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A recent study stated that a whopping 94% felt finance automation helped them immensely during Covid Lockdowns.
That’s not surprising now, is it?
With the world shifting to a 100% digital era, it is time you too considered AP automation for your business accounts payable.
If you have a business using multiple accounts payable (AP), you should start looking for automated vendor payment solutions.
However, just before jumping in, you should know exactly what AP automation is and how it works.
In this blog, we break down Accounts Payable automation and the critical technologies it uses to make business decisions systematically.
Table of Contents
It is a process where the accounts payable process is managed digitally with automation software. It helps manage approvals, and receive invoices, on a single payout platform.
The importance of APIs in AP automation is unparalleled. They run the entire system.
When APIs break, the system breaks.
That’s just how it is.
APIs are interfaces that software-based computer applications use, to unlock data. They perform functions like data transfer, integration, and software connectivity between software, apps and computer systems.
APIs enable software-based applications to “speak to” each other. It operates as another security layer that helps communicate between systems.
APIs are connective nodes for generating more opportunities, increasing productivity and ultimately improving vendor/ customer experiences.
APIs can convert your simple accounting software into high-performance financial management software. It also provides the following:-
Regarding the functionality of APIs within AP automation, they make information exchange achievable to increase the efficiency of payment.
Moreover, invoice sharing between businesses becomes easier, more reliable, smoother and faster. Other AP automation technologies rely on a sturdy set of APIs for stability.
Data has emerged to be the most valuable corporate asset. It has become a crucial differentiating factor.
ML allows all available data points – cash flow, payments, invoices, customer behaviour and many more, to arrive at insightful conclusions.
This ability to make decisions quickly and efficiently is only enabled through making good use of data.
It results in intelligent decision-making to implement some major changes like personalized invoicing and payments to customers and vendors.
This is where machine learning, steps in as a differentiating factor. It can analyze historical data and understand the behavioural patterns of vendor payments.
When the suppliers don’t pay on time, machine learning can leverage the behavioural data to alert the business about it.
Machine learning in AP automation solutions can also enable businesses to predict vendor payment risks, forecast future spikes or drops in spending and the probability of invoice frauds.
It can also help identify which vendor has been the most inconsistent in terms of their invoice formats.
In finance, matching is precisely what it sounds like. Matching means matching the items on the invoice with information on your sales receipt or purchase order.
Mismatching on the other hand is when something doesn’t correspond,
for example, the PO amount doesn’t equate to the invoice amount.
Without a centralized and automated system, it is next to impossible to investigate mismatches. It can go on for hours.
Automating matching processes streamlines AP to manage almost unlimited invoices and POs in relatively no time.
In the event of an audit, don’t fret, because your records will be organized in a central, accessible and secure location.
People tend to generalize RPA in terms of its potential. It is often looked at as a software tool which automates repetitive manual processes.
This is a core functionality of RPA, but it is not all.
RPA can be considered as an alternative to the manual workforce. It is literally a digital workforce that has programs with electronic circuit instructions to perform tasks.
RPA can be measured based on the number of invoices it can process. RPA once implemented can be seen in action as tasks, that index numbers into the digital invoice.
This technology is crucial where repetitive, routine, high-volume tasks need to be performed that takes a lot of time to perform manually.
While RPA cannot automate each aspect of AP automation solutions, it can certainly free the finance professionals from performing repetitive tasks, allowing them to focus on growth, sustainability, and overall business success.
It is an automation tool in data extraction, usage and further processing of the data that is extracted. It allows direct conversion of documents to a digital format that can further aid in AP automation.
The most popular OCR finance tools are
