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Answering invoice processing and collections FAQs, including what is AP automation?

Answering invoice processing and collections FAQs, including what is AP automation?

Automation has the power to drive significant time and financial savings when it comes to accounts payable/receivable processes. By handling these typically manual steps using automation, businesses can see extensive operational and financial improvements.

In this blog, we’ll answer frequently asked questions about invoice processing and collections, including what is AP automation and how much time can it save finance departments? 

What is AP automation?
AP automation software automates manual, routine steps in the accounts payable and receivable processes. From digitising invoices and coding, to managing approval workflows and making payments, automation can drive new efficiencies and offer better cash flow control. You may hear it referred to as ‘touchless invoice processing’, as it eliminates the need for cumbersome manual data entry.

What are the common challenges with manual invoice processing? 
Manual invoice processing can come with a range of challenges that can cause both financial and time inefficiencies. These include: 

  • The need to re-enter data on multiple systems by multiple people, leading to wasted time and more potential for human errors to occur
  • System misalignment, making it hard to identify approved vendors and duplicate invoices
  • Difficulty tracking invoice statuses and retaining wider visibility
  • Delays in approval and payment processing, which can result in late payment fees and unhappy suppliers
  • Security vulnerabilities from using multiple systems and platforms 

How does AP automation software work? 
AP automation software works by extracting data from invoices and storing them digitally. 95% of invoice data is automatically extracted, boosting efficiency and vastly reducing the need for manual data entry. The system then pushes invoices through a digital workflow, including relevant approvals, resulting in the invoice being paid. 

How does AP automation software integrate with my ERP?
Integrating AP automation software with your Enterprise Resource Planning (ERP) facilitates further time savings. It allows the automation software to provide invoice and transaction data to the ERP for immediate reconciliation. This reduces manual data rekey, thereby reducing the chance of human errors occurring. 

How does AP automation software handle payment approvals? 
Manual accounts payable processes are often a root cause of frustration both for employees and suppliers. 

With AP automation software, you can set payment approval workflows to automate and speed up the process. The system sends approval requests automatically to the appropriate business approver. 

How much time can I save with finance automation? 
Automating manual finance tasks significantly speeds up everyday processes. Finance automation can improve employee productivity by 5x, offering the opportunity to allocate more resources to business-critical intelligence tasks that cannot be automated. 

How does finance automation offer protection against fraud? 
Research by J.P. Morgan found that accounts payable departments are most vulnerable to being targeted by fraud. 

AP automation software provides businesses with more control over the accounts payable and receivable processes. Finance leaders can gain full cash flow visibility and control of the approval process. Choosing finance automation software with security features like 2-factor authentication further helps to ensure your finance department remains secure. 

A step-by-step guide to finance automation implementation 

From selecting the right software, to managing integrations and powering change with ongoing training, download our guide to discover the steps involved in implementing finance automation software. 

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