Efficiency and accuracy are everything when managing your busy back office. Yet one area that's often bogged down by bottlenecks, manual errors, and time-consuming tasks is accounts payable (AP). Manually handling invoices, payments, purchase orders (POs), and vendor communications can be overwhelming — and expensive.
The solution? AP automation.
But what exactly is AP automation? And how does it work? Let’s break it down.
What is AP Automation?
AP automation refers to the use of technology to handle repetitive, manual tasks in the accounts payable process. This includes everything from receiving and processing invoices to making payments and reconciling records. By streamlining these workflows, you can reduce errors, improve accuracy, and save time.
With AP automation, paper, spreadsheets, and manual reconciliation become things of the past. Instead, you can transform your process and approve, track, and pay invoices with just a few clicks.
How Does AP Automation Work?
While different solutions may offer their own unique features, the AP automation process generally includes the following steps:
- Invoice Capture: The system uses optical character recognition (OCR) technology to scan and read invoices. It captures key information and line item detail, like invoice number, date, amount, and quantity.
- Data Matching: The software compares the invoice with existing data to ensure accuracy. This process — typically known as three-way matching — checks that the invoice, purchase order (PO), and receipt all align.
- Approval Workflow: Once the invoice is matched, it’s sent to the appropriate team member or department for approval. Automated workflows speed up this step by routing invoices to the right people automatically — meaning no more chasing signatures or waiting on approvals!
- Payment Processing: After approval, the solution initiates the payment process and schedules payment using your vendor's preferred payment type. AP automation solutions ensure payments are processed on time, every time — preventing late fees or missed discounts.
- Easy Integration: Leading AP automation solutions integrate with your existing Enterprise Resource Planning (ERP) system or accounting software. Having accurate and up to date records across all your systems gives you real-time visibility into your cash flow.
- Record Keeping: All invoices, payments, and related documents are stored digitally, allowing for easy access and audits. You’ll never have to search through physical filing cabinets again.
6 Benefits of AP Automation
The move to automated AP isn’t just about convenience — it offers real, measurable benefits. Here are six of the top reasons to embrace automation:
1. Time Savings
Manual invoice processing is slow. Depending on how many invoices you receive each month, it can take days or weeks to get through them all. With AP automation, this process can be cut down to hours or even mere minutes.
This means your team can focus on higher-value work, like maintaining vendor relationships or strategic planning, rather than being weighed down by repetitive AP tasks.
2. Cost Reduction
Processing paper invoices, printing checks, and dealing with manual errors can all add up — often leading to unexpected costs that can bog down your bottom line. Automating the AP process reduces these expenses significantly. In fact, automation may be able to cut your invoice processing costs by as much as 80%.
Automation solutions also ensure your payments are always made on time — meaning fewer late fees and more opportunities to take advantage of early payment discounts.
3. Improved Accuracy
Humans make mistakes – it's natural. From typos to lost paperwork, manual processing introduces a high risk of errors.
But with AP automation, the risk is greatly reduced. Automated data capture ensures accurate entry, while matching capabilities can catch errors before they cause bigger problems.
4. Better Compliance
Managing compliance can be a nightmare for AP teams, especially in industries with strict regulatory requirements. AP automation keeps detailed digital records, so you audit trails are complete, accurate, and easy to access.
You’ll gain peace of mind knowing your documents are always organized and compliant with industry regulations.
5. Stronger Vendor Relationships
Vendors expect to be paid on time. Late payments not only come with fees, but can damage your relationship with suppliers.
AP automation ensures payments are approved and scheduled quickly and accurately — improving vendor satisfaction and strengthening relationships. Many systems also offer vendor self-service portals, where they can check on payment status without needing to contact your team.
6. Scalability
As your business grows, so does your volume of invoices and payments. Automating the AP process makes it easy to handle a higher volume of transactions without needing to hire additional staff or spend more time slogging through the process.
Whether you’re processing 100 invoices or 10,000, automation ensures you always stay efficient.
Busting Common AP Automation Myths
Despite its advantages, some businesses are hesitant to adopt AP automation due to common misconceptions. Let’s debunk a few:
- “AP automation is only for large companies.”
AP automation benefits every business, no matter its size. In fact, smaller companies can experience even greater efficiency gains, since manual processes are often a bigger burden on small and over-extended teams. - “It’s expensive and hard to implement.”
While there are costs to consider, like setup and subscription fees, AP automation is an investment that pays for itself over time. Implementation is often straightforward, especially if the system integrates with your existing tools. And with so many AP automation providers available, it's easy to find an affordable option tailored to your needs. - “We’ll lose control over our AP process.”
Some teams worry that automating AP will mean losing visibility. But that couldn't be further from the truth. Automation provides real-time insights into every step of the AP process, giving you more control and transparency than ever before.
Is AP Automation Right for You?
If your business is still manually managing accounts payable, you’re likely missing out on significant time and cost savings. AP automation isn’t just a nice-to-have — it’s becoming a must for companies that want to stay competitive.
Wondering if you should make the switch to AP automation? Here are some signs it may be time:
- You’re processing more than a handful of invoices each month.
- Your AP team is overwhelmed with manual tasks.
- You’re missing out on early payment discounts or getting hit with late fees.
- You want better control over your AP process.
If you're experiencing any of these, it's time to explore AP automation.
Ensure Success with AP Automation
AP automation offers the best way to simplify your accounts payable process. With the right solution in place, you can reduce errors, save time, and boost visibility for your company's finances.
Ready to get started with AP automation? Nimbello is here to help. Our powerful solutions are ready to take your accounts payable process to the next level. Contact us today to learn more!