Guide to Accounts Payable Automation & the Best Systems

AP automation removes many costly and time-intensive aspects of accounting and AP. Learn how to get automation on your company’s radar with this quick guide.
Written by:  Allison Reich
Last Updated:  April 16, 2024

Picture your accounting department at the end of every month — is it calm or chaotic?

If your staff is scrambling and cash reconciliation is always a nail-biter, your AP workflow may be broken. Accounts payable automation is the best way to avoid month-end madness and bring visibility and efficiency to accounting processes.

Automated accounts payable (AP) workflows allow you to see issues in advance and access information that drives good decision-making. You can scale your department without increasing headcount, eliminate errors by reducing manual tasks, and accelerate your financial operations, approvals, and payable processes.

But what does an automated process look like, and can technology ensure you pay the right vendors on time without issues or delays?

To help you understand AP workflow automation, this article addresses the following questions:

  • What is accounts payable automation?
  • How does AP workflow software work?
  • What are the benefits of automating AP workflows?

Download the free ebook: How Automation Can Solve Finance Teams’ Biggest Challenges

What is AP workflow automation?

AP workflow automation uses technology to process your accounts payable activities, such as invoice coding, invoice matching, vendor payments, and month-end reconciliation.

A smooth accounts payable process ensures you stay on top of your debts by paying the right vendors at the right time. AP automation software streamlines your invoice management, payment process, approval workflow, accounting process, and procurement operations. 

Traditional versus automated AP workflows

In a traditional AP workflow, your accounts payable department handles various business operations by manually processing all steps from intake to payment. There is no continuous flow of information or centralized AP data source for visibility, verification, and auditing. 

Manual processing through traditional AP is slow — the average AP clerk can process about five invoices per hour. Human data entry also increases the occurrence of errors, with the manual invoice exception rate averaging around 23 percent

These issues result in late payments, missed payments, or even duplicate payments. This creates a continual backlog of payments and data, which makes it difficult for Finance to report accurate financials or plan future budgets. It’s expensive, too — profit margins decrease due to unnecessary fees and increased labor hours. 

AP automation software tools provide a single platform for your AP department and the rest of the organization. All supplier and vendor information is automatically collected. When invoices are transmitted, AI algorithms match them to the purchase order, detect and flag mistakes, and code the invoices for processing. 

The system also automatically routes payments to the correct approvers and provides access to bank accounts for fast payment processing. Automatic payment scheduling prevents cash flow deficits and ensures early payments. All taxation and payment details are stored for compliant documentation and easy auditing. 

In essence, AP automation provides Finance with all the information it needs to compile accurate and timely financial statements.

[eBook] How Automation Can Solve Finance Teams’ Biggest Challenges

How Automation Can Solve Finance Teams’ Biggest Challenges

Take a few pages out of WeWork’s playbook and learn how automation can solve some of the greatest challenges facing your finance team.

Download the ebook

The benefits of AP workflow automation

AP workflow automation takes the stress out of processing invoices and lets your AP team focus on higher-level projects that drive value. It also offers various other benefits, such as error handling, risk reduction, vendor management improvements, and increased profitability.

Preventing overpayment

A traditional AP workflow is complicated and lacks automated processes that prevent overpayment. Without checks for invoice duplicates, supplier changes, or purchase order details, your AP department may overpay its vendors, resulting in losses. This disrupts critical cash flow necessary for business expansion and jeopardizes timely payments essential to retaining vendor relationships. 

Software is the solution that introduces e-invoicing and digital purchase orders, all on a single platform. With fewer paper invoices and manual processes, your AP department has increased visibility, accuracy, and control.

Improving your business’s credit score

Early payments and positive cash ratios indicate your business is capable of managing its finances and is likely to repay future debts. Both vendors and lending institutions look to your financial reporting when extending credit and continuing business relationships. 

A streamlined payment process reduces late payments, which boosts your creditworthiness. When it’s time to change suppliers, request credit, or ask for a business loan, a good credit score helps you access necessary credit at lower interest rates.

Creating positive vendor relationships

Your business relies on suppliers to process purchase orders and deliver goods promptly in the agreed volume and condition. Vendors may be less willing to deliver if you pay late or have outstanding debts — and could terminate business altogether. Early payments motivate vendors and encourage discounts. 

Automated AP systems help you track all your invoices, as well as schedule and approve payments on one interface. You can verify that you’re paying for goods supplied as ordered or withhold payment if necessary. 

