Accounts Payable Batch Processing: A Tactical How-To Guide
Accounts payable departments can quickly overwhelm themselves if they try to process, pay, or adjust every invoice as it comes in. This is known as real-time invoice processing.
It’s a question of volume, with 92% of businesses in a 2021 survey report by Stampli and Treasury Webinars noting that they receive at least 100 invoices every month. It can also cost more in fees and take longer to process invoices individually, though some accounting situations call for real-time invoice processing.
On the other hand, there’s a more efficient method to processing invoices in comparison to the manual piecemeal method: Accounts payable batch processing. Join us as we explore why, how, and when companies should cook up some hot batches when they process, pay, and adjust invoices and how Stampli’s AP Automation can help.
Accounts Payable Batch Processing: The Basics
First, let’s explore a few basics of accounts payable batch processing, including a quick definition, explanation of how the process can work, and when — and when not — to opt for batch processing.
Defining Accounts Payable Batch Processing
In short, accounts payable batch processing allows companies to manage invoices, and process business-to-business (B2B) payments, and adjustments in bulk.
Rather than just conducting each step of processing individually, which necessitates separate accounting journal entries, companies can group every invoice, payment, and adjustment into batches that will be processed as a single payment to their supplier. Batch sizes can be both large and small.
Batch processing can standardize the invoice data entry, payment, and adjustment process. Rather than pursuing ad hoc, potentially erratic processing with each invoice, batch processing puts things onto a more unified schedule, allowing for payments to happen at consistent dates and times.
There isn’t a particular type of payment that’s needed for accounts payable batch processing, with it possible to be done with a variety of forms including credit cards and through peer-to-peer payment sites such as PayPal. For its part, Stampli, as we’ll explore in a bit, enables accounts payable batch processing payments to be made via painless paper check or through the automated clearing house (ACH) with Stampli Direct Pay, or even outside of the Stampli system.
How Batch Processing Works, Step By Step
While the nuances can vary between different accounting systems and AP automation software, accounts payable batch processing typically follows a few steps:
- Potential batches of invoices, adjustments, or payments are created and reviewed for possible mismatches. The batches are prepped for submission at a single point in time which can help to lower payment fees and save time;
- The batches are posted within AP automation or other accounting software and linked to the general ledger within an accounting system;
- Batches are backed up via accounts payable posting journals and general ledger transaction reports, a useful practice for audit preparedness and ensuring data consistency and accuracy.
With the right software, accounts payable batch processing doesn’t have to be an overly-complex endeavor. It should simplify AP work. If it doesn’t seem like it’s doing so, this can be a sign something’s off.
When and When Not to Use Accounts Payable Batch Processing
When an invoice arrives, a company typically has two options for how to proceed with its account payable work.
One option: The company can have an AP specialist drop what they’re doing or even hire accounts payable outsourcing companies to manually process the individual invoice. Sometimes, it makes sense to do this, such as if a company has a high-profile vendor who needs payment right away. Another instance AP would process invoices as they arrive is when they need to have the invoices approved by one or more invoice approvers. Batch processing moves a little slower, taking slightly longer to settle than real-time, so it’s not always going to be ideal in certain scenarios.
When it comes to a quick-turnaround, high-dollar, or otherwise mission-critical deal, calling a financial institution to arrange a one-off wire transfer might be a far more logical course of action than saving the payment for a batch. There’s just no reason to risk the big transaction getting lost or delayed in a batch.
On the other hand, the routine invoices that can quickly pile up for mid-size and enterprise-level firms — and even small businesses with a lot of vendors — can be nightmarish to process individually, or even manually. In these scenarios, accounts payable batch processing can work wonders, handling the bookkeeping for as many transactions at once as a company would like.
3 Reasons to Opt for Accounts Payable Batch Processing
There are a number of benefits associated with accounts payable batch processing. Here are three of the biggest to consider.
1. Batch Processing Saves Time and Money
It isn’t always fast or cheap to process an invoice or prepare it for payment, particularly for companies that do so manually.
A 2021 survey report by Stampli and Treasury Webinars, “How & Why Companies Choose Payment Types” found roughly 70% of companies paid more than $5 to process each invoice. Meanwhile, another 2021 report from Stampli and Treasury Webinars, “AP Today: Bottlenecks, Benchmarks & Best Practices” found small businesses averaged 15 days from invoice receipt to payment, mid-size companies needed 17 days, and enterprise firms 20 days.
