Accounts payable (AP) is a critical financial process because it deals with money that is owed by a company to vendors for goods or services. These goods — like computers, office equipment, or general maintenance — keep businesses operating smoothly and without interruption.
AP management is critical to accurately tracking a company’s cash flow. For example, if AP increases then that means a company is buying more on credit than with cash, which could negatively affect cash flow if the debt becomes too much to handle.
A late or missing payment can lead to a series of problems, including financial penalties, a negative impact on future business planning, strained relationships with existing vendors, and a tarnished reputation among future potential vendors.
For companies with a high volume of purchase orders or a finance department of one, managing POs, vendor relationships, customer orders, and employee reimbursements can be a challenge — but automation can help make that easier.
What is accounts payable process automation?
Automation is the use of technology (such as software or machines) to complete specific tasks without the need for human action. Automation streamlines repetitive, manual, and predictable tasks that do not require problem-solving or decision-making skills.
Accounts payable automation is the practice of applying automation to the accounts payable process to minimize delays, eliminate time-consuming rework, and reduce errors due to manual data entry. This can be done by integrating an existing finance tech stack with a solution like low-code business process automation (BPA) software.
Common AP process challenges
|Customer and employee dissatisfaction||Manual, time-consuming work||Unstandardized processes that create inefficient workflows||Poor cross-departmental collaboration|
|Late or missed payments||Data entry errors or rework||Lack of business unit agility||Late fees and terminated contracts|
A manual accounts payable process can snowball into larger problems, especially for teams that lack a standardized process or are under-resourced and managing more work than they can reasonably handle. Manual AP management is prone to rework, accidental errors, compliance oversights, delays, and can lead to financial problems that could affect a company’s financial standing.
If an error occurs in any step of the process, payment processing slows significantly, resulting in vendor (and employee) dissatisfaction and even sizable fines. Over time, slow payments will drive vendors to more reliable new partners that are more efficient in their financial duties.
Because accounts payable is so closely related to other finance processes, collaboration across other teams can also become a problem.
How low-code automation solves these challenges
Low-code automation improves accounts payable by eliminating unnecessary work, making data entry easier, standardizing routine tasks, and allowing employees to focus on strategic activities instead of repetitive ones.
But the real power of low-code automation lies in the first half of the solution: low-code.
Low-code automation platforms use visual interfaces and drag-and-drop menus that allow non-technical users to design, build, automate, and continuously improve processes, all without adding to the IT backlog. With a low-code automation solution, fiance teams gain the agility they need to keep up with company needs in a secure, standardized, and IT-approved manner.
Here’s how automation can simplify and resolve some of the problems plaguing accounts payable:
|Matching errors||Data tracking: Three-way matching is easier with automatic tracking. Keep up with updates and status changes with POs, receiving reports, and vendor invoices.|
|Repetitive, manual tasks||Notifications: Automated notifications alert stakeholders and task owners when the status of an item changes.|
Email templates: Automated email templates can be dispatched to multiple people. No more manual follow-ups, less time spent writing the same email.
|Data entry issues||Smart forms: Convert form fills to documents and records, and add them directly to process workflows. Adding required fields makes data entry easier and less likely to include errors. |
Integrations: Connect to your favorite financial software and run your accounts payable process from a single platform, seamlessly and reliably.
|Approvals||Routing: Once a task is done, it can be automatically routed to the next step or person for approval.|
|Double payments||Dashboards and reports: Keep track of the entire accounts payable process, and easily create reports to analyze the status of payments.|
3 key benefits of accounts payable automation
By applying automation to the accounts payable process, costly problems like data-entry errors, processing delays, or time-consuming manual tasks can become a thing of the past. Accounts payable automation systems drastically speed up the workflow and help reduce the occurrence of serious issues. With low-code automation, finance teams can:
1. Improve invoice processing and management.
With automation software, you can easily store, find, and share invoice data and automatically assign tasks that involve specific purchases. You can automate the screening phase by creating rules and setting responsibilities automatically, depending on the type, amount, or department of the purchase.
Automation software also enables you to facilitate approvals by notifying and sending messages to approvers when they need to review a purchase order or payment, build collaboration across departments, and notify suppliers, vendors, or employees when a purchase request is approved.
2. Eliminate costly errors.
Errors in the accounts payable process mean spending more money than you should and delaying required payments. According to PwC’s 2020 Global Economic Crime and Fraud Survey, 67% of professionals surveyed mentioned process automation improved accuracy and/or reduced errors.
With automation and built-in database functions, duplicate payments and erroneous entries appear much less frequently, substantially lowering the risk of fines or overpayments. Plus, automation software can help with bottleneck monitoring, making way for future cost savings.
3. Protect your business from fraud.
Nearly 47% of companies surveyed in PwC’s survey experienced fraud in the past two years, with 13% losing at least $50 million each. In many cases, it happened because of employee mistakes.
Automation helps reduce human touchpoints, adding substantial visibility, increasing centralization, and bolstering security. Automation also improves the payment request process by adding valuable standardization at every step.
It’s time to upgrade your accounts payable process
Finance departments can benefit significantly from increased control over their processes and access to better communication tools. With business process management software like Pipefy, you can solve common accounts payable process challenges and improve your finance department’s productivity.
Pipefy’s low-code platform accelerates digital transformation and makes it easy for citizen developers to take charge of their processes by easily automating workflows and managing business processes with no coding skills required. Take your process management further by connecting Pipefy to your existing software with Pipefy’s robust library of finance and admin integrations so your process runs smoothly end-to-end.