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AP automation, or accounts payable automation, uses automation technologies and digital processes to streamline the accounts payable process. It improves a finance team's efficiency, making AP faster, more productive, and less costly.
Cloud-based technologies convert the manual processes of entering individual invoices and signing checks into digital systems—turning your AP process into a competitive advantage. They read and store each invoice, manage billing communication, and make payments, all from one accounts payable solution that can be accessed remotely.
That does NOT mean that a computer system is taking over and paying every bill automatically. Far from it.
Any good accounts payable automation solution will use your own approval processes. If a new invoice should require 3 approvals before it gets paid, the platform will automatically route that invoice to the right people for those approvals.
AP automation is designed to improve the efficiencies of your AP department, applying your own trusted workflows in a faster, easier way, with less chance of human error.
Most accounts payable systems are already digitized to some degree. Business accountants use software like QuickBooks, Oracle NetSuite, Sage Intacct, Xero, and other accounting tools to keep financial records. That accounting software tracks income, expenses, assets, and liabilities—invoices that have been processed, bills that have been paid, and other business transactions.
Today, accounts payable automation platforms integrate with that software to take digital automation to the next level. The Bill.com platform, for example, can capture information from an invoice automatically and digitize it for your review. It can automate your approval workflow. It lets you make payments by ACH, virtual card, physical check, or even international wire. It handles invoice processing, electronic documents storage, authorization, and payment, all from one convenient dashboard.
And because it integrates with the major accounting software platforms, it reduces the effective chance of human errors. The data entered in Bill.com is automatically synced and posted to your general ledger.
Accounts payable automation is a broad term for a wide range of digital technologies that automate the AP process. But they don't all provide complete functionality, advanced automation, advanced image capture, storage for related documents, actual invoice payments, and all the things that make true AP automation so powerful.
In traditional AP systems, invoices arrive on paper. Each one is recorded and stored manually. Then those invoices are routed to different departments to be signed for approval. Once approved, bills are paid by physical check, which requires yet another manual signature. It's a tedious process with long processing times, bottlenecks, and inefficiencies at every stage of manual execution.
Some companies might pay hundreds of checks every month. That takes up a lot of their finance executives' time, resulting in losses that are hard to quantify, and every one of those checks could expose the company to the risks of check fraud.
When you automate any part of that system, for example using invoice management software, that's a step on the road toward AP automation. But true accounts payable automation is an automated solution that works from start to finish:
It digitizes invoices, whether they come in electronically or on paper
It reads the information from each invoice and enters it automatically for your approval
It automatically routes the invoice through the right approval process, according to your own business workflows
It lets you send comments back and forth about the invoice if there are questions, storing that communication digitally with the invoice itself
Once approved, it lets you pay that invoice with a few clicks
With payment options that include ACH, virtual card, paper check, and international wire, Bill.com pays that bill from its own financial systems, so your banking account information isn't exposed to your vendors
Physical checks are printed and mailed for you, so you can pay firms by check from your smartphone
It syncs with your accounting software, so you don't have to enter any of that information twice
And it keeps a digital, time-stamped audit trail of every touchpoint along the way
Of course, not every automated software solution does all that.
They don't all apply artificial intelligence and machine learning to invoice processing. They don't flag potential errors for your review. They don't manage your approval process with your own customizable workflows, including both multi-tiered approvals and automated payments. They don't provide full transparency into the AP process.
So if you read about accounts payable automation somewhere else, make sure you know how they're using that term and what they really mean. AP automation platforms are not all the same.
AP automation saves accounting professionals and finance departments a lot of hours. That's the first thing. In fact, our customers report saving on average 50% of their AP time.
That's time you could spend working more strategically, investing in active growth.
It's also more secure than manual systems. AP automation provides electronic payments, automated approval routing, a digital audit trail, and far better transparency than paper invoice management. It also protects your organization by keeping your bank account information hidden from vendors and suppliers.
Cloud-based AP automation lets finance teams work remotely, with more control, visibility, and transparency than an office-based paper system. It lets busy executives ask questions, see each response, and approve invoices with ease, from anywhere, even on a mobile device.
And it can significantly reduce errors. True AP automation applies machine intelligence to read and enter invoice data for review, flags potential issues like duplicate purchase orders, and syncs with your accounting software.
The accounts payable workflow begins when a business needs to procure a product or service. That could be anything from electric utilities for the office to contracted marketing agencies. Eventually, that expense payment becomes due, and the organization receives a paper or electronic invoice from the supplier of those goods or services.
First, the invoice data needs to be recorded and filed. Then, the AP workflow requires a storage system, invoice approval, and payment.