Reducing financial fraud

AP fraud schemes are challenging to detect if you don’t have adequate data and don’t know what to look for. In the 2020 AFP Payments Fraud & Control Survey, 81 percent of companies admitted they were AP fraud targets. Even large companies such as Google and Facebook have fallen victim to AP fraud scams and paid millions to individuals. 

Fraud happens through false billing, fraudulent checks, overpayments, and wrongful manual data entry. Automating your AP tasks helps you fight AP fraud at various levels with processes such as: 

  • Setting budgets and administering approvals through automatically routed invoice processes 
  • Automated invoicing through artificial intelligence (AI) and machine learning (ML) to capture and match invoices to purchase orders
  • Electronic audit trails for your accounting team and external auditors

Creating better audits

Audits are never pleasant, but they can be easier with a reliable AP platform and accurate data. With fully featured electronic AP systems, auditors track invoice data to the proper purchase orders, approvers, and payments.

With accounts payable automation, you avoid bottlenecks caused by manual data entry and lengthy paperwork reviews. As a result, everyone benefits, including the procurement team, accounting teams, approvers, auditors, and the CFO. 

Ensuring better profitability

When your AP workflow is automated, you eliminate fees and control your overhead costs, which boosts overall profit. An automated system requires fewer AP staff to manage the process, reducing hiring costs while scaling your operations.

The ROI of AP automation

Manual AP is expensive, but the true cost is often obscured in numerous small cash leaks. These small pockets of spend inefficiency quickly add up to significant expenses. Knowing where to look is the first step in remedying the invisible cash losses that happen throughout the AP process. 

Three of the biggest inputs to spend inefficiency include:

Invoice processing: Processing invoices is expensive, costing companies as much as $15 to $40 each. These costs compound in a growing AP department that handles a flood of paper or emailed invoices. And if an AP clerk can only process a maximum of five invoices per hour, they’ll likely fall behind the constant flow of work.

From digitization to completion, AP automation software handles thousands of invoices simultaneously, reducing individual cost per invoice. Software categorizes purchases automatically, records the data, and processes payments — all without human intervention.

Errors and penalties: Manual processes rely on human data entry and review. While many accounting departments use manual processes, the financial costs can be significant. In addition, human error can easily reduce the integrity of your AP accounting and payment processes. Issues such as missing payments, creating duplicate payments, and invoicing for incorrect amounts may result in associated fees and penalties that reduce cash flow and threaten liquidity. AP automation removes manual tasks for many accounting and payment processes, reducing costly errors and time needed to remedy such mistakes.

Wages: Staffing an AP department is an expensive proposition. While AP team members are a vital part of keeping a company’s financials strong, manual entry requires an ever-increasing number of work hours to keep up. Companies posting hundreds or even thousands of invoices per month must continually expand their headcount. Meanwhile, none of those valuable additions are working on higher-level tasks and are instead trapped in the hamster wheel of invoice processing and reconciliation. Automation allows your staff to meet processing demand while still having time to create value and tackle interesting projects. 

How automated AP workflow works

An automated AP workflow is one of the most important business processes you’ll implement for keeping purchasing and invoicing on track.

Here are the basic steps of accounts payable workflow automation:

  1. Order submission: Accounts payable receives an approved purchase order created during the larger procurement process. After a Finance review, AP transmits the purchase order to the vendor for fulfillment. AP enters the information into its centralized vendor information database to begin the invoice automation process. 
  2. Processing and fulfillment: The vendor processes the order and submits an invoice to AP. Electronic invoices are automatically routed to the system. This can happen directly within an automated platform, electronically through an email address, or by capturing a paper invoice with optical character recognition (OCR) technology. The system codes the payment automatically for entry into the general ledger (GL).
  3. Three-way matching: The system checks the invoice, purchase order, and receiving information to ensure they match. In an automated workflow process, this process happens without human data input or interaction. 
  4. Invoice reconciliation: Once the matching process is complete, the system reconciles the invoice and sets it up for payment. Vendor payment is submitted through an electronic invoices payment workflow according to the payment terms outlined in the invoice. 

Vendor payment: Payment information is recorded in the accounting system and into enterprise resource planning (ERP) systems, if integrated. Finance teams have full visibility into the transaction.

[eBook] How Automation Can Solve Finance Teams’ Biggest Challenges

How Automation Can Solve Finance Teams’ Biggest Challenges

Take a few pages out of WeWork’s playbook and learn how automation can solve some of the greatest challenges facing your finance team.

"*" indicates required fields

This field is for validation purposes and should be left unchanged.

