Accounts payable is the amount a business owes its suppliers. The balance sheet of a company indicates this outstanding amount as a liability in its balance sheet. As a function, the accounts payable team ensures that the organization pays its invoices appropriately.
Accounts payable has an important role to play in the calculation of total capital available that can be utilized for a company’s routine operations. As such, most AP amounts are small, where the general recipients include vendors, subcontractors and suppliers. And as the nature of transactions is low volume and assumed to be low risk, most organizations tend to keep accounts payable paper-based or within legacy software.
As a result, the AP practice gathers a lot of invoicing errors over time, thereby giving way to compliance risks, increased processing costs and slow payments to suppliers. But accounts payable has now shifted track from a tactical and transaction-oriented processed process to a strategic business function focused on resource optimization and increased savings, and at the same time improving supplier relationships.
However, companies are starting to realize the potential of savings from the AP process. By introducing automation into the process through AI and cloud computing, companies have started to leverage digital transformation to the maximum.
Fully automated AP solutions also enable companies to free up resources, which can be assigned to more strategic and productive tasks at hand.
Companies can also team up with technology partners with proven expertise in transactional processing that can combine process design experience and best-in-class procure-to-pay technology to unlock greater value from accounts payable.