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Best Practices to Implement in Accounts Payable Automation

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Best Practices to Implement in Accounts Payable Automation

Given the immense benefits it has to offer, more and more companies are inclined towards automating their accounts payable (AP) processes. Studies show that automating accounts payable can reduce the operational costs by 81% and improve the efficiency by 73%.

Using cutting-edge technology, enterprises are automating the time-consuming task of manual entry into a process that can be carried out using modern software to deliver precise results efficiently. However, accounts payable automation needs to be aided by certain practices to ensure that maximum benefits can be derived from the automation process.

So, what are the best accounts payable automation practices to implement – we’ll find out in this blog. 

Let’s get right into it:-

What does Accounts Payable mean?

Accounts payable is an accounting term used to denote the outstanding amount of money owed as debt by a company to its short-term creditors. 

Usually, companies purchase goods on credit which need to be paid back in a limited period of time. As most companies usually function in similar recurring debt circles with their creditors while carrying out their day-to-day processes, it can be a very complex task to keep track of all such creditors and make timely payments when the money becomes due. While this is only a brief idea of the concept, visit our blog to explore it in detail.

Understanding AP automation

Accounts payable automation is essentially the automation of the manual aspects of accounts automation using tools and software. 

According to the Institute of Finance and Management (IOFM), about 3.6% of manually generated supplier invoices have errors - that's where automation comes in. AP Automation aims to minimize human intervention and eliminate the possibility of error in the accounts payable process. Additional benefits of automation are that because it relies on machines and programming, it doesn’t experience human-related issues such as laziness and exhaustion. This helps ensure that the output is consistent, efficient and error-free. It also allows users to keep a proper record of the activities carried out and ensures that the entire process remains transparent. 

Thus, AP automation indeed has several advantages over traditional account payable processes and can lead to saving of both time and resources if optimized efficiently. If you wish to know more about the meaning of AP automation, our blog has additional information to help.

Best practices to adopt while implementing AP automation

To save you the trouble, we’ve compiled a curated list of the accounts payable automation best practices to implement along with your to ensure that it remains efficient and effective.

They are as follows:–

1. Involve your staff 

Some amount of resistance is inevitable when you introduce automation processes into your business. But for the automation process to be successful, every member in the finance team needs to be on board, and be a committed part of the project. Any attempts of forced change can lead to the negation of any benefits that could be derived from the automation processes. So, it is best to hear from everyone in the team, and make them understand how it would make their life easier.

Make sure to take note of any obstacles that might emerge among your staff regarding such automation, and take effective steps to resolve the issues immediately. Documenting such issues and feedback gives you a better idea of the key areas that are to be focused on to address the real problems of the users. Once the automation process is rolled out, ensure regular reviews of the process and fine-tune the process accordingly for effective results.

2. Implement phased automation 

There are several parts of the process that can be automated in the accounts payable process, but be careful to select the right automation processes to adapt. Reviewing the relevant areas of your AP process in which such automation is urgently required and implementing them accordingly in a phased manner can help you save resources and money. It also allows you to focus on a single key area such as transition to digital invoicing and e-payments, reduced paper trails, efficiency managements, etc and develop it completely instead of going about the entire process in a haphazard way.

Further, taking up too many automation tasks at the same time can be confusing for your staff. Allow the staff to understand and adapt themselves well to a given number of automation processes before introducing them to any new methods of automation. This ensures that there is no ambiguity among the employees and that the transition can be carried out with ease and clarity.

3. Assign a project manager for the automation process 

The transition from traditional methods of accounts payable processes to automation can be a complicated task. So, it is important to have a dedicated person who acts as the crucial point of contact between all the dealings of your software supplier. The person shall be responsible for optimizing the automation flows and maintaining active communication with all the internal stakeholders to ensure that all the possible issues are resolved in real-time.

Apart from monitoring and optimizing tasks, the project manager should also be tasked with regular reporting and devising ways to improve the system so as to ensure that it can be tweaked to maintain the ideal efficiency in all real-time situations. Since automation is a machine-oriented process, its efficiency and precision can only be kept consistent by updating the system in real-time, and the project manager plays an important part in this role.

‍4. Ensure professional training 

Although the process of automation requires minimal human intervention, some amount of human expertise and supervision is still necessary to run the processes. If the employees are untrained and unaware of how the process works, it could lead to serious losses in terms of damage, delay or malfunction of the system. Thus, it is important to ensure that the concerned employees are trained by professionals to use the automation systems correctly. 

