Businesses rely on automated accounts payable (AP) to manage their invoice payments. It’s essential to handle the transfer of funds from the company’s bank account to vendors and suppliers with precision and to keep meticulous records.

You’ll probably hear “save money” and “save time” when you ask companies of all sizes what their main objectives are when it comes to automating their accounts payable functions, along with preventing fraud. Nevertheless, despite the clear advantages of automated accounts payable (AP), most businesses still handle their payables manually.

Automation uses software to replace the labor-intensive manual accounts payment process, which can increase productivity and save costs. Continue reading as we examine the key AP automation benefits.

What is Accounts Payables Automation?

Accounts payable automation uses cutting-edge data capture technologies to expedite payments, lowering the need for human interaction and enhancing financial transparency. Businesses can reduce costs, strengthen their connections with vendors, and save money by utilizing automation.  

There are 4 steps in the AP process:

• PO Generation and Delivery: A purchase order (PO) is generated and presented to the selected vendor or supplier. Once the vendor confirms the delivery, the PO is recorded and prepared for the next step. 
• Validation and Goods Received Note (GRN) Generation: The received goods are validated against the invoice, and a Goods Received Note (GRN) is generated. This ensures that the delivered items match the order before proceeding to the invoicing stage. 
• Invoice Upload and Validation: The invoice is then uploaded into the AP automation system, where it is automatically validated against the PO and GRN. Once verified, the invoice is ready for approval, review, and payment processing. 
• Approval and Payment Processing: After validation, the invoice is routed through a digital approval workflow. Once approved, the AP automation system schedules the payment according to the agreed-upon terms, ensuring timely and accurate payment to the vendor. 

14 Key Benefits of Accounts Payable Automation 

1. Saves Time 

Accounts payable automation software is revolutionary when it comes to efficiency. It enhances the department’s contribution to the firm by eliminating manual data entry and reducing errors.  

AP automation speeds up the accounts payment process by streamlining it with secure payments, easy approvals, and an audit trail. It’s crucial to reduce the time spent on the AP process, as the time saved can be better used for critical business tasks that improve cash flow management. 

2. Reduces Paper and Storage Costs 

How many needless documents are piled up on your desk? Automation can eliminate the need for paper bills and files, saving money and promoting more environmentally friendly practices.

If you automate the AP process, you can drastically reduce the amount of paper you use and store. AP automation can also improve operations and reduce the possibility of misplaced or lost documentation. Businesses no longer need to print and maintain physical documents because they use digital invoicing, approvals, and payments.

3. Helps Achieve Better Accuracy & Reduce Errors 

Approximately 88% of spreadsheets used by businesses for account balancing have errors in them. This indicates that there is a significant chance that mistakes will find their way into the accounts payable cycle. 

By reducing the need for repetitive data entry, accounts payable automation can minimize manual data entry. Extensive automation driven by artificial intelligence can also use two- or even three-way matching to validate entries against records that already exist. Reducing the possibility of human error raises accuracy and reduces oversights. 

4. Enhances Vendor Relationships

Timely and accurate payments, enhanced communication, and vendor collaboration are essential for every organization’s success. AP automation offers numerous ways to improve vendor relationships. 

First, it removes the potential for manual error during the payment processing stage, resulting in accurate and on-time vendor payments. Second, automating communication and invoicing can streamline the entire payment process, giving vendors faster turnaround times for their money. Lastly, because everyone has instant access to the same data and updates, utilizing an automated system promotes better visibility and reduces complaints from suppliers 

5. Boosts Audit Proficiency 

Finance teams often struggle to gather all the necessary documentation and prepare it for audit season, which can be quite stressful. AP automation can greatly simplify this task, making it easier to prepare audit documentation. By reducing the chance of human error, AP automation ensures better audit readiness. 