It sounds simple, and in a small business, one person might handle everything without any inquiries or special policies. The business owner might glance at the invoice, drop it in a folder, look up their bank funds, write out a check, apply postage and mail it, and then hand the invoice to an accountant at the end of the year in a stack of bookkeeping forms and receipts.
But as a business grows, it can't operate that way for long. Not even with a talented accounting manager.
The volume of papers and bills tends to increase dramatically. Monthly and quarterly reporting demands almost daily verification, and keeping up with the supporting documentation is a real challenge. Accounting systems increase in complexity, and each accounting update takes hours or even days instead of minutes or seconds.
In addition, as the company becomes more valuable, partners, investors, and CFOs demand formal invoice approval rules and compliance processes. Records management. Exception handling.
Add in the considerable hassles of different deadlines and fluctuating cash flow, and that manual system just isn't reasonable anymore. It's not how big business operates.
Successful companies need tools that can grow with them as their accounts payable workflow gets more complex.
The implementation of AP automation streamlines approval workflows for both your accounts payable department and your executive suite.
Add as many controlled rules, roles, steps, and approval processes as you need. As each invoice comes in, Bill.com matches it to the right workflow and directs it to the right people for approval, handling that distribution automatically.
Need to accelerate the release of that payment? Checking on the status of any invoice is easy. The platform shows you all the events associated and tracked with that transaction so you can locate exactly where it is at a glance.
If there's an issue, you can answer any questions by adding a message right there in the app. Or send reminders to request timely approval and meet your payment cycle.
Give each employee their own controlled access to the application as needed. Thanks to today's automation tools, users can even approve invoices on their mobile phone using the Bill.com app for Google's Android or Apple's iPhone.
AP automation software makes the AP process faster and more efficient. It can reduce costs. It can reduce errors. But the right software does more than that. It transforms the AP experience.
Instead of hunting for missing invoices, just search for them digitally and find them in a snap.
Don't dig through your email trying to remember what happened last month. It's all right there, saved in one convenient place.
Automate invoice receiving, data entry, and approval routing, and pay with a few clicks.
Plus, take advantage of early payment discounting and other opportunities for improved terms. Avoid duplicate payments. Advance your reputation and maintain preferred status in your vendor relationships by offering fast, easy payment.
Lower processing costs. Reduce spending with better analytics and insights. Streamline processes, knowing that the right controls are in place and that every invoice is being sent to the right people to be reviewed and validated.
And make monthly statement reconciliation faster and easier than ever.
The difference between a decent accounts payable platform and a great one lies in what AP software can do for you. The right software helps your AP teams and approvers spend less time working with the accounts payable process, giving them more flexibility to focus on other aspects of the business.
Why is Bill.com the leading provider of AP automation, used by more than 80% of the top 100 accounting firms in the United States? Let’s start with how invoices enter the system.
Vendors can email a digital invoice directly to your dedicated AP address, and the platform starts to process it automatically upon arrival. Still getting invoices on paper? Drag and drop pdf scans into Bill.com on your computer, or snap a picture with your mobile phone and upload it. It's that easy.
Powered by IVA, our Intelligent Virtual Assistant, Bill.com gets started as soon as incoming invoices are detected, reading them and extracting data with state-of-the-art optical character recognition, then collecting and entering that information for your review.
Once you confirm that the billing codes, amounts, and other information are correct, Bill.com automatically routes the invoice to the right people according to your own flexible, customizable workflows. Automate workflows with as many specific rules and controls as you need.
Choose any of our popular payment methods—ACH, virtual card, international wire, or even paper check—and pay with just a few clicks.
Sync your Bill.com data with your accounting software to keep your general ledger up to date automatically.
But one of the biggest advantages of Bill.com is how much of a resource the app can be when things don't go right with an invoice—because there are different types of mistakes, problems, discrepancies, or suspicious activity. For example, if a vendor sends a duplicate invoice. Or if an approver is requesting information because they think the amount looks off.
The app has the ability to perform invoice matching and purchase order matching, flagging potential duplication to reduce the chance that you’ll pay the same bill twice.
And any back-and-forth conversation about a bill is stored with the bill itself—logged and time-stamped in a permanent, detailed audit trail just like every other touchpoint from entry to payment, for the kind of transparency investors and loan officers love.
Better yet, Bill.com is extremely easy to use. Actionable items show up in a user-friendly to-do list. Visible alerts highlight tasks that need your attention. Your team can hit the ground running without complicated instructions, fancy webinars, or in-house training from expensive consultants.