Automation software also provides real-time data and feedback at the click of a button. It is important to keep the team updated with such real-time data and tweak the system as per the feedback received to maximize the output of the automated processes. Remember to consistently track such data and analyze it to learn and improve your automation process as per the real-time needs of your business. Similarly, it is also important to train your staff to understand the importance of such data and to implement the necessary changes. 

 5. Enter new invoices immediately 

According to the Aberdeen Group, AP automation can save up to 5 days payable outstanding (DPO) on average. However, that depends on how soon the transition to digital invoices is made. So, it is important to ensure that paper invoices are discarded as soon as possible since paper invoices require manual entry, and it eventually increases the time required to process the desired output through AP automation.

Another advantage of digital invoices over paper invoices is that they are easy to keep track of and compare.

Further, the PayStream Advisors’ 2017 AP & Working Capital Report also found that lost invoices and incomplete invoices were reported as pain points by 36% and 39% of employees. With digital invoices, such problems are unlikely to happen. Thus, it is important for the team to get accustomed to handling digital invoices, which can be directly added to the software from day one itself. This helps keep a transparent record as well as ensures that maximum benefits can be derived from your automation process.

‍6. Set up designated workflows 

Maximum efficiency from the automation process can only be derived when there is a clear workflow framework which designates each member with a specific responsibility. This ensures that there is no ambiguity and the team can work efficiently without any conflicts with each other, especially during tight deadlines. Employees will also be able to handle more work without it affecting the quality of the outputs.

Since every employee has a designated role, it becomes hard for the employee to evade their responsibilities and can be held personally accountable for the work they were tasked with. Moreover, a clear role makes certain that there is someone to take accountability and allows you to nudge the person to complete the same immediately. 

‍7. Integrations

Accounts Payable automation in isolation can be of little help if the rest of the systems are not automated. This includes all the ancillary systems, customer service as well as any vendors or suppliers. So, it is important to develop any other systems in place to ensure that they provide digital data to allow easy input into the automated AP system. It can prove useful in avenues such as enterprise resource planning (ERP), customer relationship management and other relevant financial systems.

In the case of vendors, most AP software allows the setting up of vendor access portals to facilitate self-service. Implementing this in your system is likely to save valuable time as vendors and suppliers can easily check the status of their invoices and get answers to common queries through the portal itself. Thus, it is essential to integrate the ancillary systems to ensure end-to-end automation to derive the most benefits.

‍8. Enable auto-save processes 

While automation processes save time, it still requires certain points of manual entry. It can be very convenient to enable auto-saving and auto-login to ensure that you save time. You can also use advanced methods of automation to ensure that the data is digitally stored and all the relevant business documents are automatically uploaded into the system via the electronic document management systems.

Another step is to integrate workflow automation tools such as Active Directory, SAML, etc., to further improve the system efficiency. You can also consider implementing single sign-on (SSO) to enable users to automatically and securely authenticate users using their personal credentials. These tools can go a long way in reducing delay and ensuring that the desired results are achieved efficiently. 

‍9. Take advantage of early payment discounts 

Early payment discounts essentially refer to a form of trade finance where the buyer avails of discounts by paying the full invoice amount before the maturity date. According to PayStream Advisors’ 2017 AP & Working Capital Report, an average of 31% of respondents found the manual entry of invoices for payment and approval to be the most time-consuming task. However, AP automation can go a long way in easing the process and ensuring that you can avail early payment discounts offered by most vendors by ensuring that the results can be delivered efficiently.

‍10. Eliminating accounts payable fraud 

Any process that involves money is termed as high-risk and top priority for a business. This also includes AP automation. It is recommended to have significant policies and procedures in place so that unnecessary risks can be avoided. Frauds in AP automation mainly occur in expense reports, billing and kickback schemes, checks, etc. 

The Association of Certified Fraud Examiners (ACFE) suggests some red flags to be aware of, particularly within invoices, checks, vendor’s master file or dummy accounts, received complaints, and abnormal behaviour of employees. 


The automation process uses machines to replace human processes to improve efficiency and precision. However, it is unlikely to be effective if the transition to automation is not aided by a change in the related factors such as trained staff, system integration and digital invoices. Thus, it is important to understand that these processes need the ideal practices to ensure its smooth functioning. So, these are the top 10 accounts payable automation practices to implement along with the automation processes to ensure that you derive the maximum benefits from your automation processes.

Suggested Case Study
Automating Portfolio Management for Westland Real Estate Group
The portfolio includes 14,000 units across all divisions across Los Angeles County, Orange County, and Inland Empire.
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Pankaj Tripathi
Written by
Pankaj Tripathi

Helping enterprises capture data for analytics and decisioning

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