Accounts payable batch processing benefits companies in large part because it can save time and money when it comes to the manual process. Payments through methods such as the ACH can cap fees, making costs especially low per invoice in large enough batches. Time is saved with accounts payable batch processing because doing work in batches can be more efficient and allow for AP specialists to build momentum. There’s less stopping and starting.
2. It Allows for Cleaner Bookkeeping and Better Data Visibility
General ledgers and sub ledgers can be veritable accounting pirate maps, riddled with countless transactions every month. Get a few duplicate or inaccurate invoices in there and accounts payable reconciliation can become more or less impossible.
In fact, companies struggle a lot when it comes to accounts payable data visibility. In a 2021 survey report by Stampli and Treasury Webinars, “The How, the Why & the ROI of AP Automation” roughly 30% of small and mid-size companies said they were driven to invest in automation due to a lack of payment and invoice data.
With accounts payable batch processing, though, companies get clean and condensed accounting records. Instead of lots of disparate transactions to pore through each month in a ledger, there might only be a handful. Needless to say, it’s good not only for day-to-day accounts payable work but also audit preparedness.
3. Payment Cycles Will Be More Predictable
Vendors and suppliers don’t always have the easiest go of it. The average one can skate by on tight margins, depending on the companies they work with to pay bills when they say they will or at least at predictable intervals to maintain positive cash flow. Some savvy vendors will even get good at learning the accounts payable cycles of their partner companies, helping them to know when a payment might be on the way.
Accounts payable batch processing makes these prognostications easier, able to reduce the number of possible days that remittance occurs.
It’s not just vendors that benefit, though. By consistently processing in batches, companies can create trust with their vendors and decrease all of the anxious phone calls and emails that can flood accounts payable departments. Businesses can also make more accurate forecasts of their own, being better able to project their cash flow and credit needs by using batches.
How Stampli Enables Accounts Payable Batch Processing
For companies ready to take their AP operations to a new level with accounts payable batch processing, here’s how Stampli can help.
Helping Companies Batch Process Invoices with AP Automation
The first thing Stampli does to help companies process invoices more efficiently is remove manual practices from the equation. Through the use of cloud software, Stampli provides a software-as-a-service, or SaaS-based platform that automates many parts of the procurement-to-payment (P2P) process. This includes accounts payable batch processing.
Through the magic of Stampli, accounts payable specialists don’t have to stumble through manually processing each invoice, payment, or adjustment.
When it comes to invoice processing, Stampli automates the capture and coding, and even approval routing so AP doesn’t need to manually code every single invoice as they come in. Moreover, AP can process invoices in batches in Stampli. Then when it comes to approvals, Stampli enables approvers to approve invoices in batches as well, which can save time depending on the process. The same goes for AP when it comes to authorizing multiple invoices for payments, marking multiple invoices as paid, in addition to cancelling multiple rejected invoices. This method quickens payment runs by providing easy access to all relevant details and supporting documents for seamless payment approvals.
Batch invoice processing and approvals can move faster with the help of AP automation software like Stampli. In that Stampli and Treasury Webinars 2021 survey on the ROI of automation, 57% of companies said they saw faster approval of invoices while 37% reported higher productivity and 27% cited smaller late fees.
Stampli Direct Pay for Easy, Batch ACH Payments
Sometimes, payment can be a clunky affair with even the best of AP automation software, with companies doing all of their invoice processing right up to the point of paying a bill but then having to use other software or go elsewhere for payment. This isn’t the case however with Stampli, which makes payment possible directly within its AP automation platform.
With Stampli, companies are able to batch process ACH payments with individual transaction reconciliations in their bank statement. No longer will you will have to worry about mystery transactions on these statements for you or your vendors. Stampli also helps facilitate batched check payments with its software, with the process similarly seamless.
Stampli offers payments as an optional service to our platform because Stampli believes that customers deserve payment options that do not squeeze their vendors, make reconciliation miserable, or hold data hostage.
Painless Reconciliations
Stampli also helps there to not be any problems when it comes to reconciling batch transactions. The batched ACH payments come through as individual transaction reconciliations so there’s no questions for what the payment was for. It’s instant audit prep and can help keep accounting books spotless day-to-day.
It’s all part of the way that Stampli helps to streamline accounts payable batch processing, enabling the companies it works with to enjoy cleaner, faster, and more cost-effective accounting.
Game, set, batch. Work with Stampli today to streamline your accounts payable batch processing.
