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5 min read

Selecting the Right AP Automation Solution for Your Business

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Accounts payable (AP) automation is a technology that allows you to streamline the processing of invoices and payments so your business can manage its financial obligations more efficiently and effectively. Choosing one that fits well with your operational needs will not only speed up invoice processing times but it will also provide significant cost savings and support the scalable growth of your business.

With these benefits in mind, this CloudX blog will help you explore what to look for in an AP automation solution, the features available, and how to narrow down your selection.

Assess the Needs of Accounts Payable

Assessing your current AP processes and identifying pain points begins with a thorough audit of existing workflows. Start by mapping out each step involved in your AP process, from invoice receipt to payment execution. Identify manual tasks, bottlenecks, and areas where errors or delays frequently occur. Engage your AP team for insights, as they can provide firsthand accounts of challenges and inefficiencies they encounter daily.

Next, review any existing data and metrics related to your AP processes, such as invoice approval times, error rates, and late payment fees. This information can highlight recurring issues and areas needing improvement.

It’s also important to consider scalability and growth potential for your business. An effective AP automation solution will allow your AP department to handle a higher volume of invoices without increasing headcount. It will also provide real-time data and analytics, enabling better financial decision-making. Overall, by freeing up resources and enabling more accurate, faster processing, AP automation will support sustainable growth and operational efficiency as your business grows.

Understand Key AP Automation Features

Invoice Capture and Data Extraction. Accounts Payable (AP) automation significantly enhances invoice capture and data extraction through advanced technologies such as Optical Character Recognition (OCR) and Artificial Intelligence (AI). When an invoice is received, whether via email, a scanned document, or an electronic file, AP automation software will capture the invoice digitally and convert the document into a standardized, digital format.

Once invoice data is captured, OCR technology scans and extracts key information from it, such as vendor details, invoice number, line items, and total amounts. AI algorithms then validate this data against predefined rules and existing records to ensure accuracy and flag discrepancies.

This automated process eliminates the need for manual data entry, reducing errors and speeding up the entire AP workflow. The extracted data is then seamlessly integrated into your company’s Enterprise Resource Planning (ERP) system or financial software, facilitating real-time tracking and reporting.

2-Way and 3-Way Matching. AP automation significantly enhances the efficiency and accuracy of two-2-way and 3-way matching processes by seamlessly comparing invoices against purchase orders (2-way matching) and against receiving reports (3-way matching) in real-time.

The software solution is also able to swiftly identify discrepancies such as pricing errors, incorrect quantities, or unauthorized charges, automatically flagging them for review. This ensures that only valid and accurate invoices proceed to payment, thus preventing overpayments and fraud.

Approval Workflows and Customizable Rules. Automation software allows your business to define specific approval workflows tailored to your unique needs, accommodating various levels of authorization and complex hierarchies. Invoices are routed automatically to the appropriate approvers based on predetermined criteria such as invoice amount, vendor, or project code, ensuring compliance with internal policies and reducing delays.

Customizable rules further streamline the process by allowing businesses to set conditions for automatic approvals or exceptions. For example, invoices below a certain threshold can be automatically approved, while those exceeding limits are flagged for further review. This flexibility saves time and reduces the risk of bottlenecks.

It’s also worth noting that automation platforms often include notification and reminder features to ensure timely action from approvers. The result is a more organized, transparent, and efficient approval process that minimizes manual intervention, accelerates payment cycles, and enhances overall financial control.

Payment Processing. A good AP automation solution will efficiently handle multiple payment methods such as checks, ACH payments, and virtual credit card transactions, therefore ensuring timely and accurate payments. Additionally, when an AP automation solution has real-time tracking and notifications to keep all stakeholders informed, it further enhances your business’s transparency and accountability.

Integration with Accounting System. In order to maintain data consistency and accuracy, it’s crucial that an AP automation solution synchronizes with an ERP or accounting system. Seamless integration ensures that all financial data is automatically updated in real-time, eliminating manual data entry and reducing errors. This connection enhances visibility into a business’s financial health, streamlines reconciliation processes, and supports accurate financial reporting. It also enables better cash flow management and ensures compliance with accounting standards.

Evaluate Potential AP Automation Software Solutions

Once you know the features your business needs from an AP automation solution, it’s time to choose a provider able to serve you efficiently and in the most cost effective manner. Here are tips to guide you through researching and shortlisting automation providers:

#1. Conduct Market Research

Gather a list of potential automation providers by consulting industry reports, analyst reviews, and customer testimonials. Websites like G2, Capterra, and Trustpilot offer reviews and ratings that can provide invaluable insights into various solutions. Additionally, check industry-specific forums and LinkedIn groups to see what your peers and experts recommend.

#2. Evaluate the Automation Provider’s Exerience and Expertise

Shortlist automation providers with a proven track record in your industry. If they are experienced in your sector, they are more likely to understand your unique challenges and offer tailored solutions. Look for case studies, whitepapers, and testimonials on the provider’'s website to gauge their expertise and success stories.

#3. Request Demos and Trials

Hands-on experience with software is crucial. Request demos and trials from shortlisted automation providers to evaluate each solution's functionality and user interface. During the demo, assess how intuitive the software is, its customization options, and how well it aligns with your predefined needs. Trials offer a risk-free way to test the software in your real-world environment, allowing you to assess its performance under actual working conditions.

#4. Check Integration Capabilities

Seamless integration with your existing ERP or accounting systems is essential for maintaining data accuracy and efficiency. During your evaluation, ask automation providers about their integration capabilities and whether they have pre-built connectors or APIs for your current systems. Ensure that data synchronization is smooth and in real-time, minimizing manual data entry and the risk of errors.

#5. Assess Scalability and Flexibility

Choose a solution that can grow with your business. Assess the software’s scalability by examining how it handles increasing transaction volumes and whether it supports multi-entity and multi-currency operations. Flexibility is equally important; the solution should be easily customizable to adapt to changing business needs and regulatory requirements.

#6. Investigate Customer Support and Training

Reliable customer support is crucial for a smooth implementation and ongoing use of software. Inquire about the automation provider’s support options, response times, and availability. Assess the quality and comprehensiveness of their training programs, as well as the availability of resources such as user manuals, video tutorials, and knowledge bases.

#7. Analyze Total Cost of Ownership

Compare pricing models and assess the total cost of ownership, including upfront costs, subscription fees, implementation charges, and any hidden fees. Evaluate the ROI by considering potential cost savings in terms of reduced manual labor, fewer errors, and expedited payment cycles. Ensure the solution offers good value for money and aligns with your budget.

#8. Gather References and Case Studies

Ask automation providers for references and case studies to understand how they have addressed similar challenges for other clients. Speaking to existing customers can provide insights into the solution’s real-world performance, ease of use, and the quality of customer support.

#9. Evaluate Security and Compliance

Ensure the solution complies with industry standards and regulations relevant to your business. Inquire about the automation provider’s data security measures, including encryption, access controls, and data backup protocols.

Begin Your AP Automation Journey

Transforming your AP processes with automation is a strategic move that can drive significant improvements in the efficiency, accuracy, and cost savings of your business.

For more information about how AP automation works and to learn more about APSmart by CloudX, please fill out our online form here.

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