13 Jul, 2022

What is AP Automation and How does it Work?

The goal of accounts payable automation (AP automation) technology is to handle back-end financial process in a way that is more effective, quick, and accurate. AP automation can help you save time and money by getting rid of manual processes and piles of paper. It also reduces the number of days sales outstanding (DSO), which helps your cash flow.  

What is AP Automation (Accounts Payable Automation)?  

The technology used in AP automation automates repetitive tasks like receiving invoices, coding, sending for approval, paying, and reconciling. The phrase ‘touchless’ processing may be used to describe how AP automation eliminates the need for manual data entry at any stage, though approvers may still need to click to confirm payments.  

Dashboards and analytical tools are frequently included with AP automation software so you can control the AP process and find issues. It is simpler to search for and audit the data because all accounts payable data has been converted to digital form and is kept in a single system.  

How Does Automated Accounts Payable Work?  

The invoices from your suppliers are transformed into a common digital format by AP automation software, which then moves them through a digital workflow that ends with paying your suppliers.  

AP automation employs optical character recognition (OCR) to extract data from invoices at the beginning of this procedure. Machine learning is used by some systems to identify patterns over time and increase accuracy; for instance, they might recommend particular general ledger codes or approval routes based on prior usage. You might be able to do away with the need for manual intervention when it comes to most invoices by creating criteria specifically for your company, such as permitted variations or approval hierarchies.  

Why Automate Accounts Payable?

Automating AP makes sense for numerous reasons. Some of these include an immediate, measurable return on investment. AP automation can save your processing expenses by eliminating the need for manual labor. It can also make it easier for you to scale AP as your company expands by negating the need to add staff.  

Automation of AP can improve your potential to obtain supplier payment reductions by hastening and streamlining the payment process.  

Top Accounts Payable Automated Tasks 

Input data 

Compared to automated data capture from all source documents, manual data entry is slower and more error-prone. 

Invoice matching 

Examples of supporting documents that automatically matched to invoices include purchase orders and receiving documentation (three-way matching). For firms that would normally have to match papers stored at various locations, automatic matching is quicker and more precise than human matching.  

Coding bills

Through creating rules, you can do away with the time-consuming and inconsistent coding that comes with manual coding and automatically assign the appropriate general ledger code to each invoice.  

Approval route

In addition to being quicker than manually distributing papers to each required approver, electronic routing allows for improved workflow tracking.  

How Can Accounts Payable Be Automated?  

In order to use AP automation software, businesses often implement it. This is done either on-premises for businesses that wish to host and administer their own systems, or in a software-as-a-service model where the application is hosted in the cloud.  

It is also important to take the time to establish rules so that as many processes as possible can be automated. Even though the AP process is quite common, some businesses may have particular needs, so you make sure the system can support such workflows. 

What Advantages does AP Automation Offer?  

AP automation can also help the entire firm, not just the financial department:  

• Paper storage and postage and delivery fees are no longer necessary.  

• It takes less time to handle supplier complaints and conduct investigations when there are fewer manual errors. 

• Auditing and compliance initiatives are simpler. Integral security and accountability tools can signal questionable behavior and aid in the fraud detection process.

• Paying on time and consistently improves your reputation and benefits you in future supplier negotiations. 

• Instead of spending their time on manual data entry, staff can be reassigned to jobs that have a higher economic value, including evaluating payment data. 

How to Choose AP Software?  

The four steps below should be followed while choosing the best AP automation software for your company:


Create a cross-functional team that can outline the objectives for AP automation at your firm

Gather requirements  

Your accounts payable department compiles a list of criteria for an AP automation system and documents how your present accounts payable processing operates. After this phase, you produce a request for proposals (RFP) and distribute it to qualified vendors.

Vendor assessment

You assess the responses to your RFP from suppliers, looking at the features, price, and implementation strategy of their suggested solutions.  

Select a vendor  

You investigate further to ascertain the precise degree to which the most promising providers satisfy your needs; this may entail creating thorough discovery documentation and seeking demos. 

Automating Accounts Payable Using NetSuite  

By automating invoice processing and payment, NetSuite's Accounts Payable Solution benefits businesses by saving time, enhancing control, and boosting productivity. The program, for instance, can reduce the time and work needed to process invoices by doing away with manual entry and automatically figuring out discounts. If there are discrepancies between invoices and purchase orders, exception processing is automatically handled. In order to lower the possibility of misplaced invoices or fraudulent invoice payments, NetSuite also offers real-time visibility into the entire accounts payable process.  

Searching for a powerful NetSuite consulting service? Get in touch with Jobin & Jismi to find out more about NetSuite Consulting and the advantages it offers to companies.