Accounts Payable Automation – All You Need to Know

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Last Updated on February 23, 2022 by Mandy Schmitz

Changeaholic Blog Title Image Accounts Payable Automation
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Have you ever thought about how repetitive and slow AP processes are without accounts payable automation? It makes employees’ jobs boring, and therefore might also harm their productivity.

To avoid that, automating your accounts payable processes is the way to go. AP software ensures everything related to your payables is handled automatically, so your employees can limit the time spent on repetitive and mundane tasks. Moreover, it helps reduce human errors and potential fraud.

This article explores all the nitty-gritty of AP automation solutions.

From its benefits to implementation, we would like you to understand how integrating smart technology into your processes can make a huge difference in your business going forward.

Accounts Paybale Scrabble Letters Image
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What is Accounts Payable Automation?

It is a process that includes features and tools to eliminate the manual work related to accounts payable processing.

This solution allows every procedure regarding a payable account to be dealt with automatically. Accounts payable software helps to accomplish this task, and we will review some key players in this article.

AP automation allows you to approve invoices digitally, can efficiently handle approval limits, and automate payment processing in bulk. Besides that, an accounting system reduces the efforts required for data entry, as it helps to extract information from the invoices given.

Simply put, an AP automation system gives a company better control and visibility over any purchase-related financial data without the involvement of any manual work.

Below, we have explained some crucial benefits of this process.

Benefits of Automating Your Accounts Payable Processes

There is no doubt that automation of your AP account can benefit your organization in many different ways. For instance, it increases the efficiency of the entire purchasing department and also reduces errors.

Besides, AP automation will eventually lead to cost savings. Instead of hiring three to five people in your AP department to handle your invoice data, the system ensures that you hire only one or two people to run it and get everything done.

As a result, your labor costs eventually start to decrease.

Moreover, by automating your accounts payable, you help eliminate the use of paper invoices, simplify document management, avoid the risk of duplicate payments or invoice fraud and have access to audit trails.

An automated solution for your accounts payable gives life to accessibility. Meaning that instead of going through bundles of files to find a single invoice, the built-in search engine can help you accomplish the task within minutes. Digital storage is expensive but worth it.

One of the best things about automation is that it speeds up processes. Therefore, factors such as employee absences, human error, and the efforts and time required to complete a task do not affect this solution anymore. As a result, your organization doesn’t suffer from unnecessary delays.

In short, automating your accounts payable process will digitize a crucial process of your business operations.

How Do You Automate an AP Process?

If the above benefits have convinced you to further look into automating your existing accounting system, don’t delay getting started and take the first step. But how should you start?

Read on for prerequisites that will help you kick-start this journey.

1. Evaluate Your Needs

Ask yourself, “what are the needs of my organization?” Without identifying your requirements prior to searching for a software solution, you may fail to identify the most suitable tool for your specific business requirements, and therefore you won’t be able to reap all the benefits of a world-class accounting system.

As Benjamin Franklin said, “If you fail to plan, you are planning to fail”, so do yourself a favor and don’t skip this crucial step. Start with evaluating your priority AP processes, and then decide whether they deserve automation or not.

For example, sometimes a supplier doesn’t deliver the right receipt, and in many cases, also delays your AP process. This may slow down your operations, and so an automated AP solution might not be of any help.

However, if you are experiencing too many performance delays and unacceptable human errors, an automated solution might prove beneficial.

So, before you spend your money on an accounting system, evaluate your requirements and then find the right solution.

2. Curate Achievable and Clear Goals

After evaluating your organization’s needs, take a step ahead and curate your goals. However, instead of being general, come up with SMART goals which will be the foundation for a clear implementation plan and provide an overarching objective.

For instance, an automated AP goal could be to automatically process a certain number of invoices every month. Moreover, another goal could be to lower overall staff expenses in your organization by the value of x at a certain date. This could be achieved by using automation to its fullest and therefore being able to downsize your AP team.

