What is accounts payable automation?

These days, if you’re running an in-house accounting team and not utilizing invoice automation software, you’re likely a step behind competitors. Accounts payable (AP) can involve hours of paperwork and staff resources better spent elsewhere, which is why many companies today use AP automation software. A Markets and Markets report claims that the market for AP automation software is expected to expand rapidly, reaching an estimated $3.1 billion by 2024 - a jump from the current $1.9 billion. 

As the economy is projected to turn towards recession through 2023 and 2024, financial leaders in your organization are going to look for opportunities to manage costs.  Improving AP process efficiency is one of the ways AP departments can contribute to cost control, allowing existing staff to process more invoices and reduce the cost of invoice errors and fraud. 

First, it can be useful to have some information about how AP automation works. Although the precise features will vary depending on your needs and the software you choose, there are some key features today’s best-in-class AP automation software offers. In the simplest of terms, accounts payable automation is a way of minimizing the human element in AP processing, eliminating a variety of tasks such as preparing invoices, keeping track of late payments, and much more. 

There are several ways AP automation software can benefit businesses, the first being eliminating human errors that often occur during the manual automation process. Some of the other benefits include: 

• Reduces the risk of fraud: Using AP automation software reduces the chance that your company will fall victim to fraud by storing all your business-crucial accounting info under one secure umbrella and automating processes that could normally be intercepted by internal or external attackers.
• Improves control over payments: With the automated processes offered by accounting and payroll software, you’ll never have to worry about checking payment schedules and missing a payment. All of this is automated, providing much greater control and oversight into the accounts payable process. 
• Provides insight into spending: If your enterprise is trying to streamline its spending, then the right accounting software will provide visibility into your spending habits. Tracking and providing detailed reports on a regular basis will tell you how much of your money is going where and identify areas where you can scale back. 
• Improves cash flow management: With accounting software, your cash flow management processes can be easily regulated, ensuring that when you need to pay your staff or initiate payroll requests, there’s always money in the bank to do so. 
• Streamlines invoice approvals: Since any issues are detected prior to sending out emails or payment requests, you can streamline the approval process and eliminate any back-and-forth due to unexpected errors. 

If you’re wondering how accounts payable automation can benefit your AP department, it provides more timely invoice processing, as well as more efficient and accurate results. Additionally, with the right AP software, your team will have comprehensive oversight of all pending invoices, in addition to your company’s spending and cash flow management habits. Since all these processes are automated, your AP department will spend much less time on manual tasks and can focus on other important aspects of your business. 

According to a recent report, there are around 3757 invoice processing applications in the world, making choosing the right one for your business no small task. However, when it comes to selecting the right AP software for your business, there are a variety of factors to consider. The key components of AP automation software to keep in mind include choosing one that:

• Supports all of your business’s invoice-processing procedures 
• Offers end-to-end automation
• Saves time and increases efficiency, providing cost-savings
• Provides easy integration with your ERP system & accounting software
• Offers compliance enforcement procedures 
• Delivers enhanced visibility to AP spend 
• Includes real-time dashboards
• Reduces risk with more stringent workflow controls
• Leverages AI to speed up data entry 

Accounts payable automation software can help you eliminate many of the manual tasks involved in AP processes, which can help to reduce cost, improve oversight, streamline invoice approvals, better manage cash flow, and prevent fraud. Choosing the right software is crucial, and you should consider solutions that take into account all your required workflows, meet your compliance requirements, eases integration into your ERP & accounting software, and leverages AI to speed up data entry.