AP Automation Vendors: A Complete Guide

As businesses experience growth, their accounting needs evolve accordingly. While relying on a small accounting team to manage the complete accounts payable function may have been adequate in the past, it becomes imperative to explore alternative Accounts Payable solutions as you expand your operations.

Types of Accounts Payable solutions

Accounts Payable can be managed using a variety of approaches. Here, we present a few options:

Manual Accounts Payable

This is the most basic type of accounts payable process commonly employed by companies. In this approach, the company's accounting team handles payables internally, with minimal or no utilization of technology. Typically, this process involves manually inputting invoice data into an Excel spreadsheet or directly into accounting systems and managing approval workflows through emails or phone calls. Payments are made by printing and sending checks to vendors or uploading NACHA files onto banking portals for ACH payments processing.

While this method may seem simple, it is also highly susceptible to errors. Manual data entry and approval processes can lead to delayed book-closing, missed or delayed payments, as well as instances of overpayment or duplicate payments. Additionally, tracking this process can be challenging as most activities occur on offline spreadsheets and lengthy email chains.

Outsourcing Accounts Payable

When companies are in a phase of scaling, they often opt for this method, which involves outsourcing their accounts payable function to overseas regions known for their lower labor costs. By doing so, businesses can establish a streamlined and centralized process that effectively alleviates the workload on their in-house accounting team.

However, it is important to acknowledge that this approach comes with certain disadvantages. Outsourced accounts payable solutions may not offer optimal visibility or control over accounting processes. While this solution is external, it may lack the necessary technological expertise and be susceptible to errors. The individuals involved in this process might not possess a comprehensive understanding of your company's operations, potentially leading to challenges in identifying duplicate invoices or instances of incorrect invoicing, as well as missed cost-saving opportunities.

Payment software

Certain payment software also offers Accounts Payable automation solutions. While this may seem like an efficient option at first glance, it imposes limitations on payment methods, restricting you to the options provided within the software. Additionally, once your accounting team has undergone training and the software has been implemented within your organization, you are bound to using the same payment methods, even if more cost-effective alternatives exist.

Moreover, the level of automation provided by these companies might not be comparable to that offered by more established Accounts Payable software available in the market.

OCR solutions

Manual accounts payable processes often encounter significant challenges with invoice data capture, which is highly susceptible to errors and consumes a considerable amount of processing time. Nevertheless, this issue can be effectively addressed by leveraging invoice automation software. By harnessing the capabilities of Optical Character Recognition (OCR) technology, invoice data can be automatically extracted. 

While this approach eliminates the need for manual data capture, it is important to note that other aspects such as general ledger (G/L) posting, cost center allocation, approvals, and payments remain manual and inefficient. Consequently, your company may still incur financial losses due to delays or missed payments.

End-to-end AP automation software

A comprehensive Accounts Payable automation software stands as the most efficient method for processing payables. It automates the entire accounts payable process, encompassing invoice processing to payments, ensuring a seamless workflow. This approach also offers robust control and facilitates the identification of duplicate invoices, and renders errors or fraud nearly impossible to go unnoticed.

A comprehensive AP automation solution typically incorporates the following features:

• Invoice processing and digitization: Leveraging invoice digitization technology, it extracts invoice data and facilitates GL coding and cost center assignment.
• Workflow automation: It automates the entire approval workflow, mirroring your organization's approval processes. The software automatically assigns and notifies the approver, allowing them to directly approve the invoice within the system.
• Electronic payment processing: These solutions enable you to process payments through their software using your preferred payment method. Certain solutions even provide Corporate Cards to facilitate better management of employee expenses.
• Analytics and reporting: These solutions offer valuable insights into your cash flow and provide comprehensive accounts payable dashboards. Some software also notifies you of any invoice or accounting errors and identifies duplicate invoices, promoting greater accuracy and efficiency.

What to look for in a comprehensive AP solution

Before choosing a comprehensive AP solution, it is essential to understand the key features to consider 

Data migration and integration with accounting systems

When investing in a software solution, the setup time and cost play pivotal roles in the decision-making process. It is imperative to verify that the solution can seamlessly integrate with your current accounting software and that the onboarding and migration process are straightforward and hassle-free. Lengthy onboarding procedures can cause substantial delays in your accounting functions and potentially lead to financial losses.

Long-term scalability

Selecting software that can scale alongside your business is of utmost importance. Take into account factors such as the software's ability to handle a growing volume of invoices, accommodate additional users, and process high payment values. Without considering these aspects, you may find yourself needing to switch to a different software solution in the future, leading to further process delays and inconveniences for your team.

Security and compliance

Compliance holds paramount importance as you scale your business, particularly if you have plans for an IPO in the near future. Legal complications can have detrimental effects on your company's financial stability. Additionally, using insecure software puts your data at risk of theft or misuse. It is vital to choose software that facilitates gated logins for different users and strictly adheres to government regulations and industry standards.

Customer support and training

Customer support plays a vital role both during and after the onboarding process. It ensures a seamless onboarding experience for your accounting team and allows for timely resolution of any queries. This, in turn, enables prompt reconciliation with your vendors, safeguarding your supplier relationships and preventing late payments or missed discounts.

Pricing and return on investment

Choosing a vendor that delivers both cost-effectiveness and high value is of utmost importance. Look for a vendor that offers affordability without compromising on quality, ensuring it aligns with your specific business needs.

Conducting a pricing analysis can be challenging due to the varying pricing strategies employed by different vendors. Therefore, it is crucial to understand your accounts payable metrics, such as the number of invoices and annual spend, before comparing software options.

Many software vendors also provide an ROI calculator on their website, which can be a valuable tool in selecting a solution that offers a high return on investment. Take advantage of this feature to make an informed decision.

ClearTech - The right choice for your business

If you value the features mentioned above, ClearTech could be the ideal solution for your business. ClearTech offers comprehensive AP automation, seamlessly integrating with popular ERPs to ensure a smooth onboarding and implementation experience.

With ClearTech, you benefit from managed services and round-the-clock customer support, simplifying vendor reconciliation and ensuring prompt issue resolution. Its customizable approval policies and support for ACH or check payments eliminate the need to modify your existing accounting procedures.

What's more, ClearTech allows you to add users without incurring additional costs and supports multi-entity functionality. With its intelligent cost-saving insights, you can maximize your return on investment.

Consider exploring ClearTech as a potential solution to streamline your accounts payable processes and enhance efficiency in your organization.