Knowing your requirements, goals and budget from the start is essential for designing a realistic plan to accomplish these goals.

3. Involve Your Team

It is not easy to do everything independently. Shifting from manual processes to automatic setup requires teamwork, and hence, you need to include your AP staff in every step of setting up an AP automation solution.

Prepare your employees for the change and be transparent. Ideally, include your IT department to help with the implementation, any required customization and any additional training to make this project a success.

Involving your team will allow them to feel valued. As a result, your employees will not hesitate to put in the effort required from their side.

Besides that, give your vendors some insight as well. For example, communicate the benefits of going paperless with them and the impact this change can have on your AP teams performance.

4. Evaluate Your Options

Once you have everything sorted within your organization, it is about time you explore your accounting system providers. This step could be a little overwhelming at first if you have no technical background.

However, you will gain some experience during the requirements and goal definition process, which will guide you further.

Instead of going for an all-in-one solution, consider a process-specific system. A standalone AP software is easier to learn and will have tools built specifically for your industry.

While making a choice, also evaluate whether a certain software integrates well with the existing IT solutions processes in your organization. If it doesn’t, there is no point in spending your money and time on it.

Ask the supplier to clarify all open questions such as whether the software eliminates human mistakes efficiently, if it can help to reduce costs related to accounts payable, and if is it easy to configure and control.

Evaluating how well a potential software solution will meet your pre-defined requirements and goals, plus knowing the answers to all your burning questions, is imperative before making your final decision.

5. Implementation

Implementing a new AP automation system can be challenging, but if your preparation is good, the difficulty level during deployment might decrease to a certain level.

After considering your organization’s size and complexities, you can also consult a specialist in the field during the implementation process. In addition, if you have an in-house specialized team, get them on board to make the deployment more efficient.

Finally, a thorough onboarding training is crucial for employee adoption of the new system. To fully reap the benefits of AP automation, you need to ensure that your employees are well-versed with the new tool.

6. Optimize and Make Improvements

Optimization and improvements can help you make your new AP automation system a savior for your organization. You might not find the need to optimize the system in its first few days of implementation, but with time, you will find many areas that might demand some improvements or customizations.

It is best to work with a specific solution many times before finding areas that require improvements. Also, while doing so, regularly evaluate whether the system is helping you achieve your goals or not.

Further Considerations Before Starting An Accounts Payable Automation Project

When initiating an AP automation project, there are many things to consider. But, most importantly, you need to decide whether an ERP or accounting system is the right choice for your organization. Therefore, the question is does just your accounting system needs optimization, or do other processes too?

For instance, in some cases, you might find that your manufacturing and marketing department are also going through problems that indicate a much-needed intervention of automation.

Evaluate this by going through the latest performance reports of each department and by consulting the leaders of the department in question.

If every process in your organization requires a certain degree of automation, choosing an ERP solution over a standalone accounting system will serve you right.

Enterprise Resource Planning or ERP is software that integrates all business processes and then manages them through advanced technology. Simply put, this solution helps organizations manage their everyday activities, such as manufacturing, procurement, purchasing, marketing, customer service, and even risk management. The possibilities are endless.

ERP Infographic
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Moreover, the system enables a smooth flow of data between different processes, eliminating the risks of data duplication and improving the integrity of collected information.

Regardless of your business’ size and nature, an ERP offers solutions to control and automate different business activities and therefore reduces the chances of human error.

Compared to standalone systems, ERP eases communication with different departments, ensuring that all entities of an organization are working towards one clear goal. In addition, it is also relatively cost-effective as one system can facilitate all operations at a time.

Further, unlike standalone applications, ERP offers the flexibility required to run the whole organization as one unit. You can also centrally manage this software and use all the necessary controls to reap its benefits.

If you want to implement an ERP system in your business, providers such as SAP, Oracle and Intuit Inc. are worth considering.

However, if an ERP doesn’t meet the needs of your business, don’t wait any further and start looking for the best standalone AP automation software.

