How to Overcome the Biggest AP Automation Challenges

AP automation holds considerable potential to make finance departments more efficient and cost-effective. Automation eliminates time-consuming manual invoice processing and data entry, reduces errors, eliminates duplicate payments, and enhances data reliability. The right AP system can provide real-time visibility and better procurement outcomes. 

However, achieving AP automation can be a challenge. Fragmented data, insufficient policies, and stakeholder reluctance make it hard to implement automation and workflows. Still, if organizations overcome the main challenges of automation, they can reap the financial and operational benefits of digital transformation. 

This article covers the main challenges facing automation projects and offers solutions to help organizations overcome objections and recreate their procurement and accounting processes with technology.

Read on to learn the top four challenges in automating AP, best practices to enhance outcomes, and the importance of choosing the right automation technology. 

Download the free tool: Invoice Tracking Template

AP automation challenge #1: Poorly documented policies

Process is the foundation of any automation project. Moving from manual to automated workflows is easier with a clearly defined, well-documented policy. 

Many organizations — especially those that have grown quickly — have incomplete or non-existent policy documentation. Because manual processes for small businesses are initially manageable and easy to communicate, organizations don’t always formalize and document these routines. However, the systems that worked when the company was a small business begin to break down as it grows. 

As businesses scale, they encounter more errors in invoice processing, late payments, or compliance issues. At first, the accounts payable department can add headcount to deal with increased manual accounts processing. But at some point, the volume of work exceeds the team’s ability to keep up with operational inefficiencies. Things break down if AP department leaders don’t define and communicate better practices.

Solution:  

Look at the current procurement process within the organization. Document what works and what doesn’t. Identify opportunities to define and formalize the procurement and accounts payable processes. 

Solicit feedback from stakeholders about areas for improvement and document updated policies and workflows. Communicate changes to all impacted employees to ensure everyone works with the most updated information.

AP automation challenge #2: Poor spend visibility

Organizations struggle to manage their cash flow when they can’t see all sources of spend. Poor visibility hinders short-term operations and long-term strategic planning.

Lack of spend visibility stems from fragmented data across the organization. These data silos make it hard to track spending, reconcile invoices, conduct three-way matching, and ensure correct and timely payments. They lead to cash leaks, late fees, contractual non-compliance, and missed chances for early payment discounts and savings opportunities. 

Poor visibility can mask fraudulent activities or human error within the procurement function. Nearly every company (98 percent) responding to one survey reported being the victim of fraud attempts. Establishing robust internal controls or foreseeing financial discrepancies in an environment rife with uncertainty and risk is virtually impossible.

Poor spend visibility also makes it more difficult to adopt AP automation. While most spending with known vendors or contracts moves to a centralized platform, out-of-policy transactions (also called maverick spend) continue in the background on credit cards or expense reports, perpetuating the cycle of cash leaks and inadequate oversight.

Tool

Invoice Tracking Template

Download the invoice tracking template to avoid costly mistakes, clarify financial patterns, and track spending throughout the year.

Download the tool

Solution:

Conduct an AP audit as part of the move to automation. Gather data on spending from the previous 6 months, including corporate card transactions and those reimbursed through expense reports. 

Identify opportunities to consolidate spending in cases of vendor redundancy or similar SKU purchases. Look for auto-renewing licenses or subscriptions and reduce these license seats where applicable. 

The process of creating a single source of truth for current spend and reducing redundancy makes the move to automation cleaner and more efficient. Using a procurement platform further enhances savings opportunities by identifying better pricing, volume discounts, and other potential cost benefits. 

AP automation challenge #3: Internal resistance to adoption

Moving from manual processes to automation requires time and cash investment. In many cases, stakeholders inside and outside accounting may resist the move to automation and a new procurement platform. Several concerns contribute to this initial reluctance. 

Implementation: In organizations where manual processes have long been the standard, the move to automation may seem like too much effort. The complexity of manual practices often makes the procurement process appear more difficult than it needs to be. 

While change is hard at first, automation's productivity and efficiency benefits pay many dividends in the long run. With over half of AP staff spending 10 hours or more per week processing invoices, the need for automation far outweighs the desire to maintain the status quo. 

