Tips for Choosing an AP Automation Solution

Accounts Payable (AP) Automation is the act of processing invoices in a digital format and through a touchless process by using an AP automation solution. In an ideal situation, 100% of invoices a company receives can be processed automatically without any human intervention.

AP automation is more than just Optical Character Recognition (OCR). It is automation across the entire AP process, from data capture using OCR or digital invoice formats (such as EDI and e-invoices), through AP workflow, such as routing, coding, reviewing and approving invoices and automatically matching them to Purchase Orders (PO), to the seamless integration with your Enterprise Resource Planning system.

Why AP automation?

AP shouldn’t be cumbersome, inefficient and costly. Instead, AP processes should be automated, interesting and rewarding. Well-designed and secure AP automation solutions allow organizations to manage their AP processes efficiently.

1.The pitfalls of partial AP automation

Some companies are automating only parts of the process – such as using Optical Character Recognition (OCR) to recognize characters in paper invoices, or workflow to move the invoice through the handling and review/approval process. But the reality is that true automation must include all of that.

Optimizing your AP process

AP automation should not just be considered as an IT-only project. Finance and AP departments should also be involved to lay the groundwork for success. When these departments all work together effectively, implementation typically becomes very smooth and straightforward.

Before you automate, you should review the AP process and see how it can be optimized. On the right, there are 3 process development tasks that can help you improve AP operations – regardless of whether you automate or not.

2. Dividing the workload

Before automating a process, you need to make decisions on work division between the AP department (or finance team) and the invoice reviewers and approvers in the business units. Bear in mind that the AP process involves many busy people in the business units. In fact, when companies perform efficiency calculations, the time spent on financial management tasks outside the finance team is rarely considered, even if the cost related to it might be significant. Our recommendation, based on hundreds of process development cases, is to centralize as much of the AP-related work as possible.

3. Gain control and compliance

Control and compliance is a critical concern of all organizations. Consider the internal policies that you need to implement to effectively control AP and avoid fraud.

Final words

1. Digitizing the data

The more you receive invoices in structured and digitized format, the better. Go through your invoice receipt methods, and improve them as much as possible.

2. Developing a matching plan

To optimize invoice automation, also make sure you establish a sound process for purchasing. By establishing effective purchase order practices, accurate invoices can be automatically matched against them, bypassing the approval process. The same method can be used with recurring and contract-based invoices.

3. Considering Robotic Process

Automation (RPA)

RPA can be a good addition to invoice automation. The benefits of RPA are best seen with tasks that require lots of manual input work. RPA is particularly suited for tasks that are too small, irregular or fast changing to be automated using traditional systems, such as invoice entry and posting.