How Do You Select an Accounts Payable Automation Software?

Choosing the best AP automation software requires lots of homework and some analysis. If you want to buy a system that will benefit your business for a long time, considering a few factors before making a final decision is quite crucial.

Read below for some factors that will help you pick the right software.

1. User-friendly Interface

A simple, intuitive and user-friendly interface will help accelerate the onboarding process. Moreover, it also allows employees to learn different aspects of the system without struggling.

Select an AP automation software with many built-in functions that are quite easy to navigate. Additionally, select a system that comes with an uncluttered and neat dashboard.

2. Invoice and Payment Automation

Evaluate the system for all the features that might help with easy and hassle-free payment and invoice automation. For instance, the system should generate payment reminders for your finance department and should be able to automatically handle any recurring transactions.

Besides that, features such as Optical character recognition (OCR) can automatically capture all the data from an invoice as soon as it enters the system.

You should also consider if the software can offer the facility of three-way matching during the invoice process.

3. Touchless Invoice Processing

Taking the last point further, software that comes with touchless and paperless invoice processing is worth your attention. The benefit of this characteristic also eliminates the hassles connected with manually matching your purchase orders with the corresponding invoices.

4.Invoice Approval Process Including Approval Limit

An invoice approval process is a system that reviews invoices from all vendors before the company processes any payment.

Manual processes of reviewing invoices and invoice related documents can be pretty cumbersome, so the presence of this process in your potential AP automation system is vital. In addition, you should also verify that you can set approval limits for automated invoice processing.

In simpler terms, consider the quality of the AP tools invoice and payment automation features. This analysis is crucial to determine if it can benefit your organization’s workflow.

5. Vendor Portal

Your goal should be to invest in an AP automation solution that is immediate and transparent. Simply put, you need a channel that tracks all your vendors and any amount you owe them. In that case, choose a system that offers the facility of a vendor portal.

A vendor portal allows your suppliers to log in to the system and get an update regarding invoices and payments. This feature makes it relatively easy for your company to communicate your payment progress without any representative calling the supplier and answering their concerns.

6. Artificial Intelligence Technology

If you want to invest in a high-quality AP automation system, pick one that runs on artificial intelligence technology (AI). AI helps streamline invoice processing and makes data entry a piece of cake.

AI Technology - Accounts Payable Automation
pixabay.com

In addition, an AI-based system also helps combat invoice fraud. The tools analyze the data and highlight any red flags.

All this happens at a speed that is impossible to achieve manually. So, as soon as the invoice uploads, the system detects all the things that seem fishy.

7. Security

It is always wise to choose software with top-class security. For instance, select an AP automation solution that provides proper encryption, secure communication, and two-factor authentication.

Considering the above points is vital to identifying a suitable AP tool for your business. If you want to know the best AP automation software that may meet your criteria, keep reading for a short review of our recommendations.

8. Pricing

It is imperative to select a solution that meets your requirements and your budget. For example, don’t buy an expensive automation system that you won’t use in your daily transactions. Similarly, avoid underspending when purchasing software as you will regret it later.

What Is the Best Accounts Payable Automation Solution?

The three accounts payable automation solutions below have their pros and cons. So, review them properly before selecting the one that might tick all the right boxes for you.

1. Sage Intacct

sage intacct - accounts payble automatin software
sageintacct.com

As one of the best cloud accounting systems, Sage Intacct has an impressive built-in-class design, allowing it to work with other processes in your business. This solution can handle all your accounting needs, from accounts payable to accounts receivables and general ledgers.

Sage Intacct also has advanced functions designed for global consolidations, revenue management, and project accounting.

Features

Below are some essential features of this automation solution:

  • Management of accounts payable and receivables
  • Streamline payments and procurement
  • Management of finance and sales teams
  • Automated reconciliations
  • Transaction visibility
  • Built-in reporting
  • Insightful dashboards
  • Additional modules related to fixed assets, inventory management, use, and sales tax etc.

