Outlining Optimal AP Automation for Netsuite

Last updated 9/18/2023 by Chris Cosgrove, Chief Revenue Offer at CloudX

Optimal procure-to-pay (P2P) processes involving NetSuite OCR and NetSuite 3-way match begin with a high-performing AP automation solution like APSmart.

As you begin navigating the world of AP automation for Oracle NetSuite, you will most likely find that no two solutions are going to lead your business in the exact-same direction. And as you narrow down some automation choices, having a primer on the mechanics behind these technologies will help you make the right decision for your team.

Let’s start with defining what AP automation actually means, especially since it’s such a broad topic and confusion over it can arise rather quickly. Basically, AP automation is a way to leverage an advanced technology tool for invoice processing–from purchase order and invoice receipt to presentation and posting to your business’s accounting system. 

Toward the end of this path, a full P2P AP automation solution will also include payment processing, a function called “integrated payables.” We’ll talk about that later, but for now, let’s discuss invoicing …

Why use an AP automation solution with Oracle NetSuite?

The integration that occurs when an AP automation solution is merged with NetSuite will speed up invoice processing, approvals, and payments. It will also help resolve a large number of typical accounts payable challenges, from errors with invoicing and approvals to late payments, fraudulent activity, and poor relationships with vendors.

APSmart by CloudX offers a seamless integration with NetSuite which then helps streamline invoicing and approvals, lower the margins of error in AP processes, and increase visibility across a business organization. So the real question should perhaps be, “Why not use an AP automation solution with NetSuite?”

Keep reading to learn more about how NetSuite workflows can be optimized with APSmart–a leading AP automation solution from CloudX.

#1 Invoice Presentment with AP Automation and NetSuite OCR

It’s still common today for businesses to receive invoices in a variety of formats, including on physical paper and digitally via PDF, JPG, TIFF, XLS files and more. Unfortunately, processing this variety of document types can be cumbersome and frustrating for even the most efficient of AP employees–and this is where automation comes in to help.

Optimizing AP automation for NetSuite, with respect to how invoices arrive, means being able to scan and convert documents into scalable formats that gather all the necessary data. This process happens through the use of advanced Optical Character Recognition (OCR) technology in which incoming invoices are automatically categorized by type (non-PO, PO 2-way, or PO 3-way) and readied for matching with POs and goods receipts documents previously captured and stored in the ERP using NetSuite OCR.

#2 Invoice Capture with AP Automation and NetSuite 3-Way Match

In order to post to NetSuite for payment, a business must gather and validate all required information from received invoices first. When performed manually, this process is tedious and usually involves staff completing vendor searches, PO lookups, line item matching, cost verification, GL coding, and more. Together, all of these actions are inefficient and expensive, not to mention, stressful on employees and unnecessary in today’s digital environment.

Once an AP automation solution like APSmart is implemented, its built-in OCR technology scans and digitizes paper invoices plus extracts information from digital invoices into a single online platform. It then captures and syncs data with NetSuite ERP so that GL codes get assigned to invoices and NetSuite 2- or NetSuite 3-way match gets completed. 

If a discrepancy arises at any stage of this capture process, the error is flagged and AP staff is notified so they can review the invoices in question. In these cases, the CloudX support team also provides human-backed data validation. As processing continues, all invoices without errors automatically get forwarded to the appropriate team members for approval. 

#3 Data Integration with NetSuite Invoice OCR and NetSuite 3-Way Match 

This aspect of optimization is where a tight integration between an AP automation solution like APSmart and NetSuite really pays off, and here are a few things a business can expedite using these partnered technologies:

Vendor Validation. As invoices are processed through an AP automation solution, vendor information is validated against NetSuite master file information to determine the vendor’s accuracy and legitimacy. Once a vendor is identified, the invoice continues ahead on its processing path to approval … unless the vendor doesn’t reconcile against the NetSuite master file. In this case, the invoice would shift into an exception state and get forwarded to accounting staff for resolution and further processing.

Fortunately, with an AP automation solution like APSmart, the exception routing workflow can be pre-set so all exceptions get automatically routed to appropriate staff members. This functionality lowers processing delays and eliminates the need to manually search for the right person to handle the problem.

