Addressing business challenges

AP automation can alleviate multiple challenges caused by manual invoice processing. For example:

• Minimizing human error: Manual data entry leads to incorrect amounts, duplicate payments, miscategorized items and misfiled documents. System validation checks can identify these issues before payment processing.
• Boosting efficiency: Paper-based workflows burn precious time on repetitive tasks. AP automation streamlines data entry, verification and routing of invoices. This faster processing helps capture early-payment discounts and avoid late payment fees.
• Improving visibility: Without centralized data, cash flow and financial reporting suffer. AP automation consolidates everything onto one platform, enabling real-time tracking and informed decisions.
• Expanding scalability: Manual processes can buckle under growing transaction volumes. AP automation handles increased workload efficiently without compromising accuracy or speed.
• Strengthening security: Paper documents are susceptible to loss, damage and unauthorized access. AP automation can help protect sensitive financial data through secure digital storage and controlled access.
• Improving vendor engagement: Delayed payments and status uncertainty frustrate suppliers. AP automation provides real-time visibility through integrated vendor portals, strengthening relationships.

How does AP automation work?

AP automation combines several key technologies to create an end-to-end digital payment process. These technologies can include AI, as well as robotic process automation (RPA).

• AI plays an increasingly pivotal role in accounts payable automation platforms. AI-driven technologies like machine learning and natural language processing intelligently process and interpret invoice data, identify patterns and predict potential discrepancies. This allows for more accurate invoice matching, fraud detection and anomaly identification. AI can optimize approval workflows by learning from historical data to predict and recommend the most efficient routing paths. As a result, AI not only reduces manual intervention and processing time but also empowers organizations to make data-driven decisions, ultimately leading to cost savings and improved financial management.
• RPA uses software robots (sometimes called “bots”) to automate repetitive, rule-based tasks within the AP process. This includes data entry, invoice matching and validation, as well as updating records in the ERP system.
• EDI is a standardized method for electronically exchanging business documents, such as invoices and purchase orders, between organizations. It replaces paper-based communication, enabling faster, more accurate and efficient data transfer across different systems. This is typically utilized by large organizations.

The payment process proceeds serially through the following steps:

• Invoice capture: Optical character recognition (OCR) technology digitizes paper, email and electronic invoices into structured data.
• Data extraction and validation: The system pulls key information from invoices, such as vendor details, invoice number, dates and amounts. It then validates it against internal records and purchase orders to ensure accuracy.
• Workflow automation: Configurable approval routes ensure proper, timely review based on company policies and invoice criteria.
• Matching and exception handling: Three-way matching verifies invoice, purchase order and receipt data, flagging discrepancies for review.
• Payment processing: The system schedules payments according to terms, supporting multiple payment methods from ACH to cards or checks.
• Reconciliation and reporting: Digital archives maintain invoice and payment records, enabling audits trails and performance analytics.
• ERP integration: AP automation works with existing enterprise resource planning (ERP) systems to ensure consistent data flow and reporting.

Tips for automating your business’s accounts payables

Follow these steps to support a successful implementation of AP automation:

1. Assess current processes: Evaluate your existing AP processes to identify pain points and areas that will benefit most from automation.
2. Set clear objectives: Define specific goals like reducing processing time, minimizing errors or improving cash flow management. 
3. Choose compatible technology: Select AP automation that fits your organization’s needs and integrates with your existing systems.
4. Engage key teams: Involve finance, IT and procurement early to ensure buy-in and address department-specific requirements.
5. Standardize before automating: Create consistent invoice handling and approval workflows, then transition to electronic invoicing.
6. Start with a pilot: Test automation with a single process or department before a full rollout.
7. Invest in training: Ensure staff understands both the new technology and revised workflows.
8. Monitor and adjust: Track system performance and user feedback to optimize processes over time.
9. Keep vendors informed: Maintain clear communications about changes to invoice submission and payment processes.