Vendor relationships: Some employees may fear that automation will impair vendor relationships. This concern can create strong resistance against switching from manual processes to an automated system. Find a procurement solution that lets stakeholders maintain the beneficial relationships built while allowing spend visibility and data capture.

Cost: Some stakeholders may view the investment required to research and implement a procurement platform as prohibitive. Addressing accounting software as a potential cost-saving vehicle may alleviate these concerns. 

Solution:

Take a collaborative approach to vetting and adopting AP automation. Identify champions within the organization to promote the benefits of automation and solicit feedback from stakeholders about current pain points within the procurement process. 

In many cases, education and transparency in the process make it easier to ensure buy-in. Address concerns about implementation and incorporate a strong change management program into the automation process. 

AP automation challenge #4: Difficulty with implementation 

Transitioning from manual AP processes and spreadsheets to automation can present a few integration challenges. The solution must communicate with other tools within the tech stack, particularly enterprise resource planning (ERP) tools, accounting tools, intake, and single sign-on platforms. This communication allows easy data exchange between systems to reduce data entry errors and eliminate redundancy. 

AP automation software also needs to communicate with vendor platforms, whether through a direct integration, API, e-commerce platform, or other communication formats. This data exchange is vital to centralizing all info within the procurement platform. It allows users to place orders directly through the system and ensures accounting can route orders, administer invoice management, reconcile transactions, and issue payment for approved invoices.

Solution:

Select an AP automation tool with robust integration options. The best tool will enable connections with popular software through native integration and offer other solutions through APIs. The more integration options, the better organizations can synchronize order and invoice data to maintain transparency and efficiency. 

For strong vendor onboarding, look for a vendor-agnostic solution that can process spend through any source — with support for email or phone-based vendors when needed. Select an automation solution that can directly connect to large online vendors. 

Tool

Invoice Tracking Template

Download the invoice tracking template to avoid costly mistakes, clarify financial patterns, and track spending throughout the year.

Download

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Best practices for moving to an AP automation solution

Automation is one of the best ways to build cost savings and efficiency into the AP process. Selecting the right tools and supporting their implementation enhances the user experience and leads to better outcomes. 

Consider these seven best practices when integrating AP automation into your organization: 

1. Understand the current process: Before implementing AP automation, it's important to clearly understand the current accounts payable process. Identify bottlenecks and areas for improvement to leverage the automation tool effectively. Look to capitalize on what currently works and enhance it through the features and tools available within the automation solution.

2. Choose a robust automation tool: Evaluate different AP automation tools based on their features, integration capabilities, customer reviews, and pricing. The best tool will align with business needs and budget. It will offer flexibility, advanced features, and scalability to keep pace with the business as it grows. 

3. Plan a phased rollout: Instead of transitioning all at once, consider implementing the AP automation in phases. This allows for a smoother transition and easier troubleshooting. For instance, when automating AP through a procurement platform, consider starting with high-volume vendors and those with direct integrations. This establishes top-priority connections first and expands access to critical supplier relationships while other integration efforts occur.

4. Support team adoption: Ensure your organization is well-trained on how to use the new system. This includes the accounts payable team and any other departments using the tool. Enable stakeholders to learn the system independently by providing an internal point of contact and access to customer service resources from the platform. 

5. Maintain open communication with vendors: Inform vendors about the change in the order and payment processes to ensure smooth transactions. Provide them with the necessary support during the initial stages of implementation. Use the data insights from process automation to establish stronger relationships with preferred vendors and maintain competitive pricing and service.

6. Ensure data security: As with any digital transformation, security should be a top priority. Look for an AP automation tool with robust security features. A solution with role-based user permissions, single sign-on support, and encryption ensures the protection of sensitive financial data.

7. Measure and improve outcomes: After successfully implementing AP automation, don't consider it “done.” Monitor the progress of automation activities and look for additional ways to improve efficiency and cost-effectiveness. Conduct regular audits to ensure efficiency and refine processes for better savings and productivity.

The bottom line on solving AP automation challenges

Automating critical processes within your accounts payable function requires the right tools and partnership. Order.co brings together technology and expertise to overcome the challenges of automating AP, centralizes vital procurement data, connects buyers to their most important suppliers, and ensures a well-managed and cost-efficient procure-to-pay process.

Effortlessly manage payments and leverage your accounting as a strategy for growth. Download our free invoice tracking template and stay on top of your expenses year round.