Best practices for AP workflow

Use these best practices in your current workflow to increase efficiency and results.

Implement spend analysis

With full data visibility, Finance is empowered to identify spending patterns and use them to its advantage. Spend analysis can determine patterns by department, role, category, or location. You can then adjust budgets, bring excess spending under control, and identify issues or potential problems in the company’s finances.

Establish a checks and balances system 

Manual tasks and paper invoices reduce audit trail efficiency and open your business to accounts payable fraud. AP automation software enables three-way matching from invoice, payment, and reconciliation. You can easily monitor and track cash flow to check for suspicious behavior, whether alone or with an audit team. 

Accounts payable software also creates automatic routing to the right approvers after integrating with your ERP. You can track each invoice and purchase order to the approver during audits. What’s more, you can separate those who write and approve checks to monitor their approvals. Lastly, depending on your budget and demand, you can suspend, authorize, or delay payments. 

Increase cost savings

AP automation eliminates redundant work, such as invoice matching, payment processing, and checking for duplicates, which optimizes your AP staff’s workflow. By removing these manual processes, your team can spend time on higher-value work, such as improving future contracts and benchmarking costs to realize savings.

How to get buy-in for AP automation

Despite knowing the benefits of automation, many stakeholders still fear an uphill climb to adopt automation. While the cost of implementing software is often cited as a concern, automation often creates far more savings than expense. 

Use these strategies to strengthen the case for AP software: 

  1. Find and engage a champion

In a large-scale purchase like software, executive buy-in is the first hurdle to overcome. Build a solid business case for automation and introduce it to at least one receptive manager or department head. Provide your champion with the insight and data necessary to promote software to other executives or decision-makers. A strong supporter not only makes your proposal more likely to gain traction but smooths the path to adoption later in the process.

  1. Workshop the savings

Highlight the quantifiable benefits of automation within your business case. Look at the current invoice processing situation within your organization. Outline the total cost of continuing with a manual processing approach. Then contrast those numbers with the expected savings an AP solution could provide. Take it a step further, and highlight the value creation possible when the previously bogged-down AP department can put down processing tasks and engage in value creation instead.

  1. Bring solutions ready to evaluate 

Choosing the right AP automation solution greatly enhances the benefits and outcomes of modernizing your processing practice. Take a “three bids and a buy” approach to sourcing an AP automation system. Research the best options for automating your invoice process. Look at the costs involved and measure these against the total value automation can bring. Outline the merits of each shortlisted solution, and recommend a solution based on the AP requirements you’re trying to meet. 

FAQ on AP workflow automation with

Accounting and Finance often have questions about automating their workflow processes. Here are answers to some common questions: 

How do stakeholders submit requests? 

The AP intake system is different for every company. Some companies choose an email or web-form intake process. Others use procurement software to fully automate the purchasing process. With a platform like, stakeholders purchase goods through their own vendors or a network of 15,000+ pre-approved vendors. 

What happens if vendors send multiple invoices? 

All invoices are entered into the system with identifying information in appropriate fields. This means a vendor file contains all the necessary information to process the payment. Individual vendor invoices are identified by their invoice number. Duplicate invoices are automatically detected to avoid duplicate payments. 

What if there’s an issue with an invoice? 

Suppose the system detects problems with an invoice, such as incorrect or incomplete information, unusual activity, or duplication issues. In that case, the AP team receives a notification to review the information and remedy the problem. These types of issues are drastically reduced using an automated electronic system.

Is AP automation worth the money? 

The cost savings in employee time, wages, and vendor fees, paired with the potential for discounts from those vendors, give you net savings when you invest in an AP workflow automation tool. 

Automate your AP workflow with

The time is right to reap the benefits of a fully automated purchasing and AP workflow. With, buyers get access to the goods and supplies necessary, while AP supports impactful business goals (instead of just processing invoices). has all the features needed to automate and digitize your AP workflows: 

  • Centralized purchasing for stakeholders
  • Automatic line-level GL coding for purchases
  • Three-way matching capabilities for processed orders 
  • Electronic payment of approved invoices
  • Integrations and exports for better data visibility

To learn more about automating your AP workflow for greater efficiency and savings, check out our Finance Automation Guide. This guide provides in-depth information about centralizing your AP payment process, increasing visibility, and maximizing the savings potential of your accounting process.

Get started

Schedule a demo to see how can simplify buying for your business.

"*" indicates required fields

This field is for validation purposes and should be left unchanged.