Making the Business Case for Account Payable Automation
Published on 27 July 2023
Ongoing technological innovation is making the case for automation throughout the enterprise. One of the areas that is ripe for greater automation in North America is accounts payable (AP). In the past, companies were often faced with keeping the AP function in-house or outsourcing it to an accounting and bookkeeping professional services firm.
Maintaining the function in-house means using the resources of finance, accounting and administrative staff to manage the process through a combination of mostly manual processes with some level of digitization.
Outsourcing AP to a professional services firm requires their staff and resources to electronically capture and process vendor invoices. Depending on the level of outsourcing, these activities may include posting invoicing data into an accounting system, comparing invoices against POs and shipping receipts, and coding invoices and posting general ledger entries into the client’s ERP system.
But now, advances in AP automation software have made more possible, making a compelling business case to keep the accounts payable function in house. Consider how technology is changing the game of AP processes with automation:
1. Technological advances in AP automation
To understand how AP automation can support a business, it’s important to know how far automation and digitization has come since the first ERP systems developed in the 1990s, taking their cue from the 1960s roots of material requirements planning (MRP) systems used in manufacturing. Capturing invoices in an ERP system was a start.
By the 2000s, the introduction of optical character recognition (OCR) engines as a technology that recognizes text in a digital image took hold, alleviating some of the burden of data manual entry of invoice information but challenges remained with data capturing and formatting. By the 2010s, early approval flow software had evolved and rule-based AP solutions developed.
Many companies are left with a combination of digital AP processes in ERP systems and other core business systems which still require some level of manual workflow and paper-based systems. Today’s advanced AP automation and e-invoice solutions such as those by Generix provide seamless integration with ERP, accounting, purchasing and treasury systems, among other core systems, to greatly reduce or eliminate manual processes.
2. AI and machine learning enable intelligent AP systems
When considering an AP Automation solution, look for built-in artificial intelligence (AI) and its subfield, machine learning. The benefits of AI? AI algorithms enable greater automation by automatically routing invoices for approvals based on business rules, for example. AI ensures greater accuracy of data by reducing errors when invoice data is validated through cross-referencing with other sources like POs and vendor databases.
Machine learning helps improve AP accuracy over time by learning from the system. AI and machine learning have also greatly advanced OCR engine capabilities. Generix AP Automation and E-Invoice solutions use next-generation OCR with cognitive data capture technology and graphical correction. The Generix solution also offers arbitration and correction of reconciliation gaps using robotic process automation (RPA). All of these technologies are game-changers.
3. How these technologies support savings and growth
Despite all of the technological advances available to the AP process, about 75 percent of the delivery and processing of invoices and remittance information in the U.S. remains largely manual, according to the Business Payments Coalition, a U.S.-based public-private effort to modernize payments.
AP Automation holds significant potential to reverse the inefficiencies from manual processes. The gains from automating the AP and electronic invoicing processes include significant operating efficiencies from reduced labor costs, reduced errors, fraud mitigation, regulatory compliance, and greater customer and supplier satisfaction.
The Generix AP Automation solution has been shown to reduce invoice processing costs by as much as 80 percent, and can similarly reduce processing time of supplier invoices (with or without a PO). With Generix AP Automation, risk is further reduced through AI and machine learning that identifies patterns and detects fraud attempts.
Generix AP Automation and E-Invoice services are compliant with over 60 country e-invoicing regulations, and our portals allow the capture of 100 percent of supplier invoice data through a multitude of capture methods, while enabling faster supplier onboarding.
In short, the fruits of technology make the argument to outsource AP less attractive today as the capabilities of AP Automation continue to evolve. The question then becomes about the levels of growth and competitive advantage that can be gained over those enterprises without automation.
To find out more about the benefits of AP automation and e-invoicing, download our e-book.
About Generix Group North America
At Generix Group North America, we provide a series of solutions within our Supply Chain Hub product suite to create efficiencies across your entire supply chain. Our solutions are in use around the world and our experience is second-to-none.
We invite you to contact us to learn more.
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