Accounts Payable: In-Depth Explanation with Examples

Alternatively, a cost for multiple items from the same vendor might be divided according to line item value between various departments. Set up GL codes is done in a descending fashion, i.e., starting from the largest natural numbers. For example, a company may categorize its spending as 1000 for all inventory costs, 2000 for all shipping costs, etc. The account may then be further divided into specific subcategories of the spend such as 2100 for ground shipping, 2200 for airways shipping, etc. General Ledger (GL) codes are a numerical organizational system that helps rapid categorization and recording of a company’s financial transactions. invoice coding Therefore, automating the complex GL coding process relieves the accounting team from tedious and time-consuming work.

The Hands-Free Way of Coding Invoices

• With autonomous invoice processing, time-consuming manual data entry can be eliminated, drastically reducing time spent coding an invoice.
• Invoice coding is akin to labeling your bills, a method that enables you to track and manage your spending.
• By leveraging advanced artificial intelligence and machine learning, DOKKA can accurately code invoices in seconds, eliminating data entry errors and reducing processing times.
• Think about everyone involved, not just the accounts payable department, but everyone involved in the coding and approval steps.
• Additionally, DOKKA allows users to set up custom rules tailored to their specific business needs.
• It will automatically capture and read all invoices, then correctly match them to the right PO or other relevant documents (such as a note of goods received) in a split-second, all without human intervention.

By learning from your past actions and predicting your coding preferences, it not only saves time but also enhances accuracy. Automated coding systems can process invoices 24/7, ensuring invoices are coded promptly, even outside of regular business hours. Artificial intelligence (AI) solutions are making a substantial impact on the AP space, as AI can adapt and learn over time to ingest and process varying types and formats of data. In a recent article by Finextra, the use cases for AI in accounting and finance are prevalent, as there is an abundance of data processing and time-consuming work that can be addressed.

What makes an invoice ready to be paid and posted?

GL coding involves assigning an alphanumeric value to different transactions, effectively categorizing them into different expense types. GL codes petty cash are highly organized systems, sorting each spend category and subcategories depending on the highest order value of the code. GL coding all transactions correctly allows for a smooth accounting close, compliant processes, a complete view of your spending, and protection against fraud. Many companies manually assign GL codes to invoices, which is a highly error-prone and time-consuming process.

Process invoices automatically

These solutions digitally capture the data from paper and electronic invoices and put them through a custom-designed workflow that speeds up the entire approval process. Reducing or eliminating the need for paper invoices will lower outgoing costs. Automating invoice coding saves time and money by reducing manual processing, improving payment times (and reducing late payment fees), and preventing fraud and errors.

• For organizations paying their vendors via ACH, wire, or cheque expense management and tracking can be cumbersome.
• In businesses where work is done on a project basis, it’s vital to know exactly how much each project is costing.
• As you consider the path forward for your accounts payable process, remember that automation is not just a tool; it’s a catalyst for efficiency, accuracy, and financial success.
• Invoice data capture can become an instant process with the use of online supplier portals.
• All the above challenges faced by the AP processing team are mainly due to outdated manual processes.

For new invoices of new suppliers that Yokoy has never seen, the software will not automatically code the cost object and category. This is because Yokoy needs to “learn” what has been used in the past to submit on a certain invoice. The efficiency of invoice processing can significantly impact an AP team’s Accounting for Churches productivity and bottom line.