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Managing accounts payable (AP) is a critical yet often challenging task for businesses. Manual AP processes are not only time-consuming but also prone to errors like duplicate payments, missed deadlines, and mismanaged invoices.
According to a recent survey by the Institute of Financial Operations & Leadership (IFOL), 56% of AP teams spend over 10 hours per week on manual invoice processing alone. These inefficiencies can strain cash flow, hinder vendor relationships, and create compliance risks—issues no business can afford to overlook.
This is where accounts payable automation software steps in as a game-changer. By digitizing and streamlining the AP process, automation tools eliminate repetitive tasks, reduce human errors, and provide better visibility into cash flow.
From invoice processing to payment approvals, these solutions help businesses save time, reduce costs, and improve overall financial management.
The growing demand for such solutions is evident in the numbers. As per reports, the global accounts payable automation market is projected to reach $17,047.16 million by 2032. This rapid growth reflects the increasing adoption of automation by businesses worldwide.
In this blog, we will explore:
Let’s get started with the basics and discover how AP automation can transform your financial workflows in the following sections.
Accounts payable (AP), or "payables," refers to a company's short-term obligations owed to its creditors or suppliers, which have not yet been paid. Payables appear on a company's balance sheet as a current liability.
Another less common usage of "AP" refers to the business department or division that is responsible for making payments owed by the company to suppliers and other creditors.
Accounts payable automation leverages advanced AI-driven technologies to optimize and simplify your AP processes from start to finish. It starts with electronic invoices, which can be received through a supplier portal, directly from vendors, or digitized from paper formats.
The system then enables swift validation of master data and effortlessly matches invoices with procurement documents like purchase orders and goods receipts, ensuring quick approvals and on-time payments.
The process involves three steps:
Now, moving to the main focus of our blog, the benefits that accounts payable software offers. Let’s learn more about them in the next section.
Why should you automate AP processes in the first place? Right from reducing processing time and operational costs to improving accuracy, compliance, and visibility,
Generally, confirming the invoice terms, getting the necessary approval, and signing off the documents can take a couple of weeks. But, with the implementation of accounts payable automation, dispatching the pending invoices only takes minutes. Accounts payable automation streamlines processes to move things faster and improves the turnaround time by 10X.
Deploying AI-based automated accounts payable software improves invoicing starting from elimination to data entry to faster match times. The software automatically matches the invoice with the purchase order (PO) and the goods received note (GNR). This prevents major backlogs and makes the cash outlay more predictable for the business.
The goal of employing accounts payable automation is to minimize human intervention and increase the efficiency of the processes. Unlike manual labor, automation is scalable and can function with the same efficiency 24/7. Moreover, automating the majority of the accounts payable process eliminates human errors.
Accounting errors and following the wrong filing procedures can create bottlenecks that seriously affect the productivity of multiple departments. More often than not, you have to pause essential business activities and reallocate resources to resolve these issues.
Sure, the implementation of the AP automation software would come at a cost, along with a learning curve for your employees. However, the ROI offered by the implementation of accounts payable automation is unmatched in the long run.
Let’s see how:-
Automation makes it possible to store all financial data and invoices in the same place. Accountants can access and review this data whenever required. Pulling up invoices, purchase orders, and goods received notes also becomes easier from the AP automation software, which is a single source of truth.
Automating accounts payable also improves interdepartmental communications. For example, it makes it easier for the relevant department heads to quickly access the invoice and sign their approval to fast-track the entire process. Automation platforms can effortlessly identify errors and exceptions and inform the relevant personnel.
You can instantly compare the invoice data with POs and GRNs. It frees up the employees to focus on productivity. As you can see, accounts payable automation software validates the data entered and expedites the bookkeeping process, increasing the overall efficiency of your operations and adding scalability to the entire process.
Analytics and reporting features of the automation platform offer greater data visibility. This means accountants get real-time insights and recognize data patterns to help them make better financial decisions. Report generation and sharing also become easy.
Data accessibility also makes significant quality-of-life improvements to multiple business systems through third-party integration. Apart from financial departments, you can also improve the vendor access points and customer services. The seamless exchange of digitized data helps the business set up more optimized workflows. Some automation portals also enable you to establish vendor access portals where they can check the status of their invoices and raise concerns.
Establishing secure audit trails and enterprise-grade security are benefits of AP automation software that cannot be underestimated. The automation process ensures that the team conforms to all the guidelines and sticks to the correct approval procedure while filing the invoices. Ensuring the legitimacy of the invoices with end-to-end data encryption helps the company curtail the risk of fraudulent transactions.
