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Is AP Automation Worth It?

The terms “AP automation” and “accounts payable automation” have lost any semblance of meaning over the years. What was once a clearly defined term that referred to software that started with an invoice, routed the invoice for approval, sent an approved invoice for payment approval, and ended with an actual payment is now just a buzzword for invoice approval. In fact, the wikipedia definition of accounts payable automation states:

Accounts payable automation or AP automation is a term used to describe the ongoing effort of many companies to streamline the business process of their accounts payable departments. The accounts payable department’s main responsibility is to process and review transactions between the company and its suppliers. In other words, it is the accounts payable department’s job to make sure all outstanding invoices from their suppliers are approved, processed, and paid. Processing an invoice includes recording important data from the invoice and inputting it into the company’s financial, or bookkeeping, system. After this is accomplished, the invoices must go through the company’s respective business process in order to be paid.

This process is straightforward but can become very cumbersome, especially if the company has a very large number of invoices. This problem is compounded when invoices that require processing are on paper. This can lead to lost invoices, human error during data entry, and invoice duplicates. These and other problems lead to a high cost per invoice metric. The goal of automating the accounts payable department is to streamline this invoicing process, eliminate potential human error, and lower the cost per invoice.

As you can see by the definition, the payment side of AP is an afterthought. All focus is on invoice processing. When it comes to AP Automation, businesses need to ensure that the entire AP process—not just invoicing—will be streamlined in a cost effective manner and allow for the AP department to operate at high performance.

Another issue with AP Automation is that it’s not for everyone–it’s oftentimes a long, expensive process that requires overhaul of existing AP processes, and not every company is should (or can) go through that kind of transformation without incurring significant cost.

We’re happy to present our brand new guide, The Accounting Guide to AP Automation: Determining Whether AP Automation is Right for Your Business, and Evaluating SolutionsOur guide includes a short scorecard so you can determine whether or not AP Automation is right for you.  If you happen to find out that you’re in need of an AP Automation solution, we provided a checklist so you can evaluate the many options available.

Download the guide here!


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