What is Accounts Payable Automation and How Does it Work
Accounts Payable Automation is the use of software and tools to automatically replicate the non-productive, clerical tasks that are performed by AP Staff. This generally includes automating how invoices are received from suppliers, systematically routing the invoices for review, GL coding and approvals, automatically matching PO backed invoices against purchase orders and goods receipts, while integrating the accounts payable process with the ERP system to eliminate manual data entry.
Boost AP Efficiency 80 - 90 Percent
Manual accounts payable processing tasks are manual and time consuming. AP Automation eliminates the manual tasks of printing, emailing, routing, matching, coding and data entry.
Gain Visibility & Control
AP Automation puts all invoices into one centralized place for all to see. This allows financial teams to better management all of their accounts payable transactions.
Eliminate Non-Essential AP Tasks
Traditional accounts payable processing relies heavily on paper invoices, chasing invoice approvals, manual matching of purchase order invoices.
Improve Cash Flow
By having centralized invoice processing, corporate finance teams can leverage information regarding accounts payable spend, and make better cash flow decisions.
Gain Insights via KPI's & Analytics
Gain instant insights into every single accounts payable transaction from start to finish. All of the statistics, trends, analytics for month-end closes, research & audits.
Reduce Costs & Improve Efficiencies
By eliminating the non-essential tasks associated with accounts payable invoice processing, organizations can process more invoices with less resources.
Understanding Accounts Payable and Some Key Concepts
In today’s fast-paced business environment, efficiency is key to staying competitive. Accounts payable (AP) automation is one powerful tool that helps organizations streamline their financial processes, save time, and reduce errors. But what exactly is accounts payable automation, and how does it work? Let’s explore this essential aspect of modern finance.
Accounts Payable Automation: What Does it All Mean?
At its core, accounts payable automation refers to the use of technology to manage and streamline the accounts payable process. Traditionally, this process involved a mountain of paperwork—invoices, receipts, approvals, and manual data entry—often leading to delays, mistakes, and frustration. With AP automation, these tasks are digitized, optimized and automated, allowing businesses to process invoices quickly and accurately.
Imagine a world where your AP team spends less time chasing down invoices and more time focusing on strategic initiatives. That’s the promise of AP automation. It transforms a cumbersome process into a seamless workflow, enhancing overall productivity and enabling finance teams to contribute more effectively to their organizations.
How Does It Work
The beauty of accounts payable automation lies in its simplicity and effectiveness. Here’s how it typically works:
- Digital Invoice Capture: Instead of receiving paper invoices, businesses can now capture invoices digitally through various means—email, scanning, or even direct entry into an automated system. This reduces the need for physical storage and minimizes the risk of lost invoices.
- Intelligent Invoice Data Extraction: Advanced AP Automation software utilizes technologies like AI, Optical Character Recognition (OCR) and Machine Learning (ML) to extract relevant data from invoices automatically. This means that key details, such as vendor information, invoice amounts, and due dates, are captured accurately and stored electronically.
- Automated Invoice Workflows: Once the data is extracted, the automated system can route invoices for approval based on predefined workflows. This eliminates the need for manual approvals, speeds up the process, and ensures that every invoice is reviewed in a timely manner.
- Automated PO Invoice Matching: Supplier invoices with purchase order numbers can be systematically matched against purchase orders and goods receipts while validating things like taxes, freights and applying variance rules.
- ERP Integration: By connecting the accounts payable process with your company ERP (financial) system your AP Staff will no longer need to spend countless hours manually typing every single invoice into your system for payment processing. This is one of the effective an efficient uses of AP Automation systems.
- Payment Processing: After approvals, payments can be processed automatically through integrated payment solutions. This not only speeds up payment cycles but also enhances cash flow management, allowing businesses to take advantage of early payment discounts or avoid late fees.
- Reporting and Analytics: With all data stored in a central location, organizations can generate real-time reports and insights. This data helps finance teams make informed decisions, identify trends, and manage cash flow more effectively.
The Benefits of AP Automation
The advantages of accounts payable automation extend far beyond mere convenience. By automating AP processes, businesses can:
- Reduce Errors: AP Automation eliminates manual data entry, minimizes human error, leading to more accurate financial records.
- Enhance Visibility: With real-time tracking and reporting, finance teams have greater visibility and control of their financial operations.
- Save Time: By automating routine tasks like, routing coding and matching PO invoices, AP Staff can focus on higher-value activities that drive business growth.
- Improve Vendor Relationships: Timely invoice payments foster stronger relationships with suppliers, enhancing trust and collaboration.
In conclusion, accounts payable automation is more than just a technological upgrade; it’s a transformative approach to managing financial processes. By embracing automation, businesses can unlock greater efficiency, improve accuracy, and empower their teams to focus on what truly matters—driving growth and innovation. Whether you’re a small business or a large enterprise, investing in accounts payable automation could be one of the best decisions you make for your financial health.
