Defining

Accounts Payable:
Mastering the
End-to-End Process
A MineralTree Topic Paper
 The first step toward managing accounts payable more efficiently is gaining an understanding of what the
end-to-end process entails. At the end of the day, every accounts payable process includes four distinct steps
— invoice capture, invoice approval, payment authorization and payment execution. Manually managing these
four steps increases the chances of input errors, creates drag on resource time, limits visibility
into invoice payment status, and limits control over short-term cash flow.

In this topic paper, we examine each of the four steps that define the accounts payable process, along with
the challenges they create for businesses managing them manually. We will also discuss how automating the
four steps enables businesses to elevate accounts payable activities to the strategic level, by helping to
manage cash flow and strengthen vendor relationships.

The Four-Step, End-To-End AP Process

Maximizing cash flow and maintaining strong vendor relationships are vital to long-term business success.
The former is the lifeblood of company growth; the latter lays the groundwork for how well you can deliver
products and services to your customers. How you perform in both areas is directly influenced by how you
manage the accounts payable process.

Efficiently processing and paying invoices in a way that maximizes cash flow while also helping maintain strong
vendor relationships goes far beyond the receiving of invoices and cutting payments. The entire end-to-end
AP process spans four distinct steps that involve interactions among multiple frontline resources and
management-level personnel:

1. 2. 3. 4.
Invoice Invoice Payment Payment
Capture Approval Authorization Execution

2 www.mineraltree.com 617.299.3399 info@mineraltree.com

 The invoice arrives via email, regular mail, fax or a vendor website portal and has to be
coded into the accounting system. The manual transfer of data creates the possibility
of input errors as numbers are rekeyed. The process can also slow down considerably
depending on the complexity of reconciling invoices with purchase orders, and the ratio
Invoice Capture of frontline resources to the number of invoices that come in each month.

Invoices then need to be routed, typically via email, to the business unit that utilized
the vendor’s products or services, to verify delivery and to confirm the time has arrived
to issue the payment. The invoice may need to travel through multiple people before it
arrives in front of the person who actually needs to sign off on the approval, and this
Invoice Approval can drag the invoice payment process on for weeks.

Once the invoice is approved, it now needs to make its way back to the finance team and
eventually the CFO or the controller to authorize cutting the check and the issue date.
This too can extend the timeline if the authorizer is travelling or on vacation with limited
Payment Authorization access to email.

Once the payment is authorized, the invoice makes its way to the person who will cut
the check or execute the online bank payment. If the due date is not closely monitored,
it’s easy to miss payment deadlines and lose out on early-pay discounts.
Payment Execution

If the flow of the invoice and the payment lingers during any one of the these four steps, the AP team may
then have to field calls or emails from the vendor—who is wondering when their check will be cut and sent.
These follow-up vendor inquiries (perhaps handled politely but sometimes under duress) divert the frontline AP
team from their regular tasks, and can drag down the quality of work across the team.

www.mineraltree.com 617.299.3399 info@mineraltree.com 3

How Manually Managing This Process
Limits Visibility

One of the drawbacks of handling the end-to-end AP process manually is the

lack of visibility into the status of invoices—visibility is usually non-existent.
When a vendor calls to check on an invoice, or when a business unit wants to
know when their vendors will be paid, just where the invoice is within the
four-step process may not be readily apparent.

This can prompt a series of emails and phone calls that waste the time of multiple
resources checking on the invoice and the payment. This includes the person
trying to track the information down and the time of the people they reach out to.

Over time, the cost of just trying to find out where an invoice is can add up,
and ultimately increases the cost of running the company. Instead of performing
strategic activities, resources at every level of the organization—from frontline
personnel up to senior management—spend time simply tracking down
information that should be available with a simple click.

The lack of visibility that makes it difficult to quickly find information and
determine the status of an invoice can be debilitating to the company’s day-to-
day operations. The control that the finance team has over short-term cash flow
decreases. And relationships with vendors can deteriorate rapidly, which puts a
strain on the business units providing products and services to customers.

