Managing accounts payable efficiently is crucial for any growing business. But juggling piles of supplier invoices, keeping track of due dates, approving payments and reconciling transactions can become an overwhelming burden. This is where accounts payable (AP) automation comes in – providing game-changing technologies to optimize the entire AP process.
This comprehensive guide will explore what AP automation entails, the tools available in today‘s market, the tangible benefits unlocked for businesses and some best practices to ensure a smooth implementation. Let‘s get started!
What is Accounts Payable Automation?
Accounts payable refers to the money a business owes to its suppliers and vendors. It‘s a short-term liability that must be closely monitored and regularly paid off. AP automation simply utilizes technology to digitize this crucial financial process from end to end – eliminating mundane manual tasks to boost efficiency.
Key capabilities offered by leading AP automation platforms include:
- Invoice capture: Digitally extracting data and documents from supplier invoices via OCR technology
- Approval workflows: Creating conditional, multi-level sign-off chains for AP payments
- ERP integrations: Syncing AP data with accounting/ERP systems like QuickBooks and NetSuite
- Global payments: Supporting international transfers in multiple currencies
- Process tracking: Monitoring AP workflows in real-time with status visibility
- Advanced reporting: Generating insights into AP spending patterns
As a whole, AP automation aims to create lean, scalable and fully transparent processes – saving companies time and money.
Why Do Businesses Need AP Automation?
Transitioning from manual AP procedures to automated workflows powered by purpose-built platforms offers game-changing benefits for finance teams of all sizes:
1. Reduced Processing Costs
AP automation practically eliminates the need for manual data entry and paperwork. This significantly cuts down operating costs associated with managing and paying supplier invoices. Studies show it can reduce invoice processing costs by 80% or more.
2. Faster Approval Cycles
Conditional, multi-tier approval chains speed up the authorizations needed to pay invoices. Automated notifications, mobile access and exception handling also facilitate approvers so AP moves faster.
3. Fewer Payment Errors
Automated 3 or 4-way invoice matching ensures accuracy before payment. Built-in validations and integration with accounting systems further minimizes risks of errors and fraud. This improves compliance and vendor relationships.
4. Enhanced Visibility & Control
Real-time dashboards provide incredible transparency across the entire AP process. At-a-glance metrics on pending invoices, cash flow and supplier payments empower strategic decision making.
5. Optimized Working Capital
Timing payments perfectly – neither too early nor too late – is crucial for cashflow management. Features like predictive forecasting, scheduled payments and partial payments all optimize working capital.
The bottomline? AP automation enables finance teams to focus on value-adding work rather than mundane invoice processing. This directly powers business growth by freeing up strategic bandwidth.
Who Benefits Most from AP Automation?
Virtually all businesses stand to unlock tremendous efficiencies from AP automation. However, some profiles tend to benefit more than others:
High Volume Invoice Processors: Enterprises like manufacturing plants and retail chains that handle hundreds or thousands of supplier invoices monthly eliminate immense manual processing pain with automation.
Multi-Entity Organizations: For global conglomerates with multiple business units, tracking AP workflows across regions is a massive headache without centralized automation.
Companies Still Relying on Paper: Unexpectedly, plenty of modern businesses still handle AP using physical documents and mail. Transitioning straight to an automated system delivers instant dividends.
Businesses Lacking Visibility: Organizations unsure about exact pending liabilities or days payables outstanding unlock real-time clarity into AP.
Companies with Seasonal Peaks: AP volumes often fluctuate for retailers, hospitality firms etc. Scalable automation platforms easily manage spikes without staffing headaches.
On the whole, any business spending too much time handling low-value AP tasks stands to benefit greatly from process automation.
Key Factors in Choosing AP Automation Software
With so many solutions now available, selecting the ideal automation platform is crucial. Here are key factors businesses must evaluate:
Features Needed: Finalize must-have capabilities based on specific pain points before comparing tools. Key features may include global payments support, advanced OCR capability, tight ERP integrations etc.
Budget: Assess if upfront costs or monthly subscriptions suit budget constraints better. Estimating automation ROI accurately is also wise despite tricky numbers.
Ease of Use: Does the platform offer simple self-configuration workflows? UX limitations can severely hinder user adoption after implementation.
Scalability: Examine if the automation solution can smoothly manage spikes in invoice volumes during business surges to prevent bottlenecks.
Implementation Support: Business disruption must be minimized during the transition period to automation. The right guidance ensures this.
Data Security: Supplier info, invoices and banking data require robust protection. Review security protocols and compliance standards thoroughly.
