Blog/AP Automation October 29, 2021

Getting GL Codes Right


Cleaning up your general ledger (GL) is critical to creating efficient processes and running a data-driven organization. There are serious consequences to improperly coding the information put into your accounting or ERP systems. From compliance to financial reporting and tax filings, your GL tracks every transaction that flows through your business. Therefore you need an orderly GL and proper department coding to generate the necessary information for decision-making. 

Designating specific department codes to measure the horizontal segmentation of the company with vertical GL accounts gives the company powerful tools to dissect and analyze company performance, which is why maintaining accuracy is so important. 

Financial budgets are built using departmental KPIs to establish company goals. Assigning correct department codes for expenses is critical for internal benchmarking, as department executives must closely monitor their budget to forecast any deviation or threat to meeting their strategic goals. For example, when your AP team needs to check vendor statements against corresponding invoices, they use GL codes to comb through entries using specific criteria to locate the information they need. 

Traditionally, the GL coding process is manual, which can be incredibly time-consuming for your AP team. And like any manual process, GL coding is prone to human error. There are serious implications to financial reporting when GL code errors occur. Consider the impact on profitability measurement when the day-to-day operating expenses are erroneously coded to the cost of goods sold. 

The key ways automated GL coding can optimize your AP team’s time include:

  • Creating more efficient processes – With the right automation tool, you can expect a low friction integration so your team can immediately start processing invoices more quickly without interruptions due to incorrect manual inputs or lack of the proper GL coding.
  • Reducing manual matching efforts – With custom workflows you can automatically match invoice information with purchase orders and create unique matching rules set to your specific criteria. 
  • Improving visibility and reliability – As automation ensures the correct GL coding occurs, you can look to your records and the insights provided by your data as your record of truth. 

Mistakes happen, but they can be incredibly costly and exhaustive of your company’s resources. Automation can support your GL coding to ensure accuracy by eliminating inevitable human error. By combining the expertise of your team and the speed of automation, you can reduce the manual workload and spend more time on strategic initiatives. 

Look for software that supports your established workflows by automatically classifying spend categories and GL codes to save your AP team time.


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