Automation provides accurately categorized and easily accessible invoices and records, reducing the time and stress associated with audit preparation. Thanks to automated workflows, there is less chance of fraud or noncompliance because payments are made once the necessary approvals have been completed. Automating AP enhances audit readiness through process simplification and the creation of a more effective and well-organized system. 

6. Enhances Visibility and Control

With AP automation, businesses get real-time updates on payment status, vendor relationships, and spending patterns, making it much easier to see and manage everything. A centralized system for invoices and payments means fewer errors and missed deadlines. 

Finance leaders can keep an eye on spending and cash flow in real-time. This clear visibility helps with making decisions, as all financial information is conveniently available in one place. 

7. AP Automation Reduces Expenses 

Increased production and a decrease in the need for physical labor result in cost reductions. Automating accounts payable processes can greatly decrease your business’s expenses and charges. Manually entering data, printing documents, sending them, and performing reconciliation takes time and money.

Automation allows for simpler, faster completion and greater efficiency of certain tasks. Furthermore, automating invoice processing can reduce expenditure by eliminating errors and duplicate payments. Consequently, the accounts payable department operates more economically.

8. Assures Safety

Two benefits of AP automation implementation are ensuring the security of a company’s financial data and offering peace of mind. Errors and security breaches can occur when invoices and payments are manually entered and stored. 

Not only can AP automation incorporate extra security features like multi-factor authentication, but it also makes it safer to store sensitive financial data. Automating the payment procedure can decrease the possibility of fraudulent payments and duplicates.

According to a 2023 AFP Report, 80% of companies were victims of fraud attacks in 2023

9. Promotes Better Decision Making 

Financial decision-making can be made more strategically with the use of real-time insights into spending patterns and cash flow. 

Financial data can be reported more quickly and accurately when accounts payable procedures are automated. As a result, both finance teams and business executives are better able to make decisions. Your capacity to make more informed judgments regarding spending and planning is enhanced by automated processes, which reduce the possibility of mistakes and late invoice payments.

10. Reduces the Time Needed to Process Payments 

Automation expedites the processing of invoices, which leads to quicker vendor payment turnaround times as well as increased production and efficiency inside the company.

Invoice reconciliation and manual entry can be time-consuming tasks. However, by utilizing AP automation, you can significantly reduce the amount of time needed to process payments because invoices can be submitted and instantly matched with related documentation. Another advantage is that it facilitates speedier approval and payment processing by streamlining communication between the parties involved.

11. Improves Tax Law Compliance

Record-keeping becomes more accurate when AP automation is used to expedite the invoicing and payment process. In addition to ensuring tax law compliance, this enhances a business’s entire financial organization.

In most countries, suppliers are required to submit an electronic invoice, and even those delayed in adopting this practice are moving towards making it mandatory. Electronic invoicing necessitates that the buyer validates the invoice to ensure it has been registered with the relevant authorities and that the required GST/VAT has been applied. AP automation plays a crucial role in this validation process, helping businesses effortlessly keep track of their expenses and the data needed to file taxes. By automating this validation, companies can also eliminate duplicity and prevent fraudulent payments, further ensuring compliance with tax regulations.  

12. Increases Vendor Satisfaction 

Occasionally, accounts payable experiences mistakes, delays, or other problems that prevent both internal and external clients from being happy. The most common causes of supplier unhappiness are misfiled or lost invoices, which result in late payments. Internal customers view AP as a strategic asset, but if anomalies result in duplicate payments that raise expenses, this perception can be shattered. 

Here’s where an automated AP system can shine by increasing speed and control over such discrepancies, it helps ensure timely operations and improve relationships with vendors. You’ll be able to guarantee that your accounts payable division demonstrates a tangible contribution to the company’s financial objectives and upholds a favorable image within your sector.

13. Boosts Productivity 

Since AP automation eliminates manual labor, employees can concentrate on high-value activities that promote corporate growth. Task simplification and streamlining will boost productivity in your organization. AP automation accelerates payment processing, decreases errors, and eliminates manual data entry.  

