Accounts Payable Automation

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What is Accounts Payable Automation?

The digital transformation happening within accounts payable represents a significant evolution in accounting technology. With an increasing demand for accuracy and speed in financial operations, many organizations are turning to accounts payable automation to optimize processes. 

Accounts payable (AP) automation uses digital technologies to reduce manual data entry, increase accuracy and process vendor invoices and payments faster. 

Invoice processing can be time-consuming and tedious, requiring accounting teams to read and enter information, match purchase orders with invoices and ensure all data is correctly entered into the company’s accounting software system. This process is especially challenging for multi-entity companies that may share expenses and revenue with multiple locations. Without software designed for multiple entities, accounting teams often find themselves logging in and out of different databases for each location and copying and pasting the same information many times. Aside from creating additional work for your team, it also leaves your organization more prone to error. 

Accounts payable automation software further simplifies this process by matching purchase orders with invoices and shipping documents, routing invoices for approvals, scheduling payments, and even providing real-time analytics on your payable processes.

What are the benefits of Accounts Payable Automation?

Accounts payable automation offers many benefits, including: 

Streamlining accounts payable processes

By automating routine tasks, an automated system frees up your accounting team’s time to focus on more strategic work, which can contribute to your organization's growth and profitability.

Cost savings through accounts payable automation

AP automation eliminates the need for paper-based processes, reducing the costs associated with printing, storage and document retrieval. Additionally, it reduces labor costs by significantly decreasing invoice processing time.

Improved accuracy

Automation reduces human error associated with manual data entry and calculations. The system can automatically identify errors, such as duplicate invoices, ensuring accurate payments and balanced books.

Enhanced vendor relationships

Automated systems ensure timely payments, which can improve your relationship with vendors. Better relationships can lead to more favorable terms and potential discounts.

Better cash flow management

AP automation provides real-time visibility into your payables, making it easier to manage cash flow. You can identify outstanding invoices at a glance, plan payments efficiently to apply available discounts, and avoid late payment penalties.

Simplified auditing and compliance 

An automated system provides a clear, searchable record of all AP transactions. This can simplify audit processes and ensure compliance with internal policies and external regulations.

Scalability

As your organization grows, so will your invoice volume. An automated AP system can easily adapt to increased workloads without the need to expand your accounting team in kind.

  • What are key features of Accounts Payable Automation?

    • What are key features of Accounts Payable Automation?

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    AP automation technology typically has a few key components to reduce manual work. Here’s a closer look at each of them.

    Invoice processing automation

    Accounting teams receive invoices in several ways, from paper bills to email attachments or electronic statements. The first step to simplifying accounts payable is to convert these documents into a consistent format. 

    Data extraction for accounts payable

    Many technologies use optical character recognition to scan information such as vendor details, invoice numbers and total amounts. There may be a learning curve with these systems, and they may not always work for invoices that don’t have a predictable layout. Once the system extracts relevant data, an API or integration is typically required to transfer it into your accounting software. 

    Validating and matching data

    Once in your system, your team will need to match the data to your internal records. This can be a tedious process, especially if you’re processing dozens or hundreds of invoices at once. Automation software speeds up the review process by matching invoices with the same numbers. 

    Automating invoice approval workflows

    Managing approvals to pay invoices billed to different locations or departments can also become time-consuming, often requiring accountants or administrators to follow convoluted threads of emails to verify expenses have been authorized. AP automation software should have the ability to create workflows authorizing payment or requiring confirmation if invoices meet certain criteria, such as being above a certain threshold. 

    Scheduling payments

    The ability to schedule one-time payments or recurring payments using a credit card or a bill payment vendor can save hours of time each month. Look for a software solution that makes this process easy and integrates with the systems you already use for payments. 

    Applying payments

    Accounts payable software should make it easy to apply payments to your general ledger. Ideally, you should be able to have payments automatically updated or add batches of payments at once. The ability to apply payments in different months (such as if vendors send invoices late) is also helpful. 

  • What are future trends in AP Automation?

    • What are future trends in AP Automation?

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    More accounting teams are embracing automation, but there are still significant opportunities for adoption. In a survey by Deloitte and the Institute of Management Accountants, 75% reported they still rely heavily on manual accounting processes.

    At the same time, artificial intelligence, machine learning and robotic process automation are disrupting accounting along with every other industry. A recent report by Goldman Sachs found that up to 35% of accounting tasks could be replaced by AI, although a much smaller percentage of entire jobs are at risk.

