Few things keep accounts payable managers up at night like the stress of navigating an audit. The process can be complex and time-consuming, especially if you're getting sidetracked by having to dig for missing records, resolve numerous invoice discrepancies or are running behind schedule because of inefficient document management.
In the past, preparing for an audit involved ensuring that your books were finalized and organized. Then you would compile your documents and hope everything was done right.
However, with most companies still operating in a remote or hybrid remote environment, this process has become more challenging. Problems getting in requested documents on time, the absence of an audit trail or incorrect financial data entries, among other hurdles, can drive up costs and cause delays.
Optimize with Automation
Automation solutions can help mitigate all of these potential problems by optimizing the process of data collection and reporting. That equals a faster turnaround when the time comes to close the books, which means more than just finishing more quickly for its own sake.
Research shows closing the books faster allows AP teams to deliver their findings on a timely basis – within six days – giving management an edge. Companies and other organizations that embrace automation solutions enjoy increased productivity and lower costs, and those benefits apply to the auditing and tax filing preparation process.
Automation enables AP teams to close the books early or speed up invoice processing from weeks to days. But when the time comes to retrieve documents for auditing, are they easily accessible? Here’s where a built-in or integrated document management solution makes all the difference.
Here’s how businesses can optimize audit and tax season preparation by integrating AP automation and document management solutions:
Reliable Records Retrieval
Complying with an audit starts with being prepared to provide access to a wide array of documentation, including bank statements, receipts, vendor invoices and purchase orders, among others.
With an AP automation solution, pulling together the documents and information you need to provide to auditors takes seconds. Regardless of whether you are working from home or in the office, you will have instant access to the information you need and can download and send it out to them immediately.
Auditors can even be provided with temporary access to your system to recover the documents they need, without disrupting your workday. This simplifies the process for your team and auditors, reducing their stress and putting you in a better light.
To level up this process, combine it with a document management solution that organizes and stores all your records, streamlining access with tools like full-text search and advanced filtering.
Decreased Audit Time
By being able to provide requested information to auditors immediately, your audit time will be drastically reduced. What used to take days, or even weeks, sifting through papers, is reduced to hours or minutes to verify stored information. You won’t have to worry about spending time looking for information or asking your team about where things are.
An automation platform that supports AI-powered Optical Character Recognition, or OCR, can also help your legacy paper records become as accessible and searchable as digital documents.
The software recognizes text-based characters, so it's able to sort the information, leaving you with a digital library of business-ready data that's reformatted into the form that you need for your audits.
Reduced Errors in Financials
Eliminating errors in financial records is essential for a successful audit. With AP automation, AP teams can skip manual data entry, which helps mitigate errors like processing and payment of duplicate invoices.
With OCR invoice processing makes this process effective at any scale, instantly pulling the necessary data from documents with even hundreds of line items so that they can be automatically vetted for any discrepancies.
You will spend less time preparing for your audit with confidence knowing that your financials are consistently processed accurately and completely.
Visibility into Audit History
AP teams know the importance of preserving an accurate audit trail in their everyday operations, but it's rarely more useful than when preparing for an audit.
This is an automatic process for teams that use AP automation software, which can quickly generate detailed records of payments, purchase orders, vendor invoices and other financial transactions. It's an easy task that saves you time preparing for your audit.
When coupled with a document management system, it gives AP teams visibility into the entire audit history of each document, any decision that was made, who made that decision, why they made it, and when they made that decision.
This means you can quickly retrieve and submit additional information to your auditors when requested.
Built-in Compliance Checks
Another way an AP automation solution helps ensure a smooth audit is by giving AP teams the ability to build in rules that govern invoice routing, approval tracking and other limits to ensure transactions don't violate any regulatory requirements.
Automation also allows you to set up controls, checks and balances to enforce procedures that can reduce or eliminate fraud.
A digital document management solution builds upon those safeguards by assigning rules for storage so that sensitive records are kept in compliance with regulations like FINRA, HIPAA, and SOC 2.
Easier Tax Prep
All the benefits of AP automation enhanced with document management also apply to preparing for tax season. Digital storage facilitates access to multiple years of detailed financial records at the touch of a button.
AP teams can easily tap their data to generate whichever financial reports they might need to supplement their company's tax filing. And the accurate and real-time audit trails for every vendor transaction means creating tax forms like 1099s can be done on a timely basis.
Approach Audits with Confidence
Thorough preparation and organization are essential to minimize problems when undergoing an audit. But savvy AP managers know audit readiness is an ongoing process, not something you can rush.
Relying on a document management platform to organize and store your critical AP records is an excellent first step. But combining it with leading AP automation software with built-in vendor payments, OCR technology and ERP integration can ensure AP teams save time and ultimately gain confidence going into tax filing season.
DocuPhase's AP automation platform has the industry's best automated document-matching technology and can be configured to handle complex AP workflows, ensuring everything from invoice processing to payments run smoothly.
It also has a secure document management system that has configurable permissions for compliance with record storage regulations. Ready to skate through your next audit? Request a demo today.