Accounts Payable (AP) Automation
What is AP Automation Software?
AP automation or accounts payable automation is a cloud-based software solution that digitizes the accounts payable function in a business by automating the often-tedious manual tasks involved in the processing and paying of invoices, so your accounts payable team can focus on more strategic financial imperatives.
Essentially, AP automation significantly reduces the time and labor involved in paper-based manual accounts payable invoicing, as well as reducing the risk of costly human error.
Accounts payable is one of the most essential functions in any organization, but that doesn’t mean you should spend hours every month on it. Your skills and financial knowledge go way beyond filling in spreadsheets and checking whether invoices have been paid. Too many businesses waste time hunting down invoices and using skilled accounting staff on data entry. AP automation puts an end to all of the monotonous “busy work” and frees up financial talent for more strategic work.
How accounts payable automation helps your company to succeed
With AP automation, you can overhaul your accounts payable process by fully controlling your spending, time, and consistency.
AP automation software solutions give you a single environment where you can see every invoice and every payment instantly, meaning you can keep better, more accurate tabs on your invoices and their payments.
Automatic digital payments help you manage your books, make payments when it’s best for your business — with fewer errors, and no papers to file. You can rest assured that every payment is correct to the last penny, and every supplier can get paid seamlessly through one simple, centralized place with no papers passing back and forth getting lost in the process.
What are the disadvantages of paper-based accounts payable?
Lost invoices – Invoices with the wrong PO number, sent to the wrong address or inbox, with the wrong supplier information creates hours of lost time.
So. Much. Paper. – Most companies still have to process archaic paper invoices. That leads to bottlenecks, missing invoices, pointless data entry, and an impossible system for finding archived receipts.
Manual, tedious, and redundant work – Paper-led processes mean that time is wasted on tasks like data entry instead of using that time to be strategic and proactive.
Confusion about payments – When you’re dealing with spreadsheets and record books, it can be a long, slow hunt to find if an invoice has been paid or not.
Join Us: Tradeshift and Ardent Partners on the latest AP Metrics That Matter
March 29th at 10:00 am EST/3:00 pm GMT
Bob Cohen
Vice President of Research at Ardent Partners
Michael Creeden
Manager, Solutions Consulting – North America
What are the main benefits of AP invoice automation?
The way we look at the accounts payable function in a business is changing rapidly. Cutting-edge technology like artificial intelligence (AI), process automation, blockchain, and machine learning empowers modern enterprises to empower their accounts payable departments to become strategic players.
Best-in-class organizations are already using automation to their advantage and are planning for new ways to automate mundane processes and generate value in the future. But of course, many accounts payable departments still struggle with outdated modes of doing business.
The top challenges businesses face with their AP processes include:
- High percentage of exceptions
- Invoice/payment approvals take too long
- Too much paper!
- High invoice processing costs
- Lack of visibility into invoice and payment data
The majority of AP professionals express a desire to transform their accounts payable process by moving towards transformation, but it doesn’t appear actually to be happening as fast as they’d like. What gives? Most companies view AP as extremely valuable to their business, but AP professionals are having difficulty getting executive buy-in. They’re having trouble selling the vision to organizational leadership because only 28% of AP departments have automated their analytics, making it more difficult to back up the argument that AP automation will significantly impact the bottom line.
For AP automation to be viable with leadership, AP automation solutions need to prove that they can provide:
- Executive support of total AP transformation
- Smarter solutions that drive measurable efficiencies
- Deeper, more agile analytics and reporting
- Eradication of tactical tasks
- Increased collaboration with key stakeholders
Automation takes your Accounts Payable from reactive to proactive
Typical, traditional AP departments are siloed, buried under paper, slow, and disconnected. Often, the Accounts Payable department waits for handoffs from other stakeholders before processing reams of paper invoices across multiple suppliers — buying paper in bulk and hoping to receive payment on time.
With AP automation, every stakeholder has transparency into the AP process, can easily submit invoices through a centralized hub where suppliers can manage payments more easily, more quickly, and more accurately. Accounts payable automation allows for more early payments, better collaboration with suppliers and procurement, and one centralized hub for a clear view of financial information and analytics.