    In addition to reducing data entry, AI can support more sophisticated tasks, such as forecasting and financial reporting. That means every accounting leader needs to look closely at the individual tasks their team performs and determine which ones have the potential to be replaced or better supported through technology.

    Technology is crucial, but evaluating your team’s unique processes is just as important. This could include:

    Determining the best way to standardize invoices

    Identifying technology that can easily read your invoices in any format can save hours of time each week.

    Evaluating processes

    Determining when it's necessary to involve another team member for review or approval and how to automate that hand-off whenever possible will help you avoid "passing the baton" and taking extra time when it's not needed. 

    Measuring improvements

    It's hard to know you're making improvements if you don't measure your progress. Can you quantify the time savings or reduction in paper-based processes?

    Staying ahead of the competition

    As companies strive to stay ahead of the competition, they are exploring other trends, including the best way to receive real-time analytics and how to better integrate AP automation software with payment solutions. Data security also continues to be an important focus as the frequency of data breaches increases.

  • Why do companies choose Gravity's Accounts Payable Automation software?

    • Why do companies choose Gravity's Accounts Payable Automation software?

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    If you want to maximize the benefits you see from accounts payable automation, choosing the right software is essential. Many entry-level solutions are better suited for small businesses and have limited, if any, automation capabilities, while others are overly complex and expensive. 

    Gravity’s accounts payable automation software is ideal for fast-growing mid-sized companies with multiple entities. 

    1

    Share data across entities

    Instead of repeatedly entering customer or vendor information for each entity, you can easily share this data across all verticals or restrict them to the companies where they apply. You can also add vendor insurance information to maintain compliance and reduce risks. This simplifies invoice processing and payment scheduling, setting the foundation for more efficient accounts payable systems.

    2

    Take advantage of automation

    Gravity is a cloud-native software built on the Microsoft Power Platform, so users can take advantage of built-in automation and business intelligence features. That includes AI-powered invoice processing, which uses Azure Form Recognizer to read invoices in any format without the learning curve of technologies that strictly use optical character recognition. You can process dozens of invoices at once and reconcile them against your records in minutes.

    3

    Track everything

    Instead of relying on a series of emails to secure approvals, you can create workflows that notify a designated person to sign off on expenses over a certain dollar amount so your team can pay them faster with a full audit trail.

    4

    Categorize invoice types

    You can use dimensions to categorize specific types of vendors, such as transportation and logistics providers or marketing vendors for more precise reporting and budgeting. If you have shared expenses, you can allocate bills to multiple companies simply by checking a box. Each company’s share of expenses will be reflected in their general ledger, and the due-to and due-from information will be balanced.

    5

    Integrate with anything

    Gravity offers seamless integration with payment software, including Bill.com, and secure credit card processing so you can pay vendors faster and take advantage of discounts that may be available to preferred customers.

    6

    See your finances in real time

    All payments are automatically reflected in your accounting software, giving you real-time visibility of your company’s performance. If you need to calculate value-added tax, void checks or reissue them, you can do it in a matter of minutes.

  • What are some examples of successful Accounts Payable Automation?

    • What are some examples of successful Accounts Payable Automation?

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    With more than 3,200 customers globally, including more than 350 family office companies, we’ve seen many success stories.

    Here are just a few examples.

    Optimizing accounting for a multi-company organization

    The accounting team at The Sunray Companies, a fast-growing portfolio of nearly 50 companies, was often stuck at the office after hours or on weekends. Their previous accounting platform struggled to manage reconciliation work, recurring transactions and both individualized and comprehensive financial reporting. 

    Gravity Software's ability to manage intercompany transactions changed the game for the team. Along with a custom integration to help settle transactions, Gravity's built-in features and functionality transformed tasks that once took days into straightforward actions that can be completed in well under an hour. Reporting is efficient, accurate and provides the ability for more-effective analysis and strategic decision-making.

    Simplifying accounts payable and reporting

    QuickBooks worked well for MyDocPlus when it was a single location, but as they expanded, it became less and less efficient. The company’s controller needed to create a separate database for each office and physician, then log each shared journal entry multiple times. These manual processes made accounts payable, accounts receivable and reporting much more difficult. 

    With Gravity Software, MyDocPlus easily manages multi-office accounting in one place and automatically runs the same reports in a matter of minutes.

  • Accounts Payable Automation resources

    • Accounts Payable Automation resources

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    Learn more about accounting automation and the software to support it as your organization grows. 

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