Over the past few decades, business finance has embraced technology like accounts payable automation software to handle repetitive manual processes. Within accounts payable automation software, there are multiple features—including accounting platforms, enterprise resource planning (ERP) tools, and billing portals—all of which aim to make life easier for a company’s financial teams.
However, there are so many resources and features out there now that finding the right accounts payable automation software can be challenging. With an entire market available, how can you be sure that you've found the right product?
We'd like to help you make that choice. Here are the accounts payable software features to look out for when choosing which A/P software is right for your business.
What is accounts payable software?
Accounting has come a long way from inkwells and abacuses. Bookkeeping these days rarely involves books. Rather than a single tool, A/P software routinely refers to any number of applications or tools that allow users to manage or control parts of the accounts payable process. These tasks could incorporate anything from the receiving, tracking, processing, or paying of incoming invoices.
So, an ERP instance used to update your balance sheet or general ledger when you receive a bill would be considered A/P software. Or, if you use an application that manages ACH transactions between you and your suppliers, that would also count. And while this software routinely handles the work for you, some tools will still require manual tasks to be performed, like data entry or comparing paper invoices against purchase orders.
What is accounts payable automation software?
A/P automation software, in turn, refers to a specific set of A/P tools that are designed to reduce the number of interactions—or touches—required by users. Essentially, the application independently handles many of the functions and responsibilities previously covered manually via accounts payable workflow automation.
In other words, rather than keying in information by hand from incoming invoices, AP automation software could offer optical character recognition (OCR) functionality that allows you to scan the record, inputting the captured data directly into your ERP system. No more data entry. Or an automated workflow would route bills through the payment process without human intervention, instead performing account and purchase order verifications on its own.
Why use A/P automation software?
Simply put , accounts payable automation makes life easier for your accounting personnel. By letting the technology take care of the busy work, you can focus your accounts payable management strategies and your staff’s time and energy on more strategic decision-making tasks while remaining confident that your payment processes are being handled efficiently.
In addition, automation can help your business:
- Reduce errors by avoiding manual transcription
- Accelerate payments with automated workflows and invoice verification
- Mitigate fraud by reducing the opportunities to manipulate data
- Simplify reporting and auditing with traceable metadata that follows a bill through the entire process
- Accommodate growth without the need for additional headcount
- Encourage more frequent early-payment discounts
- Improve employee satisfaction by offloading mundane and repetitive tasks
In other words, automation is quickly becoming a standard accounts payable best practice.
What should I look for in AP automation software?
Finding the right platform for your business will depend on a number of factors, ranging from your size to how complex your A/P processes need to be. Before you begin your search, map out your current operations and any challenges you might be facing (ideas on how to do this can be found in our article on how to automate accounts payable).
Once you have these insights, begin looking for an accounts payable automation software solution that offers features to match each of these needs. Of course, depending on your requirements, you may need to consider more than one tool to cover your entire A/P process.
To help simplify your choices further, make sure you’re looking for platforms that offer access to a demo or trial version of the software so you can thoroughly examine it before you buy.
All of that said, there are some common features that you should look for, including:
1. Workflow engine
If you want to automate your A/P processes, an effective workflow engine is critical. Choose one that allows you to build process maps that align with your business practices. Or, even better, find a solution that includes pre-packaged workflows that you can customize to match your unique needs.
2. Data capture
To automatically convert your paper files into electronic information, you’ll want some manner of document imaging, capture, and extraction capability. Commonly, this feature will integrate with your scanner and use OCR to convert the raw image into usable data that’s shareable with your ERP platform.
3. Invoice separation
In a perfect world, all of your suppliers would send in their invoices individually and in the same format. But in reality, a vendor might mail you multiple invoices at once. And depending on your data capture policies, all of these pages might be scanned in as one document. However, with an automated invoice separation tool , the technology can independently identify and individuate these records, allowing them to move through the process correctly.
4. Three-way purchase order matching
As previously mentioned, one of the key advantages of A/P automation software is simplifying the verification process for incoming bills. When choosing a platform, look for one that delivers three-way matching—meaning that it verifies that the details of any invoice align with the corresponding purchase order (PO) and goods received note (GRN). By confirming that these three documents agree before payment, you can significantly reduce the likelihood of fraud.
And for costs that don’t originate from a purchase order—such as a utility payment—you’ll also want your solution to offer non-PO matching (or contract matching).
5. Approval controls
Alongside verification capabilities, you’ll also need tools in place that allow financial leads and other decision-makers to sign off on scheduled transactions. This authorization mechanism should be integrated with the overall process workflow, notifying personnel when approval is needed and automatically routing the invoice to the next phase of the process once it’s validated.
6. Batch processing
Why do things one at a time if you can do them all at once? Batch processing allows you to manage and set up controls for your invoices in bulk rather than individually. By handling these bills as a group, your business can establish a more unified A/P schedule, allowing you to coordinate multiple invoices into a single payment. Further, you can more easily establish consistent payment dates and times.
7. Advanced search
Once all of your A/P records are now in a digital format, you’ll be in a much better position to leverage analytics and other pattern detection efforts. And whatever accounts payable platform you choose should ideally provide you with complex search capabilities that make it easy to find any individual transaction or document in your expanding data stores.
8. Role-based access
One of the factors for effective IT and data security is to limit access to critical systems—and there are a few areas more critical than your company’s financials. You can better separate and restrict these sensitive actions with role-based controls to avoid potential fraud. For example, you typically don’t want the same worker responsible for both creating new vendor entries and authorizing payments. With these tasks separated, creating a dummy account is much more difficult.
9. Integration capabilities
You also want your new automation platform to play nice with your other existing back-office systems. And an application programming interface (API)—a collection of protocols and subroutines that dictate how a piece of software communicates—will simplify integration with these other platforms.
10. Real-time data sharing
Old data can lead to bad decisions. Look for a platform that enables real-time, two-way communication between your A/P platform and your ERP system. With accurate, up-to-the-second data available to your staff, they will be in a much better position to make smart, informed choices regarding your payment processes. Further, with this level of data sharing, your business can more easily embrace corporate performance management and enterprise-wide analytics efforts.
Invoiced: A/P Automation Software You Can Count On
Choosing the right platform for your business might take a little up-front work, but you'll be much happier if you choose a solution that can adequately meet all of your critical needs.
At Invoiced, we are proud to offer all of the above features and more through our Accounts Payable Automation Software and automation for Accounts Receivable and a Business Network that provides a simpler, safe, streamlined way to send and receive invoices.
Discover how simple invoice management, tracking, and payment can be. Get started by creating a free account or scheduling a demo today!