What is AP Automation Software

The finance department of a company, especially accounts payable (AP), are responsible for processing hundreds (even thousands) of documents a month. Opening, reading, analysing, verifying, and paying invoices is a laborious task when handled manually, with multiple steps where human error can creep in.

Automating the steps within an accounts payable process is a fantastic way to improve efficiency and accuracy with invoice processing and can save your business time and money.

What is accounts payable automation?

Accounts payable automation software is computer technology that mimics the tasks an employee would undertake to process invoices, communicate with vendors, approve expenses, and pay accounts.

By removing manual processing of paper and digital documents, the accounts payable process becomes more accurate and streamlined. Not only does automating accounts payable save time and effort, but it also reduces the costs of running a finance department.

How does accounts payable automation work?

Accounts payable automation software replace the manual tasks performed by an AP team. An intelligent software program replicates the steps an AP team would take, but in a faster and more accurate way.

Electronic invoice scanning

This is the first step of the AP process. When an invoice arrives in an email inbox, the automation software scans the email, PDF or other digital file and captures the data needed to process it.

Automating this step of the process improves accuracy remarkably, removing the need for manual data entry where errors usually happen.

Automatic invoice verification

Using data-matching algorithms, the AP automation software can either automatically process the invoice for payment or route the invoice to the appropriate person for further verification.

Automatic payments at this step of the process are defined by predetermined rules and workflows set by the user.

Approval and exception workflows

If the invoice cannot be processed automatically by the software (due to a discrepancy or other issue), it is sent to the buyer or employee responsible for the invoice involved. Reminders are sent to the user to ensure invoices are verified in a timely manner and workflows do not become bottlenecked.

Payments processed

After an invoice is processed, it is posted for payment. The accounts payable department can then arrange payments according to the vendor’s specified terms. Payments can be scheduled automatically, factoring in any early payment discounts, to ensure vendors are paid accurately and on time.

Reporting and archiving

You can monitor invoice statuses in real-time, track payment history, and generate reports, providing valuable insights into your automated accounts payable process.

Once payments have been made, documents are automatically archived to ensure a consistent and compliant paper trail is maintained.

Best accounts payable automation software

ThinkAutomation

With ThinkAutomation, you can automate the entire accounts payable process, from receiving invoices to making payments. This platform integrates with your existing accounting software, ERP system, or other business applications, making it easy to manage all your accounts payable tasks through one piece of software.

Using intelligent document processing technology and ‘If this, then that’ logic, you can easily customise your entire accounts payable workflow, making it more efficient and much more accurate.

Xero

Xero includes built-in features to streamline accounts payable management. You can schedule and batch payments, review spending reports, and monitor cash flow to identify the best times to make payments.

Medius

Medius’ software uses intelligent technology to capture, process, and pay invoices, continuously learning and improving with each transaction, making your work easier and more efficient over time.

Advantages of using accounts payable automation software

There are several key benefits to using accounts payable automation software, especially when it comes to improving efficiency and accuracy in the accounts payable workflow. Below are some of the top advantages you will gain when using automated accounts payable software:

1. Automatically capture and process invoices: The software captures invoice data from emails, PDFs, or other digital files, and then process that data to create new invoices in your accounting system.
2. Streamline approvals and payments: Automatically forward invoices through the appropriate approval channels and generate payments based on your pre-defined rules and workflows.
3. Improve accuracy and reduce errors: Eliminate human error linked with manual data entry, cut the risk of overdue payments, and ensure that invoices are processed in efficiently and quickly.
4. Monitor results real time and generate reports: Monitor the status of invoices, track payment history, and generate reports to gain valuable insights into your accounts payable process.
5. Compliance is built in: The software forces approval workflows to be adhered to, ensuring internal policies and external regulations are followed. The software can also detect and prevent fraud by flagging irregularities in the AP process.

How accounts payable automation software can save you money

Reduced labour costs: By automating the manual tasks of an AP team, there is no need for a large workforce to process your accounts payable, thus saving your business money.

Better efficiency: AP software streamlines the entire AP process, enabling faster invoice processing, approval and payment which can incur early payment discounts and better cashflow.

Reduced human error: There is a drastic reduction in the risk of human errors, such as duplicate payments or data entered incorrectly.

Better relationships with vendors: Paying businesses and vendors on time makes them happy, which can lead to future discounts or more flexible payment terms.

More control of finances: Reporting can help identify areas where costs can be optimised and prevent unexpected cashflow issues.

Manual accounts payable vs automated accounts payable

Manual accounts payable processes have traditionally been the norm in finance and accounting departments. However, these outdated methods often lead to risks and inefficiencies, which can be addressed through automation.

Here is a side-by-side look at how automated accounts payable is superior at every step of the process: