Accounts Payable Automation Process: How to Improve Efficiency?

The accounts payable department serves as a critical financial control centre for businesses of all sizes. Manual processing of invoices creates unnecessary bottlenecks that slow down operations and increase costs. Accounts payable automation software transforms these time-consuming tasks by digitising the entire accounts payable workflow from invoice receipt to payment execution.

By digitising these tasks, businesses can improve accuracy, reduce delays, and free up valuable time for staff to focus on more strategic activities, such as financial analysis and vendor relationship management. Implementing AP automation not only enhances efficiency but also helps organisations maintain stronger financial control.

This guide will walk you through implementing an effective accounts payable process for your team using AP automation.

A clear accounts payable (AP) strategy sets the foundation for successful automation:

Start by assessing the potential for AP automation systems to streamline your existing AP workflow, addressing bottlenecks, redundancies, and the inefficiencies of manual processes that consume excessive time.

Document each step from invoice receipt to payment completion, including approval chains and reconciliation processes, to ensure data consistency.

Map out the desired future state of your AP operations, focusing on which tasks should transition to automation - for example, leveraging productivity automation to handle invoice data entry - and which require human insight and oversight.

Consider factors such as invoice volume, payment methods, supplier relationships, and compliance requirements when crafting your strategy.

Calculate the cost per invoice processed and benchmark it against industry standards to establish realistic improvement targets.

Set specific, measurable goals for reduction in processing time, error rates, and operational costs through automation, enhancing process integration and transparency.

Assess your current technology stack and determine whether existing systems can integrate seamlessly with new automation tools - essential for ensuring visibility throughout the process.

Review your chart of accounts, coding structures, and approval hierarchies to standardise them for a successful automation project.

This preparation phase proves critical for smooth automation adoption and helps secure buy-in from stakeholders.

The success of AP automation hinges on choosing an AP automation system that aligns with your business needs.

While OCR for invoice scanning can be helpful, it’s not essential, as many tools can integrate with your AP system to provide OCR functionality. From our perspective, the more critical aspects are the later stages of AP automation, such as payments and reconciliation, which drive greater efficiency and accuracy.

The right accounting software should also excel in security compliance to ward off invoice fraud risks effectively. The software should handle multiple invoice formats, including PDF, paper, and electronic data interchange (EDI), demonstrating the software’s flexibility.

Look for features such as:

Duplicate payment detection

Three-way matching automation

Real-time visibility of invoice status and payment

Easy invoice approval process for multiple stakeholders

Advanced analytics tools can further enhance financial data insights, ensuring your accounting tools are driving informed business decisions. The system must scale with your business growth and support various payment methods, including ACH, wire transfers, and virtual cards. Security features like role-based access control and audit trails protect sensitive financial data and support security compliance.

Evaluate vendor track records, implementation support, and training resources. Request detailed demos and trial periods to test the software’s user-friendliness and functionality. Consider the total cost of ownership, including implementation, maintenance, and potential customisation expenses. Opt for a payment automation solution that promises scalability, ensuring adaptability as your business processes evolve, whether it’s in procurement or overall operational workflow.

Automated approval workflows enhance productivity by streamlining invoice processing and ensuring efficient workload management, maintaining proper controls.

These process automation tools design workflows that reflect your organisation’s approval matrix, which can include dollar thresholds and department budgets, tailored to the specific needs and delegation rules of your company. Configure automatic notifications to alert approvers of pending items and escalate any overdue approvals promptly to maintain process momentum and avoid paper invoicing backlogs.

Enable mobile approval capabilities allowing decision-makers to review and approve invoices from anywhere, which significantly contributes to the flexibility and efficiency of invoice management. Set up parallel routing for invoices requiring multiple approvers to prevent sequential delays that could impede the swift transaction of business operations. Include comment fields and attachment capabilities to facilitate transparent and effective communication about specific invoices within the system, thus promoting clarity and accountability.

By leveraging the insights gained from technology, like AP automation with machine learning, you can monitor workflow performance metrics to identify bottlenecks and discover optimisation opportunities with precision. Adjust routing rules based on actual processing patterns and feedback from users to ensure that these process automation tools are being utilised to their fullest potential. Regular workflow audits are paramount to maintain efficiency and control effectiveness, reinforcing the safeguarding of financial records and maximising productivity gains through the clever application of technology in finance.

Automated payment processing reduces manual intervention while strengthening payment controls for AP departments. As you optimise your payment transaction process, it’s crucial to harness the capabilities of a robust vendor portal.

Schedule payments based on due dates and cash flow requirements, taking advantage of early payment discounts when beneficial and seamlessly processing transactions while managing your accounts payables. Configure the system to select optimal payment methods based on vendor preferences and cost considerations, ensuring smooth vendor management and financial operations.

Implement positive pay and other fraud prevention measures to protect against unauthorised payments. Set up recurring payment templates for regular vendors to reduce setup time, integrating this feature into your vendor portal for an elevated layer of efficiency. Maintain an audit trail of payment authorisations and executions, which is a cornerstone of accounts payables, for compliance purposes.

Leverage electronic payment networks to reduce processing costs and accelerate settlement times. Monitor payment status in real-time and automate remittance advice to vendors, a crucial feature of advanced payment transaction systems. Regular reconciliation of payments against bank statements confirms successful execution, illustrating the imperative of precise processing transactions in preserving the integrity of financial operations.

Automated reconciliation matches payments against invoices and bank statements, closing the AP cycle efficiently. This ensures compliance data is accurate and reliable, streamlining financial reporting. Configure matching rules to handle partial payments, credit memos, and payment adjustments automatically, which enhances invoice visibility and reduces data errors. Set up exception reports to highlight unmatched items requiring investigation – a critical step for maintaining compliance and oversight.

Create standardised reports for AP aging, cash requirements, and vendor analysis with expense automation tools that enable better financial planning and budget management. Automate the generation and distribution of these reports to stakeholders on a scheduled basis, thereby enhancing transparency and accountability. Build custom dashboards to monitor key performance indicators (KPIs) such as days payable outstanding and capture rates for early payment discounts, leveraging insights provided by accounts payable automation solutions.

Integrate AP data with general ledger systems for seamless financial close processes. Maintain detailed audit trails of all reconciliation activities and adjustments, which is a cornerstone of a robust accounts payable automation solution. Regular system checks ensure matching rules remain effective as business conditions evolve, further fortifying the integrity of financial data.

AP automation represents a strategic investment in operational efficiency and financial control. Companies that implement comprehensive AP automation solutions through providers like Fyorin can reduce processing costs by up to 80% while improving accuracy and vendor relationships.

Fyorin's platform offers end-to-end AP automation capabilities, including multi-currency support, automated workflow management, and touchless reconciliation. Our solution integrates seamlessly with popular accounting platforms and supports various payment methods, making it an excellent choice for businesses seeking to modernise their AP operations.

By choosing the right automation partner and following a structured implementation approach, organisations can transform their AP function from a cost centre into a strategic asset. Get in touch.

What is accounts payable automation?

Accounts payable automation is the use of technology to automate the accounts payable process, including the handling of supplier invoices, approvals, and payments, thereby reducing manual tasks and increasing efficiency.

How can I automate accounts payable in my organisation?

You can automate accounts payable by implementing an accounts payable automation solution that includes AP software to streamline the process of managing invoices, approvals, and payments.

What are the benefits of AP automation?

The benefits of AP automation include reduced processing time, improved accuracy, enhanced visibility into the accounts payable process, and the ability to streamline your accounts payable operations, leading to cost savings.

What types of accounts payable software are available?

There are various types of accounts payable software available, including automated accounts payable software, invoice automation tools, and comprehensive AP automation solutions that cater to different business needs.

How does the approval process work in an automated accounts payable system?

In an automated accounts payable system, the approval process is streamlined through digital workflows that allow AP teams to review and approve supplier invoices electronically, reducing delays associated with manual approvals.

What are AP automation tools and how do they differ?

AP automation tools are software applications designed to facilitate various aspects of the accounts payable process, such as invoice capture, approval workflows, and payment processing. Different tools may focus on specific tasks within the broader accounts payable system.

Can I still use manual invoice processing with accounts payable automation?

While accounts payable automation aims to reduce reliance on manual processes, some organisations may choose to integrate manual invoice processing for specific situations. However, the goal is to minimise manual accounts payable tasks to enhance efficiency.

How does automation help with supplier invoices?

Automation helps with supplier invoices by streamlining the invoice receipt, approval, and payment processes, ensuring that vendor invoices are processed quickly and accurately, which can improve relationships with suppliers.

What should I consider when choosing the right AP automation solution?

When choosing the right AP automation solution, consider factors such as integration capabilities with existing systems, scalability, ease of use, support for compliance, and the specific benefits of AP automation that fit your organisation's needs.

What is the role of the AP team in an automated accounts payable process?

The role of the AP team in an automated accounts payable process shifts from manual data entry and invoice handling to overseeing the automation technology, ensuring compliance, managing exceptions, and focusing on strategic financial management.