Unlock 7 AP automation strategies for enhanced finance efficiency. Optimize processes & drive financial success.
According to a CEO World Magazine report, AP professionals typically spend about 25% of their workdays on manual tasks. These included typing invoice information, correcting errors, and dealing with inquiries about invoices and payments.
To solve this, AP automation or Accounts Payable automation leverages smart software. It takes tedious, time-consuming tasks off your plate, freeing up significant time and resources.
As per Business Insider estimates, automation accelerates invoice processing cycles by a remarkable 73%.
This also translates into significant cost savings for businesses, with invoice automation estimated to save an average of $35,000 annually.
In this blog post, we will discuss how automating these steps in the AP process can streamline operations and free up time for finance and purchasing departments.
AP automation relies on an array of tools or optimized processes to make accounts payable tasks easier and faster by reducing manual work. This usually involves special software that can handle purchase orders and invoices digitally.
Some software can even read invoices and automatically pull out relevant and vital information. The main goals of automating accounts payable are to speed up the process, make fewer mistakes, and help the company grow more efficiently. This also makes it easier to track and control important financial information.
This automation helps businesses identify cost-cutting opportunities, improve vendor relationships, and save valuable resources.
Here's why you should consider automating AP workflow:
Consider customizing your invoicing process to improve your AP department’s efficiency and match your company's unique workflow. By setting up your automation software to focus on areas that boost productivity, you can foster a culture of growth using software tailored to fit your AP process.
For instance:
Having this level of control can streamline your processes effectively.
Accounts payable automation can make handling invoices much faster, reducing the time needed from weeks to just minutes. This means tasks like checking invoice details, getting approvals, and completing paperwork can be done much quicker.
With AI-driven software, invoices can be automatically matched with purchase orders (PO) and the goods received note (GNR), which helps prevent delays and makes it easier to manage cash flow.
Manual receipt management is a time-consuming hassle. Automation simplifies the process, providing authorized users with organized electronic data for easy compliance monitoring.
For instance, better control and transparency in invoicing can help you avoid cash flow problems due to incomplete accruals or under-reported expenses. You can quickly identify and address any issues; all the necessary data will be easily accessible.
Process transparency empowers you to make informed decisions about vendor payments, efficiency, and scaling. Decision-makers across departments can easily access relevant data, while digitized approvals facilitate management.
OCR-powered AP automation can significantly reduce the chance of human errors, leading to more than 99% accuracy in handling invoice data. This eliminates the mistakes common in manual processes, preventing accounting issues and delays that disrupt other business operations.
While AP automation involves some upfront investment and training, the long-term benefits significantly outweigh these initial costs. Here's why:
A study by the American Productivity & Quality Center (APQC) found that companies that stick to manual processes can pay 5x more per invoice than those that use modern methods. These mistakes, such as paying a bill by 3x or 5x or spending a wrong amount, can burn a hole in the company’s budget.
One prominent problem with manual workflow is that it takes time to keep track of everything. This makes it easy to miss chances to save money, like discounts for paying early or late fees.
Manual systems are easy targets for fraudsters. This is a major concern since nearly half of all business fraud involves messing with expenses, including fake invoices, according to the Association of Certified Fraud Examiners (ACFE).
As a business grows, sticking to manual processes doesn't work. The more invoices a company gets, the more time and money it costs to process them. This isn't a good strategy for growth, as 25.6% of companies need accounts payable automation software.
In addition, 73.1% of accounts payable teams need help to ensure their purchase orders and invoices match.
Automated accounts payable (AP) systems rely on advanced tech like OCR to read invoices and AI to make data-driven decisions. It speeds up the whole process and reduces mistakes.
For example, an enterprise used AP automation to cut its invoice processing time from weeks to just a few days, saving 60% on costs.
These automated systems also make it easier to see what's going on with your money in real-time, which helps with planning and managing cash flow.
Using AP automation can help businesses pay all their bills on time and save about $2.5 per bill in processing costs.
Plus, they have built-in checks to help stop fraud, which is a big relief for businesses worried about losing money this way.