Employee productivity increases due to more time to concentrate on strategic work. Furthermore, automating the approval and tracking of invoices helps improve expenditure and cash flow management, saving a company a lot of time and money. 

14. Increases Scalability 

When a company expands, AP automation effortlessly handles more vendors and a higher volume of invoices without putting a burden on staff or resources. By implementing AP automation, you can expand your business without adding more employees or devoting more time to manual tasks.

This increases accuracy and efficiency in accounts payable management while also saving time and money. Integrated reporting features are frequently included in AP automation, enabling companies to monitor financial information and decide how best to expand.  

15. Allows Capturing Early Payment Discounts

One of the often-overlooked benefits of AP automation is the ability to take advantage of early payment discounts. In the manual accounts payable process, delays are common due to the time it takes to process and approve invoices. These delays can result in missed opportunities to capitalize on early payment discounts offered by vendors. 

With an automated process, invoices are processed more quickly and efficiently, ensuring that payments can be made within the discount window. This capability allows businesses to consistently capture early payment discounts, which can add up to significant cost savings over time. By automating the AP process, companies not only improve their cash flow but also strengthen their relationships with vendors by consistently making payments on time. 

How To Automate Your Accounts Payable Processes? 

Step 1: Transition to Electronic Invoicing  

E-invoicing, also known as electronic invoicing, transforms the conventional accounts payable procedure by substituting digital invoices for paper ones. This shift has several advantages and is an essential step in upgrading financial processes. 

To start, e-invoicing drastically minimizes the need for manual data entry. Businesses must manually enter traditional paper invoices, which takes time and is prone to human error. Electronic invoices can be automatically loaded, and software can extract and process the data. This automation speeds up invoice processing, increasing overall efficiency. 

Electronic invoicing also guarantees better tracking and organization. A unified system makes storing, retrieving, and managing digital invoices simpler. Due to their easy availability and swift cross-referencing with matching purchase orders and payment records, all invoices streamline the audit process. 

Step 2: Automate Invoice Processing 

Automated invoice processing is one of the most important components of upgrading the accounts payable system. This solution streamlines the entire invoice handling process—from reception to payment—by utilizing cutting-edge technology. By implementing automated invoice processing, AP teams can minimize errors, speed up the payment processes, and drastically reduce manual intervention. 

This is how it operates: After receiving an invoice via email or a digital platform, the automatic software for processing invoices gathers and extracts important data, including vendor details, dates, invoice numbers, and amounts. Machine learning and optical character recognition (OCR) make this possible, as they can reliably extract data from invoices and distinguish different invoice formats in addition to reading text on the document. 

Following data extraction, purchase orders, delivery receipts, and invoice details are compared against system-stored records by the software to ensure accuracy. The automatic three-way matching process guarantees that only legitimate, accurate invoices are processed for payment, significantly lowering the possibility of fraudulent or inaccurate payments. 

Next, the AP software forwards the invoice for the required approvals. These rules can be tailored to the business’s internal control policies to guarantee that every invoice is examined and approved by the right person. 

Step 3: Adopt Digital Approval Workflows 

One important component of automating the accounts payable process is using digital approval workflows, which turn the manual, old approval chasing process into a more streamlined and effective one. By establishing an electronic workflow, this strategy ensures that bills follow a predetermined approval path and are examined and approved by the right people before being accepted for payment. 

The process begins the moment an invoice is received. Instead of being physically distributed, an image or soft copy of the invoice is uploaded into the electronic workflow system. This upload initiates the approval process, where the system automatically checks the data and routes the invoice to the appropriate individuals or departments for approval, based on parameters such as invoice amount, vendor, or category of expense. 

Digital approval workflows greatly minimize the possibility of delays or confusion by providing real-time visibility into the status of each invoice. Participants can accept or reject invoices on the go with only a few clicks and notifications sent to their mobile devices. In addition, this digital method keeps a thorough audit trail, which is crucial for compliance and auditing. 