With role-based access rights, you can grant users specific rights to access data. You can also define if the user has right-only or write access for enhanced security.
Building workflows with multiple approval levels helps the business identify fraudulent or incorrect invoices much sooner. It also helps the accountant to check for missing data.
The company also gains the ability to set different compliance parameters to ensure the invoices are in accordance with the organization’s rules and regulations. Similarly, these parameters also check whether the invoices and approved transactions are compliant with legal requirements and government policies.
Lastly, the AP automation platform maintains a record of all the actions taken on the invoice. These records include the time when the changes were suggested, the employee name, the employee ID number, and the tools they used. The availability of this data helps the company make its employees accountable for any errors.
As mentioned earlier, automating accounts payable reduces the number of repetitive and manual tasks. Consequently, it frees up personnel for strategic planning and business development. You can even reallocate the employees to focus more on improving vendor and customer relationships. Assigning them to other revenue-generating operations also helps the business establish new cash flows.
You can create customized workflows to address your business’s unique invoicing challenges. Added features include setting up alerts, notifications, and approval timers.
Accounts payable software offers a smooth onboarding process for vendors. The platform helps the supplier update their payment information in the system with ease. It prevents the accounting department from wasting time running around loops to collect the necessary data. Additionally, the suppliers can directly check the status of their invoices through the platform and raise any queries there.
According to 92% of businesses, poor and outdated accounts payable processes are the leading reason for making late payments to suppliers. Accounts payable automation adds much-needed efficiency to this process. Faster approval of invoices, payments, loan repayments, and bills helps the organization maintain cordial relationships with its vendors and banks.
Vendors can use the AP platform to communicate their concerns to the accountants. Similarly, accountants can keep their suppliers informed by posting updates on the platform. Constant communication between the two parties ensures that there are no misunderstandings.
Governments are continuously changing and improving the laws surrounding data storage. Manually tracking compliance is time-consuming and erroneous.
Whereas advanced AP automation systems are capable of checking the compliance status of the invoices. In addition, the central document hub is designed to comply with GDPR, SOC-2, HIPPA Act, and other industry-specific regulations.
Apart from government compliances, the accounts payable automation software helps review invoices from third-party suppliers and agencies who might be unfamiliar with your invoice procedures. Accounting professionals can instantly flag potential issues and concerns with the compliance in these invoices.
Consistently keeping your invoices compliant also helps the auditors efficiently dispatch their duties. Lastly, the management can make informed decisions while introducing new policy changes and enforcing reformed policy controls.
Having explored all the benefits accounts payable automation can bring, let’s shift our focus to the next section, where we’ll get into how Docsumo simplifies and automates the accounts payable process.
Docsumo automates accounts payable in 4 easy steps:-
Upload invoices directly to Docsumo’s pre-trained API specially built for invoice data capture directly from your email inboxes.
The API supports all the popular formats for invoices, including scanned photos of paper invoices, and can adapt to any changes in formats/templates/layouts of invoices.
The system scans the document and automatically extracts valuable information like the payee's name, the amount due, account numbers, invoice numbers, and due dates. Docsumo measures up to 99% data capture accuracy.
Captured data is validated for accuracy before improved accuracy. Reviews are held for manual review.
Docsumo can easily be integrated with any CRM or ERP software. Post-processed data is pushed into a database for analytics and decision-making.
To summarize, accounts payable automation offers increased efficiency, cost savings, and data accessibility. Reduction in manual entry errors and improved control over finances empower brands to shift their focus toward critical value-added business strategies.
In a nutshell, switching to accounts payable automation improves your business' profitability along with saving time on the cost of invoice processing.
While we’ve already covered the key features that make Docsumo the best account payable software, let’s look at a case study to prove our point.
Australian managed service provider Valtatech automates invoice processing using Docsumo, bringing down the processing time from a few hours to less than 30 seconds with 99% accuracy.
Their team used to struggle to extract unstructured data from 20,000+ invoices manually.
They implemented Docsumo’s AP automation software to extract accurate data from documents with varying fonts, image quality, and resolution. The NLP-based classification framework was trained to categorize key-value pairs such as invoice number, date, and vendor details.
The result of implementing accounts payable automation was:-
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If you’re looking to automate your accounts payable, try out a 14-day free trial to Docsumo’s smart invoice capture API, or talk to our automation experts.
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