Pros

Here are some excellent points of this automation system:

  • Easy to use
  • Convenient access through this cloud platform
  • User-friendly dashboards
  • Robust integration and flexibility options
  • Provides ongoing training, education, and support

Cons

On the other hand, some aspects of Sage Intacct require improvements:

  • Imperfect operational functionality
  • Compliance regulation with GAAP results in some unique processes
  • Expensive compared to similar for small businesses

Pricing

The price of this solution may vary according to modules and the size of your team. However, on average, the subscription fee may vary between $15,000 to $35,000 for an annual subscription.

2. Bill.com

Bill.com - Account Payable Automation Software
bill.com

Bill.com helps automate both accounts receivable and payable versions of your business without compromising on the quality of any transaction. Moreover, it converts all your bills into digital records for quick access. Bill.com also recently acquired Invoice2go this past September.

While this is a standalone software, you can integrate Bill.com with applications such as Xero or QuickBooks to produce much more efficient outcomes.

Features

Some standard features include:

  • Account reconciliation
  • ACH payment processing
  • Access permissions and controls
  • Accounts payable
  • Accounts receivable
  • Activity dashboard
  • Notifications and alerts
  • Forecasting
  • Bank reconciliation
  • Cash management
  • Data security

Pros

We found Bill.com quite good in many ways.

  • Attractive and intuitive user interface
  • Comes with user-defined policies
  • Offers various payment methods
  • Has multiple levels of approvals

Cons

This software requires improvement in a few areas.

  • Do not produce customizable reports
  • Fails to link with underlying data

Pricing

There are many plans at Bills.com that you can choose from. Each has its price. For instance, a corporate plan is available for $69 per month.

On the other hand, the enterprise plan offers custom pricing according to your chosen modules.

The team plan is worth $49 per month, while essential costs around $39 every month.

3. Stampli

Stampli - Accounts Payable Automation Software
stampli.com

Stampli is an AP automation software that integrates any communication, documentation, and payments in one place so that your team, and you can have complete control over all the spending. It is a cloud-based solution that also reports on data related to forecasts, key performance indicators, and potential bottlenecks.

Features

Here are some essential features of this system:

  • Accounting integration
  • Activity Tracking
  • Email Management
  • Duplicate Payment Alert
  • Invoice Management
  • Reporting/Analytics
  • Vendor Management

Pros

Find some things that we love about this software:

  • Simple integration with easy-to-use features
  • Reasonable price
  • Multiple options for payments
  • Compatible with other software products

Cons

Here are a few things it lacks:

  • Makes it hard to search invoices at times
  • The limited trial period doesn’t give access to many functions
  • Requires some time to set up

Pricing

Unfortunately, the software’s official website doesn’t have any pricing details. So it’s better to consult the company before taking a free trial.

Conclusion

Accounts Payable Automation is the ultimate solution to streamline all your invoice and payments processing efforts which will reduce the workload of your employees, leaving them time to focus on more pertinent tasks. Additionally, it helps to reduce the chances of duplication and fraud, which is difficult to control through manual procedures.

In this article, we learned the importance of having an AP automation solution in place and how essential it is to choose a software solution that will meet your business requirements as well as your budget.

If you want to see your business thrive, automation is crucial, and so, implementing an accounts payable automation system could be the stepping stone of your digital transformation journey.

Need help with implementing an ERP or AP automation solution? As an experienced IT project manager, I can support you in this endeavor. Please get in touch via my service page.

Mandy Schmitz
Mandy Schmitzhttps://mandyschmitz.com
Mandy Schmitz is a freelance consultant and project management expert with 10+ years of experience working internationally for big brands in fintech, consumer goods and more. Join me here on Changeaholic.com to learn how to optimize your business operations and find the latest product & software reviews.

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Mandy Schmitz is a freelance consultant and project management expert with 10+ years of experience working internationally for big brands in fintech, consumer goods and more. Join me here on Changeaholic.com to learn how to optimize your business operations and find the latest product & software reviews.

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