How much time do you spend on accounts payable each month??
A powerful and helpful modern technology known as accounts payable automation can help businesses save a substantial amount of time they’re spending on manual AP processes while maintaining compliance with financial regulations, improving data security, and preventing fraud and human error.
In this article, we’ll give you a 101 lesson in accounts payable automation. We’ll discuss what it is and the benefits it brings to businesses, as well as cover common features you’ll find in accounts payable automation software.
What is accounts payable automation?
Accounts payable automation is the practice of using modern technology to handle aspects of the accounts payable process that would otherwise be manual.
This generally handles common and repetitive tasks such as importing invoice data, matching invoices against purchase orders, and account reconciliation.
However, it can also be used to automate the routing of approval workflows and even the processing of payments themselves.
Why is AP automation an important investment for business?
Without AP automation, the whole workflow of receiving and paying invoices is manual.
- Data must be entered manually
- Invoices must be matched manually
- Payments must be approved and processed manually.
All of this is time-consuming, pushing up the costs associated with maintaining and paying supplier accounts.
It is also prone to error (we’re all humans, and we make mistakes), which doesn’t bode well for financial accuracy.
Accounts payable automation helps solve these two problems.
It helps to reduce the possibility of human errors creating problems with financial accuracy, while also reducing the amount of tedious manual work, allowing AP teams to work faster.
This, in turn, frees AP professionals up to dedicate more time to strategic financial planning and decision-making.
This is made easier by more accurate financials and creates insights into cash flow management and financial forecasting.
👉 See how RenewalMD automates their financial operations!
5 benefits of accounts payable automation
Let's turn our attention to some of the specific, tangible benefits that leveraging accounts payable automation can bring.
1. Increased efficiency and time savings
First, automation makes AP processes more efficient.
A good AP automation platform can bulk import and process invoices, matching them against purchase orders far faster than even a team of AP employees can.
So, you save time, which means you can focus on more important activities like improving the processes themselves.
2. Improved accuracy and reduced errors
Then you’ve got the human error side of the equation.
By implementing accounts payable automation, you cut down on the potential for human error that comes with manual data entry and payment processing, thereby improving the accuracy of your financial record keeping.
3. Reduced costs associated with manual processes
The time you save each month on manual AP tasks turns into a financial benefit.
This means an organization can run effectively with fewer human resources on the AP team and reduce expenditure in that business unit.
Plus, you’re less likely to have to deal with the challenges that come with inaccurate financial records — potentially even fines — since your AP automation system cuts out those human errors.
4. Enhanced visibility and control over financial operations
Every automation action that takes place in your AP software is traceable.
You can see exactly when the automation recipe was triggered and what changed in your system as a result.
This gives you a ton of visibility and control over how invoices and payments are being processed and allows you to generate large reports instantly.
5. Strengthened supplier relationships through timely payments
Finally, since your AP automation solution processes invoices faster and more accurately, you’re in a better position to be able to pay your debts to suppliers on time.
This not only allows you to take advantage of the potential for early payment discounts but helps to keep vendor relationships healthy (no vendor likes a late-paying customer).
What are the typical features you’ll find in an accounts payable automation solution?
While every AP automation software program is a little different in what it offers, most share the same broad feature set.
Here are some of the main features and functions you can expect to find in a quality accounts payable automation platform:
- Invoice capture and automatic import
- Data extraction capabilities such as OCR (optical character recognition)
- Invoice validation, matching, and processing (manual or automatic)
- Approval routing and workflows
- Electronic payments (e.g., via ACH or EFT)
- Integrations with ERP systems and the other software tools you’re using to manage company financials
- Audit trails
- Real-time reporting
- Vendor portals
- Mobile accessibility
- Document management and storage functionality
- Automated reminders
How to choose the right accounts payable automation solution
Choosing the right accounts payable automation platform for your needs shouldn’t be a painful process.
Make life easy on yourself by following these 7 steps:
1. Identify key stakeholders
Determine who should be involved in the evaluation and selection process, including representatives from finance, IT, operations, and AP staff.
2. Evaluate current AP processes
Analyze processes from end to end, identify inefficiencies related to manual processes and their associated costs, and consider how automation can be used to improve existing workflows.
3. Gather requirements
Consider the strategic objectives of the AP team and determine what your non-negotiable features are (such as the tool’s ease of use, its integration with other software, or its ability to automatically match invoices).
4. Research and evaluate solutions
Build a shortlist of potential suppliers based on the requirements set out in the previous step. Hint: BILL should probably be at the top of your list!
5. Ask critical questions
Meet with the software supplier to dig into important questions you have about their invoice capture methods, product support, data security measures, integrations, and so on.
6. Look into their track record
Jump on review sites like G2 and Capterra to learn more about the experience real-life customers have had with the tool.
7. Trial your tool
Decide on the AP automation solution that best fits your needs in terms of features, security, cost, support, and integrations.
Consider starting off with a free trial period to confirm and validate the assumptions you’ve made regarding the efficacy and user-friendliness of the solution.
Learn more about choosing an AP automation solution. Get our AP Automation Buyer's Guide.
Ready to get started with accounts payable automation?
Decided that it's time to invest in an accounts payable automation solution?
Look no further than BILL, our financial operations platform that unites both accounts receivable and payable teams, improves spend management and visibility, and helps finance teams cut out 50% of the manual work they’re spending time on each day.
You can use AP automation software to automate invoice matching, route invoices for approval and payment, and pay bills via ACH, credit card, check, or international wire transfer.