Step 4: Adopt Integrated Vendor Self-Service Portal  

Vendor self-service portals provide a platform that benefits both organizations and their vendors, serving as a revolutionary solution to automating the accounts payable process. These portals serve as a central location where suppliers may send in bills, monitor the status of payments, and instantly update their data. Because there is no longer a need for back-and-forth communication, the AP team’s administrative workload is greatly reduced thanks to this direct access. 

The portals streamline the entire invoicing procedure. Vendor invoices can be uploaded straight into the system, where they will be processed instantly. Inquiries and follow-up emails decrease because of the rapid submission and confirmation feature, guaranteeing that suppliers are informed as soon as their invoices are received. 

From the moment an invoice is submitted until it is paid, vendors can monitor its status. Due to their increased sense of control and knowledge about their transactions, vendors develop stronger bonds and build trust. 

Additionally, vendors can frequently update their own information using these portals, guaranteeing that organizations always have the most recent bank account information and contact details. Due to this self-management feature, there is less chance of payment delays brought on by inaccurate information. 

Step 5: Automate Payment Scheduling and Processing  

The software first determines the due dates from invoices, which AP software can manually enter or obtain. This starts the automated payment process. The system efficiently manages cash flow and prevents late fines by scheduling payments by the due dates. 

Accounting teams can maximize the opportunity to collect interest on idle funds while also assuring adequate liquidity for necessary expenses by keeping a clear eye on when payments are due. 

Step 6: Adopt Machine Learning Driven Invoice Matching 

Manually matching invoices to purchase orders (POs) and shipment receipts has always required a lot of time and effort. Nevertheless, companies can significantly reduce this part of accounts payable by incorporating machine learning (ML) techniques. 

Machine learning algorithms are meant to learn and improve over time. They examine historical data to comprehend patterns and abnormalities in purchase orders, receipts, and bills. The AP software can now automatically match incoming invoices with the relevant documentation. 

The machine learning model can use the purchase order, and the product receipt note as examples to confirm the invoice’s terms, pricing, and quantities. Also, it may adjust to the patterns and outliers of a business’s activities, managing variations within predetermined criteria. 

Step 7: Get Data Analytics for Optimized AP Performance 

An essential component of revolutionizing the AP process is data analytics for AP optimization. First, AP teams can find possible areas for cost savings and understand where their money is going by looking at past data. This can entail grouping purchases or negotiating better arrangements with suppliers. 

Second, data analytics can help find irregularities and possible fraud. It can identify anomalous trends in payment amounts, frequency, or vendor information to prompt additional research. 

Furthermore, analytics helps increase cash flow forecasting accuracy. By examining payment cycles and vendor patterns, future cash requirements can be forecast more precisely, improving financial planning and liquidity management. 

Conclusion 

There are several advantages to AP automation, including increased processing speed and accuracy as well as improved brand recognition for your company. By giving the company access to a more transparent accounting process, you can both prevent typical issues and improve the success of your teams.  

With Global PayEX AP Automation, enjoy faster processing, greater accuracy, and a boost in your company’s brand recognition. Enhance your accounting transparency to prevent common issues and support your team’s success. Talk to our experts today! 

FAQs 

Is AP automation worth it? 

An automated AP workflow saves the AP department a significant amount of time. Using AP automation software, processing a single invoice takes roughly three days as opposed to twelve. There are additional benefits beyond money, such as visibility and scalability. 

What is the importance of AP automation? 

AP Automation speeds up and improves the effectiveness of invoice processing and approval. Automation drastically lowers the number of human interactions required to process an invoice by eliminating many manual steps, which minimizes the time employees must spend on this aspect of their jobs. 

Can accounts payable be automated? 

Yes, accounts payable can be automated. With the help of accounts payable automation, businesses can handle supplier invoices without human intervention. This digital workflow handles tasks that an AP staff member would typically manage.