An additional thought on vendor validation: From both data cleansing and fraud detection standpoints, AP automation is hugely beneficial since these functions would only otherwise be possible by an AP staff member doing manual lookups and reconciliation.

General Ledger Coding. When GL table data existing within NetSuite is exposed and brought to an AP automation solution, a pretty interesting thing can happen, and it’s this: The approval process can be overlayed with a tighter set of controls so that approvers only see the GL codes they need to access. In other words, GL codes are auto-assigned according to pre-set rules and an approver’s view is customized. This is helpful, as this capability contributes to cleaner bookkeeping and helps eliminate fraud while also providing a good audit trail along the way. 

Additionally, APSmart has been configured to work flexibly with Netsuite's 'Custom Segments', meaning you can reliably assign GL allocations with a higher degree of controls and automation that seamlessly integrates and passes data back into Netsuite upon invoice approval resulting in a streamlined and automated posting.

Finally, automated GL coding can be done through the use of Default or 'Recurring' GL coding whereby you can establish static GL coding conventions or allocations for specific vendors, even at a vendor by location level.

Purchase Order Matching. While NetSuite has latent capabilities to execute multi-way matches via NetSuite 2-way or NetSuite 3-way match, this technology can’t be utilized if there isn’t an AP automation component driving it forward–which is why finding a technology solution like APSmart is critical to full optimization. With a good automation solution, data is gathered in the invoice presentment and capture steps, eliminating the need for manual matching in a high percentage of invoices. 

It’s also important to mention that, with AP automation, variance thresholds can be overlayed between documents to tighten payment controls over AP processes. And with the advanced logic built inside an AP automation solution for NetSuite, invoices that reconcile can easily be passed along for payment while ones that have quantity and line item mismatches or exceed permissible variances can be isolated. 

#4 Vendor Payment With a Full P2P Automation Solution 

Before automation, the process of paying vendors involved looking up contract terms manually, repeatedly reviewing payment methods, in addition to cutting individual checks, running ACH payments, and processing credit cards. Like invoice processing, paying vendors has historically been cumbersome, with the potential for human error and risk of fraud always marginally high.

This is where the term “integrated payables” comes in. In plain words, it stands for ERP payments made simple.

PAYSmart by CloudX is an add-on solution to APSmart that helps accounts payable resolve outstanding invoices through digital payments on a single, easy-to-use platform. With PAYSmart’s capacity to centralize payment methods and sync information in real-time with NetSuite ERP, the overall process becomes more efficient and accounts payable is able to maintain better control over remittances. If optimized correctly, these combined technologies can even help a business gain valuable cash rebates on eligible purchases.

A Few More AP Automation and NetSuite Invoice OCR Insights

Beyond the processing elements previously discussed, there are a few more nuanced impacts of data functionality within accounts payable that should result in actionability. Here’s what that could look like when AP automation is optimized to NetSuite.

Insights into pending payables. Having visibility of invoice due dates is an important capability for any business, and there are two benefits involved: One is the elimination of late payment issues and fees and two is the ability to increase cash rebates. 

Reporting and retrieval. Being able to produce relevant AP documents–whether they are invoices, statements, credit memos, vouchers, or check request forms–is important for recordkeeping. In addition, having audit trails for invoice and payment actions of every stakeholder is crucial to ensuring the payables process is compliant with best practices and controls for corporate governance. Overall, having insights into vendor, workflow, and payment data will afford insights that maybe wouldn’t have been visible if AP functions were done manually.

Auditor and vendor relationships. By having a flexible, open platform that’s collaborative in nature and integrated with NetSuite ERP, auditors and vendors will be able to gain insights into the status of invoices and related AP documents through enhanced visibility features.

CONCLUSION

APSmart combined with PAYSmart provides a superior end-to-end AP automation solution for businesses operating with NetSuite ERP. Besides seamless integration, users get full control and visibility over all aspects of the AP process, better insights into corporate spend, and opportunities to enhance vendor relationships.

To learn more about optimizing AP automation with NetSuite, contact CloudX for a no-obligation consultation.