Unlock Efficiency and Savings with 4castplus AP Automation

One of the most labor-intensive activities undertaken by the finance department of many organizations is the effort of matching and approving vendor invoices for accounts payable (AP). As a result, AP is a very obvious target for introducing automation to let the system take on most of the low-level and time-consuming work in AP. As these companies grow in size and complexity, they are constantly seeking ways to streamline operations, enhance productivity, and optimize financial processes. By embracing AP automation, companies can achieve significant advantages, including improved efficiency, cost savings, enhanced accuracy, and increased visibility. In this article, we will delve into the key benefits of 4castplus AP automation and explore why it has become a vital tool for modern construction businesses.

Automating part 3 of the 3-way Match

Whether owners or contractors, the majority of 4castplus clients take advantage of the built-in project procurement module that enables users to issue purchase orders or subcontracts as an integrated process within the management of a construction project. This procurement module supports a full 3-way match, including:

Commitment. Initial commitment of the purchase order or subcontract.
Receipt. When items are received, cost is recorded on the project and an accrual is raised.
Vendor Invoice. The vendor invoice is attested and approved against the receipt (accrual).

It’s in that third part of the 3-way match – matching vendor invoices – that AP automation can really introduce efficiency and accuracy. As noted in a previous article on this website, “A significant part of the burden on AP is rooted in the accounts payable staff not having easy access to either the original receipt, the PO commitment, or other corroborating evidence to match the invoice against. This lack of information causes unnecessary churn with AP personnel chasing down people, documents, scanned receipts, etc. to confirm the accuracy of the invoice. Then, once the substantiating information is found, matching and approving the invoice is largely a case of verifying that what’s on the invoice agrees with what is on the associated receipts.”

In other words, once the information can be found to match the invoice, the process of matching (or, attesting) is a straightforward act of making sure the numbers align between what was received and what is being invoiced. It’s tedious work that is time-consuming, and can be easily offloaded to a system, which can rapidly process hundreds of invoices in seconds.

AP Automation with OCR

Optical character recognition (OCR) software is quickly emerging as a reliable tool for bulk-processing documents to convert them into machine-readable database records for system applications. If you’re not familiar with OCR, here is a brief summary. Whether the vendor invoices are received as PDF files or physical printed copies, OCR software produces dependable results. This significantly reduces the effort in manually inputting the vendor invoice into the system.

The diagram above shows the 4 steps involved in AP Automation with OCR. Notice that there is only one step that involves a person – the remaining steps are entirely automated by 4castplus. Notice also that we haven’t shown a specific OCR tool or ERP in this diagram. This is because there are many OCR and ERP systems on the market that 4castplus can work with. Some ERPs have OCR built in, which would further simplify the diagram. Here are the 4 steps:

As vendor invoices are received, the AP personnel can bulk-load the invoices (as printed copies, or as digital files such as PDF) into the OCR software. The OCR will extract the key fields from the invoices and create a database record with the relevant information.
4castplus Connect will read all the invoices in the OCR database that are pending approval and create corresponding vendor invoices in 4castplus.
The 4castplus invoice matching module will compare the invoices and their line items – and compare them with the receipts or accruals that have been previously entered. It will perform a match using a number of criteria, including:
- Date
- Vendor
- Purchase Order or Subcontract ID
- Amount
- Quantity
Once matched (or rejected), 4castplus will route the invoices for approval (if required), or it will auto-approve if that option is configured. Once approved, 4castplus will send an approval to pay to the ERP system, with all relevant vendor and invoice information & documentation.

Strengthened Vendor Relationships

Prompt and accurate payment processing is crucial for maintaining strong vendor relationships. AP automation ensures timely payments, reduces payment delays, and minimizes disputes. Using 4castplus AP automation enables organizations to communicate with vendors electronically, providing transparency and eliminating the need for manual follow-ups. By streamlining the AP process, automation fosters stronger vendor relationships, promotes trust, and opens opportunities for better terms, discounts, and improved service levels.

Cost Savings, Reduced Errors and Increased Compliance

By reducing the need for the abundance of manual data entry required by AP, companies can minimize staffing requirements or allocate resources to more strategic roles. Additionally, the automation of invoice processing reduces the risk of human error, mitigating the potential costs associated with payment discrepancies or double payments. Automation minimizes risk of errors by providing built-in validation checks, ensuring accurate data entry and eliminating errors caused by human factors. AP automation also enables organizations to enforce internal controls, such as segregation of duties and approval workflows, enhancing compliance with regulatory requirements and company policies.

Learn More

To learn more about how your company can take advantage of 4castplus AP Automation as a key driver for improving efficiency and quality please contact us to learn more. We’d love to hear from you.