Want all the information you need about accounts payable workflow automation? You’ve come to the right place.
In this article, you’ll learn:
- What accounts payable automation is
- 11 different benefits of automating this process
- The best tools to automate A/P
- How to specifically automate A/P
Let’s dive in!
What is Accounts Payable Workflow Automation
Accounts payable automation is (obviously) the opposite of accounts receivable (A/R) automation, a topic covered in detail here.
Accounts payable (A/P) as you likely know, is money owed to vendors, service providers, and products where the service or material goods have already been provided. In a nutshell, these are short-term debts paid by your organization.
The process by which you enter these debts into your system and pay them is your AP workflow.
AP workflow automation refers to a company turning certain elements of their process on autopilot via software.
As a business, automating your payment agreements can seem like a “backburner” task, but it has a ripple effect on your operation. For accounting firms, offering to set up accounts payable automation is a valuable service to add to your firm’s offering.
11 Benefits to Accounts Payable Workflow Automation
Streamlining bill payments can often get overlooked, but the accounts payable process or AP process has a number of benefits such as:
The word “automation” kind of outlines this benefit. If regular invoices come in, get entered into your automated system, get paid, and are reconciled with little to no human interaction, there are obvious time savings.
2. Smoother Operation
Depending on the accounts payable process you layout, approvals are often much faster and automated payments mean everyone’s happy.
3. Insights (via Data)
Paper invoices aren’t very useful to your business. You have to store them, digitize them, and pay them. Accounts payable automation or AP automation tools show you useful data like how much you’re paying (in total) based on vendor, product type, and just about any other category.
4. Preserved Data
Speaking of paper, you have to dig it out if there’s ever a problem, or at the very least look it up in your QBO (or other tools). An AP automation software will likely be much quicker to resolve any sort of payable issue.
5. Quick Audits
Run reports to see the biggest payments, quickly notice anomalies, like one payment was twice as much as all the others, and see how well your AP process is working all within the AP automation software you use.
Automating payments, paying quickly, and being easy to work with can mean better contract terms.
7. Saved Money (via Fewer Errors)
Approval emails getting buried in the inbox, checks lost, or just letting an invoice slip — All of these issues are mitigated by using accounts payable automation.
8. Improved Vendor Relationships
Every business knows where their quickest payments come from (and their slowest). Always paying on time is a great way to get attentive service.
9. Mitigate Payment Fraud
The checks and balances, as well as end-to-end tracking in the right AP automation software, means fewer opportunities for someone to take advantage of paying the bills.
10. Easily Adds to Your Tech Stack
There are dedicated A/P tools, and those that do other things (like A/R), but no matter which you choose, they all integrate with virtually every other financial software businesses commonly use.
11. Fewer Paper Cuts
You may think this is a joke, (kind of) but not entirely. Digitally tracking invoices and reducing checks leads to lower storage and fewer headaches related to a bulk paper organization.
Technology to Help Automate A/P (6 Tools to Consider)
Here are six tools that are either dedicated to accounts payable or offered on their platform of related tools.
This is a specialized tool almost exclusively helping businesses pay their bills automatically, including A/P, purchase orders, and even your monthly utility bills.
Bill.com is a big player in the space. If you see a tool that doesn’t offer accounts payable automation, it’s because they directly integrate with Bill. This past September, Bill.com acquired Invoice2go, which is an all-in-one tool that helps small businesses, freelancers, and more.
This solution focuses on both A/R and accounts payable automation, including taking credit card payments. They’re one of the most upfront, in terms of pricing and features.
Melio is a tool that handles both payables and receivables, but a cool feature here is the ability to pay invoices with a credit card even if a vendor does not take them.
Another handling both sending and receiving payments, Routable also touts a mass payment feature for anywhere from 500 to 10,000 payments a month.
Emburse Certify is primarily an expense management tool, but also has a full-fledged A/P tool available.
How to Automate Accounting Payable Workflows
So, how does a company (or accounting firm) go about finding, setting, and implementing the best A/P workflow?
Let’s lay it out in these five steps.
1. Analyze Your Current Accounts Payable Process
Typically, a basic flow involves:
- Getting the invoice
- Entering if in your automated system
- Running it through some sort of approval process
- Paying the bill either by physical check or some form of digital payment
- A reconciliation process with your bookkeeping solution, to keep your books clean
In order to automate your accounts payable process or AP process, you first need to understand what your current process looks like and where most of the inefficiencies lie.
2. Document Your Ideal Workflow
Armed with reality and the insights of those in the trenches (aka, your team who has to wait days for A/P approval) — you’re ready to rethink the flow.
How can you speed things up?
- Create a set series of questions for employees requesting goods and services?
- Ask vendors to accept credit payments?
- Work out more favorable terms with your most frequent invoices?
- Streamline the approval process by empowering your A/P team?
Example: Document recurring vendors and empower your team to pay without preapproval for any amount within a certain range. If it’s too high, it needs to be cleared.
3. Shop for Accounts Payable Workflow Automation Software
I’ve already given you an example of the best-known accounts payable automation solution or AP automation solution, but you’ll have to compare those to your own needs.
Here are 3 things to consider, during your search:
- Current tools: Consider how your accounts payable automation workflow tool will integrate with your already existing tool set.
- Reviews: Look on 3rd party automation software review sites, like G2 or TrustRadius to see honest reviews about the tools you’re seriously considering. Or consider joining a community of forward-thinking accountants over at Future Firm Accelerate® where members compare and contrast automation software options to make their firms’ and clients’ lives more efficient.
- Service: Check to see the customer service available for these tools as sometimes support matters are critical when it comes to bill pay. Can you get speedy support when you need it?
4. Implement the Software
Either yourself, or a designated person charged to find and implement the automation software needs to login, set up the company details, and begin learning how to use the newest tool in your company.
- Check for any tutorials (provided by the provider)
- See if there is a knowledge base, to walk you through more specific details
- Some tools have onboarding specialists, which could be a huge leg up
5. Test and Roll Out the Workflow
It’s always smart to begin with a test before pushing any new software live.
I suggest running through your entire workflow with some test invoices first.
After you’re satisfied with testing, it’s time to really kick things off. Send memos, have meetings, and get as many invoices in digital format as possible — using the software to automate as much as possible.
Then, you’ll effectively have some level of accounts payable automation.
Let’s Automate Your A/P
Hopefully, this post has helped you move forward with automating this typically manual part of the accounting process.
Just drop them below.