Unveiling the power of accounts payable automation

Almost 80% of companies are forecasting an increase in the volume of payments processed through accounts payable systems and 75% expect an increase in the number of invoices handled via their accounts receivable systems in the next three years. With end-to-end influxes this large, businesses would significantly benefit from digital transformation in their accounting and payment functions.   

Generative artificial intelligence is widely known as a powerful business tool that automates and augments creative processes, enhances decision making and drives innovation. The demand for trusted solutions in finance and accounting is real and not new — 48% of respondents in IDC’s 2022 AI Path Survey stated they planned to use artificial intelligence in finance and accounting business processes. Yet, 2023 research estimated that 36% of businesses still had not made the introduction of any kind of automation into AP. There is, however, a small subsection — a mere 4.6% — that have fully automated their entire AP/AR processes and are already reaping the benefits.  

The overwhelming dependence on “the way things have always been done” mentality and reliance on manual processing hinders an enterprise’s success. It’s time finance and accounting leaders seriously considered automating AP functions and marking its place as a standard business practice.  

Debunking the myths  

There are three main factors contributing to accounting teams’ and firms’ reluctance to trust automation — apprehensions about cost, complexity and security.  

While there is always an initial investment and time-to-value period when introducing new software or workflows, using a cloud-based system doesn’t require any additional infrastructure. Better yet, there are select apps that are natively built on existing leading CRM and ERP platforms such as Salesforce that can provide cost efficiencies.  

To answer the concern of complexity and scalability, natively built AP automation apps are now available on these same leading platforms and they’ve been through rigorous testing from the parent providers to ensure they’re made to scale and handle evolving business needs. Finally, according to a 2023 survey by the American Institute of CPAs, nearly 80% of businesses use cloud-based accounting software to manage their financial activities, so the risk versus reward in terms of data security is something accounting teams have already overcome.  

The cost of manual errors 

Now that we’ve debunked the main myths surrounding automation, let’s look at the cost of manual errors versus automation.

Mistakes in AP can be extremely costly year after year as it is a critical player in a business’s bottom line. When “fat-fingering” puts an extra zero into a wire, a company’s cash flow and reputation are both put in jeopardy. Manual invoice processing alone encompasses labor, paper processing and storage, errors, fraud, late payment fees and regulatory penalties. This process is fraught with windows to make costly mistakes in each step.  When using automation, AI pulls the numbers directly from the data so there’s no room for error. So, the reward of leaning in on automation is greater than the risk of continuing to rely on manual processes.

Functional and human benefits of automation

Given that AP is a repetitive, pattern-based and mathematical workflow, it is a prime candidate for automation. Data extraction, document processing, approvals, processing invoices and purchase orders and streamlining transaction review are the main day-to-day tactical workflows that can be offloaded to software.   

Removing this tedious admin work enables accounting teams to react quickly and make decisions proactively. In turn, teams gain bigger-picture visibility which allows better strategic planning, freeing humans to do human thinking while it handles the busy tasks. This more strategic workflow eliminates human error, allows for a leaner team while getting more done, eliminates redundancy and the possibility of mistakes, and boosts vendor relationships.  

Finding the right partner

The key to ushering in the new age of AP automation relies on finding the right partner and avoiding piecemealing systems. In the last 10 years cloud solutions have taken over on-premises systems, and with APIs, software changes and improvements occur per quarter, at a minimum. Be mindful of anything that requires over customization as the next software update or platform overhaul could make it incompatible for your needs and growth if you do implement a lot of configurations. If you’ve invested in a CRM, double down on offerings that are on platform as they’re more than likely to align with the long-term direction of your business and will be easier to implement. Innovation of trusted and adaptable on-platform automation solutions flourished in 2023 and will continue to this year.

The benefits of automation in the AP process are clear and compelling. By removing tedious, repetitive tasks, automation allows accounting teams to focus on strategic decision-making and proactive planning. As businesses continue to forecast an increase in the volume of payments and invoices, it is evident that digital transformation in accounting functions is not just beneficial but essential for long-term success. It is time for finance and accounting leaders to seriously consider and prioritize the automation of AP functions as a standard business practice.