Accounts payable automation is a continuing hot topic for nonprofit financial managers. Actually, it’s been around for a while but has not achieved a high state of awareness or acceptance in the nonprofit world, particularly among small- to mid-size organizations.

But, based on inquiries we get from clients, the word is getting out and more progressive managers are in the process of evaluating, acquiring and implementing AP automation systems. As consultants, we are trying to catch up and become a more valuable resource to our clients.

How does AP automation help nonprofits?

So, to begin, what is AP automation? Enabled by the Internet, AP automation expands the vendor invoice to payment cycle beyond the borders of the accounting department, essentially outsourcing all, or part, of the processes involved (i.e., entry, approval routing, payment, and reconciliation).

So, why should you consider AP automation? Inherent is saving money by reducing internal personnel costs. For very small nonprofits, this may not be feasible or practical. The lowest threshold that I’ve heard cited by AP automation vendors is 50 invoices and checks per month. Some of the benefits cited that, over time, should favorably impact the bottom line:

  • Capture more vendor discounts and rebates
  • Continuity of operations due to personnel turnover
  • Consistent and documented approvals
  • Improved accuracy and timeliness
  • Stronger data security
  • Paperless document retention

Already, we have been asked to help clients using Abila MIP Fund Accounting™ integrate AP automation systems with MIP. Our goal is to more fully understand the functions provided by AP automation suppliers so we can advise clients on the best fit. Stay tuned but don’t hesitate to call us in the meantime.

Best regards,
Lee Bengston, CPA