Global Payments: For multinational businesses, global payment execution in multiple currencies is a key requirement worth validating.
Once the requirements are clear, one can better shortlist and compare the leading AP automation solutions in today‘s market.
Top Accounts Payable Automation Platforms
With those evaluation criteria in mind, the most full-featured and uncompromising AP automation platforms today include:
1. Spendesk
Spendesk offers an end-to-end spend management platform with AP automation at its core. It comes packed with OCR-driven invoice capture, unlimited approver workflows and one-click integration with all major accounting software.
Spendesk also provides real-time visibility into all pending and processed supplier payments. Its intuitive UI ensures quick employee adoption for maximize efficiency gains.
Pricing: Custom quotes
Ideal for: Mid-market and enterprise teams seeking an all-in-one spend management solution.
2. Stampli
Stampli focuses purely on digitizing the AP process through AI-driven automation. Smart features like predictive coding for invoices, automated GL classification and duplicate detection increase accuracy while accelerating approvals.
It also offers flexible payment options including ACH, virtual cards and cheques. Native mobile apps provide approvers access on-the-go.
Pricing: Custom quotes
Ideal for: Mid-market and enterprise teams seeking advanced automation capabilities.
3. Bill.com
Bill.com is tailored for smaller businesses yet offers enterprise-grade power. It completely eliminates paper-based processes by digitizing AP workflows.
Seamless accounting software integrations, automated approvals and unlimited payment options help streamline all aspects of accounts payable. Advanced analytics provide insights into cashflow and supplier payments too.
Pricing: Starts from $29/month
Ideal for: Growing SMBs that prioritize simplicity and value.
4. Paymerang
Paymerang focuses on helping government agencies optimize cumbersome invoice procedures through automation. System integrations, electronic approvals and specialized reporting transform legacy payment systems.
Compliance with defense, civilian and Intel agency requirements has made Paymerang a popular AP automation choice across public sector organizations.
Pricing: Custom quotes
Ideal for: Federal, state and local government bodies.
This shortlist highlights the spectrum of options available to suit unique automation requirements. Businesses must evaluate trade-offs like feature set, pricing, implementation support etc before deciding on the ideal platform.
Implementing AP Automation: Best Practices
Once software procurement is complete, focus must shift to change management and seamless execution. Here are proven strategies to drive adoption:
Secure executive buy-in: Present a compelling ROI case to leadership and align automation with wider business goals to secure sign-off.
Phrase objectives correctly: Beyond cost savings, highlight benefits like productivity gains, risk reduction and strategic decision support to win stakeholders over.
Foster employee advocacy: Involve AP team leads during tool selection and train staff extensively pre-launch to capitalize on insider passion.
Customize incrementally: Leverage initial feedback to tweak approval rules, payment policies, notifications etc instead of overhauling instantly.
Offer multi-channel support: Blend email, chat and phone assistance to resolve employee queries that emerge post go-live.
Troubleshoot diligently: Monitor early stage errors closely whether system-based or user-driven to refine workflows.
Pilot testing: Initial phases should focus on automation with manual validations before fully empowering the technology. This provides a safety net allowing small failures but catching serious errors.
Staying attentive, communicating clearly and iteratively enhancing the system based on feedback enables seamless AP automation adoption.
The Future of Accounts Payable Automation
Like all financial software, AP automation technology keeps evolving rapidly to unlock even greater efficiencies. Two key trends to expect are:
Increasing use of AI and ML: Natural language processing, clustering algorithms, predictive analytics etc will eliminate more manual tasks and minimize errors.
Next-gen reporting dashboards: Real-time visualizations will empower better spend management decisions using granular insights on cash flow, payments and more.
Top platforms may also explore embedded insurance, financing options and enhanced vendor portals to take over all aspects beyond payments in the AP process.
Final Takeaways
If your business still relies excessively on manual procedures for handling supplier invoices, payments and vendor relationships – AP automation must be your top priority.
Leading solutions can capture and classify unstructured invoice data, route it digitally for verification, connect securely with bank rails to enable payment and finally reconcile transactions with accounting systems – without any human intervention!
The benefits are crystal clear – dramatically reduced processing costs, fewer late fees, optimized cash flow cycles and best of all – unlocked strategic bandwidth allowing finance leaders to support business growth in bigger ways.
Automation signifies the future of not just accounts payable but the entire finance function. The tools profiled above signify tested and proven solutions perfect for enterprises and midsized firms alike. Identify areas of pain, align on requirements and begin exploring options for maximum rewards.
