Accounts payable (AP) is without doubt one of the most task-heavy components of your finance crew’s workload. In keeping with the AFP’s 2022 Funds Value Profit Survey, most finance professionals spend not less than one hour per week on every of those duties: reconciling funds, processing ACH funds, and processing checks. That’s greater than 150 hours—virtually 19 enterprise days—every year. And a few organizations are spending as much as six hours per week on every of these duties.
However what in case you might automate a few of these processes and unlock your finance crew to concentrate on extra strategic work? What in case you might enhance effectivity and mitigate danger with automated accounts payable?
Right here’s how automated funds work in fund accounting and the way they will profit your nonprofit group.
Understanding Automated Funds in Fund Accounting
Automated funds are the subsequent step in AP. They use pre-established pathways with particular person distributors to match and pay anticipated invoices immediately and seamlessly. Incorporating automated funds into your fund accounting processes removes lots of the guide and dear processes which have plagued finance groups for years.
The method behind automated funds is much like what finance groups comply with as we speak, however among the steps are achieved by the system—decreasing time for processing and leading to quicker funds.
Right here’s the way it works:
- Arrange an working account, the place you need funds pulled from to pay the bill, and a custodial account, the account the invoices are paid from.
- Choose the invoices you wish to pay.
- Run the funds via your regular approval workflows. Cash to cowl these bills is transferred out of your working account into the custodial account.
- The primary time you submit an bill for a vendor, the fee vendor will join with each to find out the popular type of fee for every payee.
- Invoices are paid, with a transparent path within the system for monitoring.
Advantages of AP Automation for Your Nonprofit
Listed below are among the advantages you’ll see by incorporating automated accounts payable into your fund accounting processes.
Fewer Touches on Invoices
An automatic funds system strikes an bill from authorised to paid shortly and with solely obligatory human interplay.
This implies you possibly can:
- Cut back the necessity to match invoices to bills—the system does it routinely. Most automated funds methods can match as much as 60% of anticipated invoices. Because the system will get higher at recognizing your funds, probably all funds may very well be matched routinely.
- Get rid of the necessity to print, signal, or mail checks, saving money and time.
- Cut back human errors and discrepancies. Fewer human touches imply fewer errors and extra correct and on-time funds.
No Extra Monitoring Down Up to date Cost Data
Restrict the help calls from distributors and late charges by getting in entrance of modifications to vendor fee data.
With an automatic fee system, you possibly can:
- Let the fee vendor attain out to every vendor you wish to pay and confirm their most popular fee course of. Although you’ve been sending checks, you could discover that distributors favor ACH or a bank card fee.
- Let the fee vendor attain out when there’s a return, or if a fee hasn’t been deposited inside a sure time-frame to ensure there haven’t been any modifications.
- Preserve your vendor data updated and correct so you possibly can pay your distributors quicker and keep away from late charges.
Your Account Data Stays Safe
Your custodial account retains your working account data off funds, limiting your publicity in case your distributors expertise a safety breach.
Through the use of extra digital fee strategies, you possibly can:
- Cut back the danger of examine fraud, which remains to be the commonest sort of fee fraud, in keeping with a joint research by AFP and JPMorgan.
- Shield your account and routing numbers from being left in a mailbox or on somebody’s desk—the place they might get stolen or misplaced.
Establish Points Quicker
Shorter reconciliation time, extra transparency, and real-time monitoring means you possibly can establish potential fraud sooner and handle potential vulnerabilities earlier than they create extra points.
Through the use of automated funds, you possibly can:
- Monitor your funds and money circulation in actual time. You don’t should marvel when the examine can be deposited.
- Get alerts and notifications for any anomalies or exceptions so you possibly can resolve points shortly and effectively.
- Enhance your audit readiness and reporting with extra correct and up-to-date data.
Free Up Your Finance Group to Concentrate on Extra Strategic Work
All automation requires human oversight. However maintaining a tally of reviews and approving outliers takes quite a bit much less time than managing the total funds course of. Empower all members of your finance crew to maneuver from being heads-down on guide duties to tackling extra impactful work, like vendor file clean-up, monitoring down excellent checks or probably fraudulent fees, account and financial institution reconciliation, and researching cost-saving initiatives.
If you’ve streamlined your accounts payable processes, you possibly can concentrate on serving to your group ship extra affect to your group.
Able to be taught extra about how automated accounts payable may also help your group remove time-consuming guide duties and reduce danger? Obtain our information, Understanding Automated Funds for Your Nonprofit Group.