How does AP automation fix invoice-related communication problems?
What does it take to create the efficient, productive, and strategic AP department of your dreams? Best-in-class Accounts Payable departments have digitization and automation champions who are:
Changemakers dedicated to AP change management
Best-in-class accounts payable teams look at change holistically and strategically to build a roadmap for digital transformation. The first thing they do is research and understand which new technologies are most beneficial, both strategically and financially, for the long-term success of the accounts payable department structure and the company as a whole. Then typically they will move on to greater and more adaptive technology like cloud computing, AI (artificial intelligence), digitization, and full payments automation. That allows them to improve reporting and data analytics, automate mundane time-sucking tasks, reduce costs, increase collaboration, and improve data visibility.
Innovators willing to take risks
Transforming and automating your accounts payable department means taking a hard look at the way it functions. Best-in-class departments are willing to make widespread changes to significantly increase the performance of their teams to promote a culture that values experimentation for positive change. As a result, the best AP departments are 48 % more likely to make electronic payments and 56% more likely to process e invoices straight-through, translating those risks into positive gains.
Committed to accounts payable standardization
Best-in-class AP teams are 52% more likely to standardize accounts payable processes across the company. It sounds basic, but a ton of departments still struggle to manage a standard format for invoices. Whether that’s because the process is paper-based, old, or cumbersome, with the same pain-filled outcomes: lost efficiency, expensive processes, and bottlenecks. That’s why best-in-class teams recognize the necessity of repeatable processes and use a digital platform to help organize the process.
Customer-centric approach
Best-in-class accounts payable teams realize the importance of a positive departmental image. They’ve adopted a mentality of collaborating and working positively with both suppliers and internal stakeholders. While that may not sound like traditional accounts payable job descriptions, it sets up the team’s groundwork to be a strategic partner for procurement and finance teams. That plays out in the stats: best-in-class teams are more than twice as likely to use their digital insights to partner with procurement and treasury.
Accounts payable automation is the future of business
AP automation cuts out all those repetitive and simple tasks and eliminates the need for paper — which dramatically reduces time wasting on ‘busy work’– that massive backlog of boring tasks waiting in your inbox. Instead, you’ll get to branch out and collaborate more strategically with other departments in your company. AP automation can detect errors and eliminate work done by AP employees, reducing invoice processing time down to less than four days. Automation can also suggest coding, automatically code invoices, and match invoices to multiple types of purchasing documents.
AP automation is your strategic sidekick
AP automation is like a helpful sidekick, doing all the work on the back-end to make you a much more strategic partner to the CFO. The analysis takes data from invoices, purchase orders, corporate spend, supplier information, and anything filled out in a form and gives you instant access to the information you need to make strategic decisions—resulting in an immediate impact on your ability to forecast, budget, and plan.
The end-to-end digital AP process helps you connect with key stakeholders along the whole procure-to-pay spectrum. You’ll be able to support your peers in procurement by keeping suppliers happy. And when digitally connected, you have real-time information to help with supplier inquiries so that you can build stronger relationships not only with your suppliers but with your procurement function.
Automation delivers data-rich transparency which allows your AP department to be a key player in the greater organizational strategy. By automating menial tasks and gaining intelligent insight into spend data, AP can find a seat at the strategy table.
Not all AP automation solutions or tools are created equal
When it comes to AP automation, “electronic” is not the same as digital. By digital, we mean a cloud-based software solution that is everywhere, all the time, and updates in real time.
An AP automation solution like Tradeshift’s Pay platform, really comes into its own when something changes – and parties immediately have access to the latest up-to-date information (ie: live data). Being a cloud-based software system, everything is updated simultaneously across the platform eliminating version control issues and dramatically reducing human error.
Tradeshift is the world’s largest cloud-based accounts payable platform. Buyers at businesses like DHL, Air France-KLM, and Volvo use our AP automation solution to settle thousands of invoices every day. Tradeshift provides a cutting-edge AP automation solution.
Give us 20 minutes.
We’ll show you what Tradeshift can do in a live walk-through.