Automating accounts payable (AP) is an effective way to streamline your invoice approval and payment processes, reduce costs, and strengthen supplier relationships.
Traditional AP processes can be time-consuming, prone to human error, and involve a lot of manual data entry. By adopting automation tools, businesses can simplify invoice processing, speed up approval workflows, and gain better visibility into payment cycles.
In this article, we’ll guide you through the questions to ask and steps to consider when you’re ready to automate accounts payable and create more efficient AP processes for your organization.
Why Automate Accounts Payable?
Automating accounts payable can deliver many benefits for AP departments, including:
• Lower operational costs
• Faster invoice processing
• More timely payments
• Better accuracy
• Fewer manual tasks
• Improved efficiency
• Enhanced visibility
• Stronger supplier relationships
Additionally, automation allows AP teams to focus on higher-value tasks like data reporting and strategic analysis.
How to Automate the Accounts Payable Process
While there’s no one right way to bring AP automation to your organization, following these general guidelines may help your team begin the process.
1. Build a Business Case
Gather data like invoice volume, average cost per invoice, and other accounts payable metrics to build a strong business case for AP automation. Highlight clear numbers that show potential savings by comparing current costs with projected costs under AP automation.
Provide a cost estimate with a projected return on investment (ROI), factoring in staffing costs and IT resources to give a realistic view of both upgrade costs and long-term savings.
2. Rally Support from Senior Management
Take your business case up the chain of command. AP managers, controllers, and CFOs are key leaders in the AP automation transition process. Demonstrating clear ROI will help get them onboard.
Consider setting up a committee of leaders from departments including accounting, procurement, supply chain, and other impacted teams to establish a consensus around the best solutions.
3. Determine System Requirements
While some AP solutions offer strong automation out of the box, many companies need custom development. Make a list of your unique requirements and use them to inform a project roadmap with development milestones, operational goals, and target dates for the upgrade.
4. Choose a Software Provider
Identify AP automation providers and contact them to request a demonstration or software trial. Alternatively, you can issue a request for proposal (RFP) to the providers you’re considering.
Your RFP should outline business requirements, challenges, and necessary system integrations. Include inquiries on references, past performance, costs, and timelines. Ask detailed questions to ensure a thorough evaluation.
5. Finalize the Details
Once you have chosen the best AP automation provider for your business, your legal team and financial decision-makers will need to get involved. Some providers offer standard contracts, while others may collaborate with your organization for a customized agreement.
During negotiations, consider your budget, implementation costs, ongoing service fees, termination penalties, service-level agreements (SLAs), and liabilities for potential system failures.
6. Conduct a Pilot Project
Once your contract is set, consider starting with a pilot project or proof-of-concept. This small test doesn’t require full installation or integration, but it gives quick insights into functionality and helps refine your roadmap and deployment timeline.
The pilot may reveal opportunities for improvement. Though it involves some effort, the potential for significantly better results makes testing worthwhile.
7. Communicate with Internal Stakeholders
Strong communication to internal teams during planning and deployment can generate support and excitement for your automated AP system. Regular updates, especially to impacted employees, and broader emails sharing wins and upcoming changes, can boost acceptance.
8. Engage Suppliers
Gaining the maximum benefits from AP automation requires supplier cooperation. Remind vendors that upgrades benefit them too by reducing costs and speeding up payments.
Some AP automation providers offer full-service vendor onboarding. If the provider you choose does not, start planning for the time and resources this task will require.
9. Launch the System and Make Adjustments
After rolling out your automated AP system, evaluate performance to ensure continuous improvement. Track key accounts payable metrics and consider a monthly scorecard to update stakeholders. Set benchmark goals and analyze any improvement opportunities.
10. Monitor and Optimize
New technologies and evolving business needs present ongoing opportunities for improvement. Regularly assess and refine processes once you’ve automated accounts payable. Continuous improvement is key to achieving best-in-class system performance.
Questions to Ask Before Automating AP
If you’re considering how to automate accounts payable at your organization, consider the following questions that will help guide you in the right direction.
Is AP Automation a Good Fit Based on Transaction Volume and Growth Forecast?
If your organization processes fewer than 100 invoices or payments per month, managing the workload may remain feasible. However, once this threshold is surpassed, errors and inefficiencies may occur more frequently, necessitating AP automation.
If your business is operating steadily, maintaining your current AP process may be sufficient. However, if your company is expecting growth, your accounting department should be equipped to manage the increasing workload.
Will AP Automation Change Our Accounting Processes?
Map out your current processes to identify inefficiencies and their causes. Determine which parts of the process are essential and how automation may affect visibility and control.
Avoid wasting time on solutions that don’t address your department’s issues or create new ones. The right tool should streamline tasks like data entry and invoicing while preserving control over routing and approvals.
How Will AP Automation Work with Our Current Accounting System?
Since not all solutions integrate with every accounting system or enterprise resource planning (ERP) platform, ensure compatibility early to avoid wasting time on unsuitable solutions.
Choose an AP automation solution that connects directly, either via application programming interface (API) or file-based methods, without requiring migration to a new platform.
How Will the Implementation Process Work?
Before assessing the value of a solution, consider its implementation timeline and process. How long will onboarding take, and what kind of support will be available once it’s live?
AP automation typically takes 30 to 45 days once you’ve chosen a solution. Some providers may offer dedicated experts for implementation and ongoing support to address any future issues.
Learn More About How to Automate Accounts Payable
Automating accounts payable can transform financial operations by increasing efficiency, reducing errors, and improving cash flow management. By eliminating manual tasks such as data entry and invoice processing, AP automation allows businesses to focus on strategic priorities. It can provide real-time visibility into financial data, streamline approval workflows, and enhance supplier relationships through timely payments.
Choosing the right solution that integrates with existing systems is crucial for a seamless transition. With proper planning, implementation, and ongoing support, AP automation can drive long-term improvements, ensuring your organization remains positioned for growth.