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5 min read

A Step-by-Step Guide to Automating Your Dealership’s Accounts Payable Process

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Manual accounts payable processes can be a real drain on an auto dealership's time and resources. Now, as the industry becomes increasingly more digital, automating these tasks and implementing accounts payable (AP) automation solutions is significantly reducing manual data entry and helping manage invoice and payment processing more effectively. This guide aims to provide you an overview of AP automation and then outline the steps required to implement an effective automation solution tailored for today's auto dealership.

What is AP Automation in Accounts Payable?

AP automation refers to the use of technology to streamline and automate various aspects of the accounts payable process within an organization. By minimizing manual processes, AP automation allows a business to efficiently manage invoices, reduce data entry errors, and enhance overall operational efficiency. As a business seeks to optimize its workflows, AP automation is becoming an essential part of maintaining a competitive edge in the market.

Besides managing AP processes better, AP automation solutions can provide a centralized system for navigating vendor relationships and ensuring that invoices are processed and paid in a timely manner. Then, after automating, businesses can focus on strategic initiatives rather than bogging staff down with repetitive manual tasks. 

How to Implement AP Automation in Dealership Accounts Payable Operations

Step 1: Assess Current Accounts Payable Processes in Your Dealership

The first step toward implementing AP automation in your auto dealership is to assess your current accounts payable processes thoroughly. Start by evaluating how invoices are received, processed, and approved within your dealership and map out existing workflows to help identify bottlenecks such as manual invoice handling or delays in approvals. In addition, make sure you know how many invoices your dealership processes, as this will give insight into how automation will impact your operations.

After conducting a comprehensive assessment, you’ll be able to pinpoint inefficiencies that may be hindering your dealership's AP processes and improve them through accounts payable automation. For example, if your current system relies heavily on paper invoices, transitioning to an automated solution can drastically reduce the time you spend on manual data entry. 

Your assessment should also include reviewing vendor relationships and payment terms to ensure that your new AP automation solution enhances vendor relationships and aligns with dealership business objectives. Ultimately, understanding current processes is crucial for successfully implementing an AP automation solution that meets your auto dealership's unique needs.

Step 2: Choose the Right AP Automation Solution for your Dealership

To see success in your dealership's financial operations, it's important to choose the right AP automation solution. Today, there are many options available on the market for AP automation software, and each offers various features that cater to different business needs. Factors to consider when selecting an automation solution include the ability to:

  • Handle high volumes of invoices
  • Support 2-way and 3-way matching
  • Manage exceptions
  • Integrate with existing DMS, accounting, and reporting systems
  • Scale and adapt to changing dealership needs
  • Deliver robust reporting
  • Gain insights into payment trends and vendor relationships

By focusing on these aspects, you can choose a solution that not only automates manual tasks but also enhances overall visibility into your accounts payable operations, providing a comprehensive guide to AP automation. Additionally, consider vendor support and user training, as these factors will significantly impact the implementation and ongoing use of the AP automation solution. Ultimately, the right choice in automation will enable your auto dealership to streamline invoice and payment processing effectively.

Step 3: Digitize Invoice Capture in Your Accounts Payable Processes

Digitizing invoice capture is an essential part of your auto dealership's AP automation journey—a process which involves converting paper invoices into digital formats that can be easily processed by the automation solution. Through optical character recognition (OCR) technology, machine learning (ML), and similar technologies, your dealership can extract invoice data automatically, which reduces the need for manual data entry and minimizes the risk of data entry errors.

In addition, digital invoice capture allows for real-time visibility into invoice data, helping your AP department track invoices more effectively. This transformation can significantly improve the speed of invoice processing and ensure that invoices are approved and paid on time. With this digitized approach, your dealership can also centralize invoice management, making it easier to access historical data and analyze trends. 

Step 4: Automate Dealership Invoice Approval Workflow

Implementing an automated approval workflow allows your dealership to streamline the approval process and reduce delays typically associated with manual approvals. By setting up predefined workflows, your accounts payable team can route invoices to the appropriate approvers based on criteria such as invoice amounts or vendor types, accelerating the approval process and ensuring greater accountability within your AP department.

Additionally, automated workflows in accounts payable automation can include features such as notifications and reminders to ensure that invoices are reviewed in a timely manner. This helps prevent late payments, which can negatively impact vendor relationships and potentially result in late fees. 

Step 5: Set Up Digital Payments in Accounts Payable

Setting up digital payments in accounts payable is a crucial step toward achieving fully automated AP processes because digital payment solutions provide flexibility in how transactions are conducted and can offer options such as ACH transfers, credit card payments, and virtual credit card payments. The resulting transition simplifies all payments and enhances cash flow management by enabling timely payments to vendors. 

Implementing a payment automation solution also significantly reduces the time spent on manually processing payments because it allows dealerships to schedule payments in advance. With this capability, invoices are paid on time, late fees are minimized, and discounts from vendors can be effectively utilized. Additionally, digital payment solutions often include built-in compliance features and features that lower the risks associated with payment fraud

Step 6: Integrate with Dealership Accounting and Reporting Systems: Real-Time Data Syncing

In order to achieve real-time data synchronization across your dealership's financial operations, you will need to integrate your AP automation solution with your existing accounting and reporting systems. The resulting integrations allow for seamless data flow between your accounts payable department and other departments, such as finance and procurement. In other words, by synchronizing invoice data with your DMS or accounting system, your dealership can improve accuracy, reduce data entry errors, and ensure that all stakeholders have access to up-to-date information related to invoice processing and payments.

Real-time data syncing also enables your dealership to gain valuable insights into cash flow and spending patterns. Once systems are integrated, financial reporting becomes more streamlined, enabling faster decision-making based on accurate data. The integration also improves operational efficiency and supports better vendor relationship management by providing timely updates on payment statuses.

Step 7: Introduce AP Automation and Train Your Dealership AP Team 

Training your AP team on a new AP automation solution is a critical step in ensuring successful implementation because proper training equips your team members with the knowledge and skills they need to navigate the new software solution and utilize its features effectively. The training not only helps minimize resistance to change but also ensures that your employees can maximize the benefits of AP automation. 

It may also be beneficial to roll out the automation solution in phases to help ease the transition in your accounts payable department. By gradually introducing steps, you can identify any potential issues early on and adjust the training accordingly. Engaging team members in this process will also foster a sense of ownership and encourage their commitment to the new system. 

Step 8: Monitor, Optimize, and Scale Your AP Automation Solution

Once you've implemented an AP automation solution, it's crucial to continually monitor its performance and optimize processes as needed. Make a point to regularly review key performance indicators (KPIs) such as invoice cycle time, approval delays, and payment accuracy to help your dealership assess the effectiveness of its automation efforts. By analyzing this data, your dealership can identify areas for improvement and make necessary adjustments to enhance AP processes further.

Moreover, scaling your AP automation solution allows your dealership to adapt to changing business needs and increasing invoice volumes. As your business grows, your AP system should be able to accommodate new vendors and higher transaction volumes without compromising efficiency. Additionally, staying updated on advancements in AP automation technology will ensure that your dealership continues to benefit from the latest features and best practices. 

Ready for AP Automation in Your Auto Dealership?

Are you ready to transform your dealership’s accounts payable processes through automation? Then it’s time to embrace the benefits of AP automation and streamline your workflows to enhance efficiency, accuracy, and vendor relationships.

Contact CloudX today for a free consultation on implementing an AP automation solution tailored to your dealership's needs. Don’t let manual processes hold you back—take the first step towards automating your accounts payable today.

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