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Simplifying Accounts Payable with Automated Solution

A company’s accounts payable represent short-term liabilities. The accounts payable (AP) team manages and processes payments to vendors and suppliers while complying with relevant policies and regulations. At many asset managers, the AP team manages approvals via email and tracks receivables and payables manually within spreadsheets, which hampers efficiency and increases risk.

To understand why, let’s take a closer look at some common challenges AP teams face.

  1. Invoice Processing Delays: Processing invoices manually slows down approvals. Consider how many levels an invoice must go through to receive final approval. Often, this protracted process leads to late payments that can significantly impact vendor relationships.
  2. Human Errors: Using spreadsheets to manage invoices makes the process prone to human errors, such as mistakes in manual data entry. The lack of automated validation makes these errors difficult to catch.
  3. Reconciliation Errors: To ensure accurate invoice transactions, AP matches the information on invoices to the company’s internal data. If a single invoice matches multiple internal documents, the ensuing manual investigation to find any discrepancies creates further delays and a cascading slowdown for the entire department.
  4. Compliance Risk: Expense allocations need to comply with SEC regulations. Overcharging funds can result in heavy fines. In fact, the SEC has announced that disclosures related to fees, expenses, and conflicts of interest are among its top concerns for the OCIE examination. Of course, if expense allocation results in undercharging funds, it directly impacts the management company’s revenue.

Investment News recently shared a point of view on this topic: “Issues like incorrect valuations, wrong fee rates, and failure to aggregate accounts are oftentimes the result of poor operational and compliance infrastructure rather than intentional misfeasance,” says Todd Cipperman, Principal at Cipperman Compliance Services. “Emerging investment firms are often reluctant to hire back-office compliance and operational resources who make sure that these mistakes don’t get made.”

Using Technology to Solve AP Challenges

So how can asset managers avoid all of these challenges to the AP process? By leveraging expense allocation software that automates many of the workflows that are currently done manually. When evaluating your options, look for a solution that offers all of the following capabilities:

  1. Automated Data Capture

a. OCR or optical character recognition can eliminate the majority of human errors from the AP process by automating invoice capture. The IVP Expense Allocation Solution, for example, uses OCR to extract text from images or scanned documents and automate data entry significantly reducing the risk of error.

b. Excel Uploads are another way to automate data capture, allowing asset managers to upload information directly from a spreadsheet. The IVP Expense Allocation solution enables Excel-based uploads, providing a template that hedge fund or private equity AP teams can use to upload data automatically.

c. API Integrations allow AP teams to bring in data from other accounting software. The IVP Expense Allocation solution comes with API integrations with QuickBooks, Workbook, NetSuites and others.

  1. Efficient Invoice Approvals

a. Automated Approach: Some solutions can create automated workflows for each type of invoice for review and approval, eliminating the need to pass individual invoices from one department to another via email. The IVP Expense Allocation Solution can easily implement an automated invoice approval policy for AP.

b. Detailed Audit: Audit trails establish detailed records of activities and transactions related to expense allocation, including all records of invoice approvals and specific dates of allocations. This also makes compliance and tracking much easier. The IVP Expense Allocation solution offers this capability out of the box.

3. Vendor Payment Tracking

a. Payment Reports: It’s important to build good relationships with vendors, and delays in payment can put these relationships at risk. Look for a solution that offers AP reporting, which provides a detailed payment report including payment history for each vendor with dates and amounts. The IVP Expense Allocation Solution, for example, can create these reports as well as reports on outstanding payments. 

b. Cash Wire Integration: For safe and secure payments, an automated AP solution should integrate with cash wire and bank accounts so that payments can be made directly from the platform. The IVP Expense Allocation solution can be configured for direct cash wire payments.

  1. Vendor Management

a. Onboarding: Managing vendor relationships effectively helps mitigate risks, including late payments and fraud. Any AP solution should include robust vendor management capabilities that allow you to view or edit information about onboarding of new vendors and removal of existing vendors. In addition to this, the IVP Expense Allocation Solution allows you to store important vendor-related documents such as W9s and payment details.

b.Contract Management: A valuable time saver for the AP team is when contracts are accessible directly from a dashboard and tagged to related invoices. In other words, you don’t have to go anywhere else because all the information is in one place. The IVP Expense Allocation solution offers this and also notifies the AP team when contracts are about to expire.

The right expense allocation software can help asset managers get rid of time-consuming, error-prone manual processes, streamline AP workflows, reduce the risk of errors, and improve compliance. The IVP Expense Allocation solution can do all of this and more, bringing unprecedented transparency to the AP department.

Learn more about the IVP Expense Allocation solution right now or contact sales@ivp.in to schedule a demo.

 

Expense Allocation Solution

This expense allocation solution helps asset managers improve accuracy and efficiency, reduce the risk of errors, and guarantee compliance. It ensures that in-house teams can process most allocations swiftly, allowing them to focus more on exception handling. Accounts payable and expense allocations are also tracked by the platform through customizable reports. Additionally, it offers easy-to-set-up invoice approvals and maintains a detailed audit trail for approvals, rejections, and changes.

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