having vendor contact details readily available allows for easier and more efficient communication, resolving payment inquiries or addressing any issues promptly.
- Negotiation power: Access to historical transactions and performance metrics empowers businesses to negotiate better payment terms and discounts with vendors based on their payment history and volume of transactions.
- Vendor relationship management: By maintaining comprehensive vendor data, businesses can better manage and nurture their relationships with vendors, leading to smoother interactions and potential cost savings.
- Visibility into vendor performance: Tracking vendor metrics, such as on-time payments or response time, allows businesses to identify high-performing vendors and make data-driven decisions when selecting or evaluating vendors.
Overall, these benefits contribute to streamlined processes, increased efficiency, reduced costs, improved accuracy, and better vendor relationships, making SaaS solutions for accounts payable highly advantageous for businesses.
A quick guide on how to automate your accounts payables process
1️⃣ Know your AP (account payable) process
Start by examining your existing AP processes and identifying the challenges you face. For example, if you have to deal with duplicated invoices on a daily basis, consider implementing tools to enhance data extraction; if you detect that your approval process is slow, focus on features that enable an approval system that is automatic.
2️⃣ Design a key employee for analyzing the AP process and seeking potential solutions
Identify and choose someone deeply involved in the invoices management process for displaying exactly how you are currently working and which are the main blockers that slow the process and eventually ask him/her to seek the proper Saas for your specific situation.
3️⃣ Get the tech department involved
If you count with a developers team or you have some people specialized in IT, be sure that they meet weekly with the person in charge of the project (reviewing the accounts payable process) for exchanging knowledge and feedback… These folks know technology and can contribute to the digitalization process of the accounting department!
4️⃣ Set clear objectives
Define, together with the accounting and tech team, your goals and objectives for implementing AP automation. Whether it’s reducing manual errors, improving processing speed, or enhancing cost savings, having clear objectives will guide your automation strategy.
5️⃣ Start small and scale up
Begin by automating a specific aspect of your accounts payable process, such as invoice receipt and data extraction. Once you see the benefits and gain confidence, gradually expand automation to other areas, like approval workflows or payment processing.