Here are seven strategies for achieving effective AP automation:
Start by bringing together all the invoice receipts. To simplify the collection process, use a single email address or portal for all invoices. This ensures that all invoices are captured in one place, reducing the chance of lost or overlooked invoices.
Encourage suppliers to send electronic invoices (EDI, e-invoicing solutions, or even simple PDF via email). This significantly reduces manual data entry and errors, simplifying integration into your AP system.
Plus, e-invoicing offers the added benefit of being an eco-friendly alternative, reducing paper use and storage needs.
OCR technology eliminates tedious manual entry, speeds up processing, and enhances accuracy. The software verifies invoice validity by cross-referencing extracted data with purchase orders and delivery receipts, preventing fraudulent or incorrect payments.
Choose AP automation software designed to integrate with your existing ERP system seamlessly. Prioritize features like automated invoice matching (purchase orders/receipts), streamlined approval workflows, and real-time reporting. This integration maximizes efficiency, boosts accuracy, and reduces processing times.
As a SaaS buying and optimization platform, Spendflo can handle your AP automation end-to-end. It can:
Create electronic workflows to automate the approval process. Define rules based on the invoice amount, vendor, or type of expense to route invoices to the appropriate approvers automatically. This reduces the time spent on manual routing and follow-ups.
Here's how it works:
Digital approval workflows provide real-time visibility for faster approvals. Approvers get instant notifications, enabling them to review and act on invoices from anywhere. This creates a complete audit trail for easy compliance.
Integrate electronic payments into your AP system to automate the payment process. Payment methods like ACH (Automated Clearing House), wire transfers, or virtual credit cards can be used to streamline payments. This speeds up the payment process, enhances security, and enables better cash flow management.
By tracking payment deadlines and integrating with accounting tools, teams optimize cash flow for better financial management. Real-time payment tracking and detailed reports offer insights for improved analysis and decision-making.
Utilize your AP solution's built-in monitoring and reporting tools. Track key metrics like processing time, cost per invoice, and early payment discounts. This data-driven approach allows you to refine and optimize your AP processes continuously.
Here are the five top cloud-based AP automation software options and their main advantages you should know:
Oracle NetSuite optimizes cash flow and efficiency in accounts payable. It automates invoice management, calculates discounts, prevents duplicate payments, and provides real-time tracking to minimize lost documents. This powerful tool streamlines accruals, simplifies record retrieval and ensures accurate financial reporting for increased profitability.
For pricing, contact Oracle NetSuite support.
Tipalti is a cloud-based SaaS solution that simplifies accounts payable for large and medium-sized businesses. It streamlines onboarding, invoice processing, approval workflows, and global vendor payments in various currencies. This platform reduces workload, improves financial controls, and offers self-managed supplier services for efficient AP management.
For pricing, contact Tipalti support.
Stampli stands out for its real-time invoice processing capability, which automatically uploads invoices for prompt handling. It's the finest user interface (UI) among automation tools, offering simplicity and ease of access. Stampli features a central communication center for quick collaboration and problem-solving with users. Additionally, it supports organizational control through adjustable permissions.
For pricing, contact Stampli support
Procurify is a spend management solution that enables organizations to gain better control over their procurement processes. It provides visibility into spending, streamlines approvals, and enhances financial accountability. It also offers features for supplier performance management, invoice processing, AP automation, and integrations with other key systems.
For pricing, contact Procurify support
Airbase is an all-in-one platform for expense management and accounts payable. It simplifies spending management for businesses by handling approvals, payments, finances, and reports in a centralized location. The platform uses OCR and AI to process invoices accurately and make automatic payments.
For pricing, contact Airbase support.
Outdated, slow manual tasks should be a thing of the past. Forward-thinking businesses know that automating repetitive, time-consuming tasks makes their teams more productive and efficient.
Accounts payable is an excellent area in which to improve processes. AP automation systems are typically:
To help you accelerate your AP automation, Spendflo can:
To learn more, book your free demo to get the saving analysis!
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