What is AP Automation and Why Do I Need it?

Accounts payable automation or AP automation is a term used to describe the ongoing effort of many companies to streamline the business process of their accounts payable departments. The accounts payable department's main responsibility is to process and review transactions between the company and its suppliers. In other words, it is the accounts payable department's job to make sure all outstanding invoices from their suppliers are approved, processed, and paid. Processing an invoice includes recording important data from the invoice and inputting it into the company’s financial, or bookkeeping, system. After this is accomplished, the invoices must go through the company’s respective business process in order to be paid.

This process is straightforward but can become very cumbersome, especially if the company has a very large number of invoices. This problem is compounded when invoices that require processing are on paper. This can lead to lost invoices, human error during data entry, and invoice duplicates. These and other problems lead to a high cost per invoice metric. The goal of automating the accounts payable department is to streamline this invoicing process, eliminate potential human error, and lower the cost per invoice.

Some of the most common AP automation solutions include scanning and workflow, online tracking, reporting capabilities, electronic invoice user interfaces, supplier networks, payment services and spend analytics for all invoices.

Accounts Payable Automation can be a very useful tool for the AP department. This allows vendors to submit invoices over the internet and have those invoices automatically routed and processed. Because invoice arrival and presentation is almost immediate invoices are paid sooner; therefore, the amount of time and money it takes to process these invoices is greatly reduced. (financial Operations networks, 2008) These solutions usually involve a third-party company that provides and supports an application which allows a supplier to submit an electronic invoice to their customer for immediate routing, approval, and payment. These applications are tied to databases which archive transaction information between trading partners. (US Bank, Scott Hesse, 2010) The invoices may be submitted in a number of ways, including EDI, CSV, or XML uploads. PDF files, or online invoice templates. Because E-invoicing includes so many different technologies and entry options, it is used as an umbrella term to describe any method by which an invoice is electronically presented to a customer for payment.

As companies advance into the digital era, more and more are switching to electronic invoicing services to automate their accounts payable departments. Some even believe it to be an industry standard in the near future. According to a report done by the GXS team in 2013, Europe is adopting government legislation encouraging businesses to adopt electronic invoicing practices. The United States has no such legislation yet but does recognize the value of this technology. The US treasury estimated that implementing e-invoicing across the entire federal government would reduce cost by 50% and save $450 million annually.

With the increasing availability of AP Automation, businesses are driving process improvement in AP even further. By applying end-to-end process automation to their accounts payable department, organizations can accelerate invoice processing speed and accuracy while improving operational costs. Some organizations report that by implementing AP Automation they have managed to almost completely eliminate human intervention from the AP process, thus saving 65% to 75% of the time that was previously spent on manual processing.

​About Vision360 Enterprise and BlueCreek Software: BlueCreek Software is the developer of industry leading accounts payable automation system, Vision360 Enterprise. Vision360 Enterprise provides accounts payable automations services, systems and solutions to leading companies across the United States and Internationally. For more information about our Vision360 Enterprise accounts payable automation solutions please contact us or call (603) 437-1400.