AP Automation: Simplify how you manage accounts payable

Key takeaways: 

• Handling accounts payable processes manually can be a big drain on businesses, resulting in slower processing times, high rates of human error, a lack of financial visibility, and increased costs/missed opportunities for cost saving.

• Automating accounts payable processes makes it easy to streamline the management of financial outgoings, resulting in cost efficiencies, more time for strategic work, more accurate data, and faster and more reliable payment processing (leading to happier vendors).

• You can automate some accounts payable tasks such as invoice digitisation, invoice matching, approval routing, payment processing, and reporting/reconciliation.

Tired of the endless tedious tasks and fragmented workflows involved in manually managing your accounts payable process? If so, you join millions of businesses around the world likely feeling the same way. Not only does the traditional accounts payable process take up hours of your team’s time and sap your resources, but it’s also error-prone and can be more expensive in the long run.

To overcome this hurdle, introduce accounts payable automation to your business. Let’s explore how spend management platforms are helping global businesses take control of their finances, improve their data accuracy, and save money with the power of AP automation.

What's AP (accounts payable) automation?

Accounts payable (AP) automation is using technology to optimise the accounts payable process, reducing the need for manual intervention.

Accounts payable is any money that you owe to your suppliers and vendors for the goods and services you’ve purchased on credit. Some examples of common APs are invoices owed to suppliers and vendors, utility bills, and the cost of raw materials used to create products.

When you buy something on credit, it shows up on your balance sheet as a “current liability”. You may currently handle the tracking of these owed payments, ensuring they are paid on time, processing the payments, reconciling invoices, monitoring expenses, and maintaining accurate records for tax purposes.

However, as your business grows, AP automation can become a powerful tool that replaces manual steps with a faster, more accurate process – from the initial receipt of an invoice, to invoice matching, payment processing, and managing tax records.

Using AP automation software can save you huge amounts of time with capabilities like invoice capturing and matching, reliable and efficient payment processing, and real-time data insights.

Challenges of manual accounts payable processes

Manual accounts payable processes can have a big impact on the efficiency of your business’s operations. Traditional AP methods drain resources, with long hours spent manually handling payments, entering data, matching invoices, and managing approval workflows. They also make it difficult to find any specific payment information when it’s needed. Old school AP processes force your team to dedicate their time to chasing invoices and typing in spreadsheets, instead of more strategic and productive activities.

🟠 Slow processing times

Making payments manually increases processing times, which can lead to unhappy suppliers being left waiting for their funds. Strained business relationships can then impact your business in multiple ways, including lowering your price negotiating power, and delayed payments hampering operationally limiting your ability to take advantage of early payment discounts.

🟠 High error rates

We’re all human, and we all make mistakes. Manual AP processes can lead to higher rates of human error due to incorrect data entry and fiddly paper document handling. Whether it’s errors, misinterpretations, or inconsistencies, manual processes leave more room for inaccurate records and payment issues.

🟠 Lack of visibility

You need quick access to the right real-time insights to make strategic decisions. Manual AP processes can't provide an immediate view of your cash flow and forecasts since you can't see a real-time view of your spending, or outstanding payments. This can also lead to cash mismanagement and shortfalls that could have otherwise been properly managed.

🟠 Increased costs and missed opportunities

Manual AP processes take up a lot of human resourcing, as they’re labour-intensive. You could be spending hours managing manual invoicing and bill payment processes, making your financial management more expensive than it needs to be, but can also lead to missed cost-saving opportunities, like early payment schedules or other reductions.

Benefits of accounts payable automation

Automating your accounts payable processes can lead to quicker payment processing times, improved cost efficiencies, and give you a clearer view of your finances. Best of all, AP automation doesn’t require advanced technical skills to get started. Financial solutions like Airwallex are built with simplicity in mind, so your team can get up and running quickly, without the steep learning curve.

🟠 Quicker payment processing times

With AP automation, tasks like invoice receipt, data entry, approval routing, and payment execution, can now be completed in minutes. Solutions like Airwallex Bill Pay are integrated with a Business Account, making it easy for you to transfer funds from your account and have payees ‌receive their funds in as little as three days from the date of transfer.