4 www.mineraltree.com 617.299.3399 info@mineraltree.com

Automating AP Mitigates The Costs And
Improves Efficiency

Businesses can address the challenges presented by each of the four steps in
the AP process and mitigate the associated costs by taking a holistic approach
to accounts payable and automating the end-to-end process. AP automation
produces several key capabilities that reduce the number of errors and the
amount of human intervention in managing the AP process:

• During the Invoice Capture step, physical invoices are recorded digitally
and go directly into the ERP system—line items, amounts and coding are
automatically extracted using optical recognition technology. Invoices are
populated and synced back to the ERP/accounting system with no data
entry required.

• For Invoice Approval, automated workflows send approval requests with the
invoice attached as a reference; approvers are predetermined based on
vendor and invoice amounts.

• At both the Invoice Approval and Payment Approval steps, approvers can
accept or reject invoice payments from any device.

• When Payment Execution occurs, approved payments go out immediately

on a scheduled date, and two-way sync closes invoices in the ERP system.
Approval records, invoice copies, receipts and payment records are all
attached to the invoice record.

Another key element is human intervention. Someone still needs to keep an eye
on what’s happening. The leading AP automation solutions also make it easy to
manage and monitor the process of invoices and identify any invoices that need
special attention.

www.mineraltree.com 617.299.3399 info@mineraltree.com 5

The Payoff: Optimal Efficiency, Improved Vendor
Relationships, And Better Cash Flow

By automating the four steps of the AP process, businesses significantly reduce

the amount of time frontline personnel and management spend on chasing down
information and processing invoices. They can also decrease the amount of time
and the manual process for keying invoices into the accounting system. This lowers
resource costs, but more importantly eliminates the need to rekey errors that hold up
invoices and require unnecessary manual intervention to fix.

Another key benefit of automating the AP process is the ability to get payments to
vendors on time, which keeps them happy and will incentivize them to want to provide
products and services as efficiently as possible to your company. Consistently paying
vendors on time also increases the likelihood that they will be lenient if you ever need
the flexibility to delay a payment.

For the finance team, an automated AP process provides better visibility into payment
due dates, early payment incentives, and late payment penalties. This makes it easier
to manage cash flow and make decisions on the precise date to make each payment.
The increased efficiency and visibility also enables the business to be more thoughtful
about which payment methods are the most advantageous for each vendor.
For example, some vendors may accept credit cards that provide cash-back rebates.

Investing In AP Automation: Beware Of Point

Solutions

When investing in a solution to address such a broad and extensive process,

it’s important to ensure that the solution you invest in actually to address the entire
end-to-end accounts payable workflow.

6 www.mineraltree.com 617.299.3399 info@mineraltree.com

There are many solutions available that help smooth out Take The Next Step
inefficiency at individual steps within the accounts payable process.

When considering both the hard

These solutions include: and soft costs associated with
accounts payable, processing
• Document scanning/Optical Character Recognition invoices can cost as much as
$12 per invoice. By automating
• Document Management and workflow
the four steps, you can reduce
• Purchase Order Management the cost of the process by up to
• Integrated Payables 60 percent. You can also refocus
your resources on more strategic
activities, including identifying
Investing in “point solutions” like these, that only address individual
other business processes that
components of the accounts payable workflow, will restrict your need improvement to create
return on investment and leave you with all of the pain points that even more efficiency.
the solution fails to address.
MineralTree is an example of
an accounts payable automation
In order to maximize your ROI on accounts payable automation solution that integrates directly
software, it’s critical to invest in one that addresses the entire with corporate bank accounts
end-to-end process. This enables you to reap the benefits that and accounting systems.
The solution keeps overhead
come with transforming accounts payable into a simple and
to a minimum by paying for itself
streamlined workflow, including: as quickly as 60 days after the
simple implementation.
• Centralization of all accounts payable operations
For information on how
• Automatic preservation of all approval and payment details
MineralTree Invoice-to-Pay can
• Simplified transitions between each step of accounts payable help you automate and streamline
the entire accounts payable
process—from invoice capture
to invoice approval, payment
authorization and payment
execution—contact us today at
617.299.3399 or email
DAP-E2EP - (07312018)

info@mineraltree.com.

www.mineraltree.com 617.299.3399 info@mineraltree.com 7