🟠 Improved cost efficiency

Automating routine tasks reduces the need for extensive hours of manual labour, allowing you to reallocate employees to focus on higher-value tasks such as problem-solving and strategic planning, which can drive better business outcomes. Headcount costs are also reduced, as fewer resources are needed for repetitive tasks.

🟠 More accurate data

Automation also can help minimise errors that often occur with manual data entry, allowing you to have a good view of your finances at any point in time. For example, Bill Pay automatically matches payments to invoices. Its integration with accounting software can further simplify reconciliation. This ensures accurate, up-to-date financial records, essential for planning and compliance.

🟠 Better financial visibility

When it comes to tracking data in real-time, integrating your AP systems with your business account provider gives you an immediate and complete view to not just your accounts payables, but also your receivables, bank transfers. This allows for better financial control, forecasting, and decision-making.

For finance leaders, this level of visibility turns AP from a back-office burden into a source of strategic insight. With a clear view of liabilities and spend patterns across the business, CFOs and controllers can manage working capital more effectively, negotiate better terms with suppliers, and plan with greater confidence.

How does accounts payable automation work?

AP automation steps in to prevent manual processes becoming bottlenecked and slowing operations. But how does it actually work? Here is break down of the steps behind AP automation.

1️⃣ Invoice capturing with OCR and EDI

The first step of an automated AP process is to capture and digitise incoming invoices. This happens using Optical Character Recognition (OCR) technology, which converts invoices into digital data which extracts key data such as vendor name, invoice amount, and due date.

2️⃣ Automated invoice matching

After data has been captured, the software will automatically compare and match invoices against their corresponding purchase orders and delivery receipts, ensuring everything aligns perfectly. This helps to quickly identify errors, and ensures that only accurate invoices move to the next stage.

3️⃣ Workflow routing for approvals

From here, invoices are sent through an approval workflow. Automated AP systems give you the ability to customise your invoice approval workflows to match your business needs. For example, you can create a multi-layer approval workflow based on the currency of the bill or the transaction amount, as well as setting up notifications to keep your team on top of their designated approvals.

4️⃣ Payment processing

Once the invoice has been approved, the AP system processes the payment, ensuring timely and accurate payments. If you manage payments in foreign currency, choosing a multi-currency business account like Airwallex’s will help you minimise foreign exchange fees and cross-border transaction fees when you pay vendors in foreign currencies.

5️⃣ Reporting

After payment execution, the AP system will manage reporting and reconciliation for you, making things simple come tax time. An automated reconciliation process matches transactions with bank statements to verify that the amounts and beneficiaries align. AP software generates detailed reports on metrics like business spending patterns, and identifies potential cost-saving opportunities.

Automate and simplify your accounts payable process with Airwallex Bill Pay

We built Bill Pay to help businesses like yours reduce operational inefficiencies, so you can spend less time on tedious, manual accounting tasks and more time building your business and serving your customers.

With Airwallex Bill Pay, you can eliminate manual entry by automating every step of the way, from uploading the invoice, to approving and sending global payments. That means lesser admin, fewer errors and more visibility across your finance stack. To further streamline the process, you can also set rules for multi-layer approvals, ensuring that each transaction is thoroughly vetted and aligned with your policies.

And because it integrates directly with tools like Xero, QuickBooks, and NetSuite, you can sync your chart of accounts, import bills, and automatically push payments back into your accounting software, keeping your records accurate and reconciliation fast.

AP Automation Frequently Asked Questions

What is the ROI of AP automation?

The ROI of AP automation can be significant. It can provide cost, lower error rates, and improved cash flow management. You may also become better positioned to take advantage of cost efficiencies like early payment discounts.

How much does AP automation cost?

AP automation costs vary based on factors like software fees, implementation, training, integration, and support. Prices can range from per-user or per-transaction fees to flat rates. Consulting and data migration may also add to the total cost.

Is AP automation suitable for small businesses?

Yes – businesses of all sizes can benefit from AP automation, especially small businesses with stretched teams. Consider AP automation to streamline your invoice processing, reduce manual data entry errors, and free up your busy team so they can focus on more important tasks.

What security measures are in place with AP automation software?

AP automation software typically includes robust security measures such as multi-factor authentication, encrypted data transmission, secure user access controls, regular audits, and compliance with standards like GDPR and SOC 2. These features help protect sensitive financial data and ensure regulatory compliance.