All You Ever Wanted To Know About AP Automation: Top 50 FAQ's

1) What is AP automation?

Accounts payable (AP) automation refers to the utilization of technology to streamline the accounts payable workflow. This includes a range of activities, from data entry and invoice matching to approval routing and payment processing. AP automation software significantly reduces the manual effort associated with entering or processing payments, auditing accounts for errors, managing the invoice approval process , generating reports for account reconciliation and more. It integrates seamlessly with ERP and accounting systems, ensuring a smooth transition between processing an invoice and uploading it into the general ledger .

2) Why is AP automation important for businesses?

AP automation holds many benefits for businesses seeking operational efficiency, cost reduction, and improved accuracy in their financial processes. It eliminates time-consuming manual tasks, reduces the likelihood of human error, and speeds up the invoice processing cycle, which can lead to cost savings through early payment discounts and avoidance of late payment penalties. Additionally, it provides better control over cash flow and financial planning, enabling more strategic decision-making regarding expenditures and investments.

3) How does AP automation improve financial processes?

AP automation software enables real-time tracking of invoices and payments, providing a clear view of the company's financial commitments and improving cash flow management. Automated workflows ensure compliance with company policies and regulatory standards, reducing the risk of fraud and errors. The AI and machine learning capabilities of many AP automation solutions help identify opportunities for cost savings and process improvements.

4) How can AP automation drive strategic business decisions?

By automating the AP process, companies unlock valuable insights into their spending patterns and supplier relationships, allowing for more informed strategic decisions. The data collected through AP automation software can be analyzed to identify trends, negotiate better terms with suppliers, and optimize spend management. This level of financial intelligence supports strategic planning, budget allocation, and can even influence product development and market expansion strategies by identifying cost-saving opportunities and investment priorities.

5) Can AP automation improve a company's bottom line?

Yes, AP automation can have a direct positive impact on a company's bottom line. By reducing the costs associated with manual invoice processing and minimizing the occurrence of late payment fees through timely payments, companies can save a significant amount of money. Additionally, taking advantage of early payment discounts offered by suppliers for faster invoice settlement further reduces costs. Over time, these savings accumulate, contributing to an overall improvement in profitability.

6) How does AP automation contribute to environmental sustainability?

AP automation promotes environmental sustainability by shifting companies from paper-based processes to digital ones. Reducing paper usage not only saves physical storage space but also helps decrease the company's carbon footprint from paper production, transport, and disposal. Embracing a paperless office environment allows businesses to contribute to conservation efforts and align with environmental sustainability goals as part of their corporate social responsibility.

7) Can AP automation support dynamic discounting and early payment incentives?

Yes, AP automation can support dynamic discounting and early payment incentives by providing real-time visibility into payable invoices and cash flow status. The software can automatically identify invoices eligible for discounts based on payment terms and prioritize these for early payment. Additionally, AP automation can assist in negotiating more favorable terms with suppliers by leveraging payment performance data.

8) Will AP automation eliminate the need for AP staff?

No, AP automation does not eliminate the need for AP staff, and AI won't fully take over accounting jobs. While it can streamline and automate many manual tasks, such as data entry and invoice routing, human oversight and decision-making are still essential in ensuring accuracy and compliance. The role of AP staff may shift to focus more on strategic tasks like supplier relationship management and financial analysis, ultimately adding value to the organization.

9) How does AP automation streamline invoice processing?

Many AP automation solutions streamline invoice processing through digital workflows that automate the capture, verification, and approval of invoice data. Using technologies such as Optical Character Recognition (OCR) and Artificial Intelligence (AI), these software solutions extract information from invoices received in various formats, including email, PDFs, and paper. The data is then automatically matched against purchase orders and receiving reports to verify accuracy. Discrepancies are flagged for manual review, while approved invoices are routed through predefined approval workflows for payment, enhancing efficiency and reducing processing times.

10) How does AP Automation handle different types of invoices?

All AP automation solutions are equipped to handle a wide range of invoice types, including electronic invoices (e-invoices), PDFs, scanned images, and even paper-based invoices. Advanced data capture technologies like OCR are used to extract relevant data from these invoices, regardless of format. The system then standardizes the data for processing, accommodating various billing formats and requirements from different suppliers. This flexibility ensures that all invoices are processed efficiently, reducing delays and errors associated with manual data entry.

11) Can AP automation handle complex approval workflows?

Yes, AP automation systems are highly configurable and can be tailored to replicate an organization's specific approval hierarchies and workflows. They can manage complex, multi-level approval processes by routing invoices automatically to the appropriate stakeholders based on predefined rules, such as invoice amount, department, or project. Notifications and reminders ensure timely approvals, while mobile capabilities allow approvers to review and approve invoices from anywhere.

12) How does AP automation enhance data accuracy and integrity?

Through automated data capture and validation, AP automation significantly reduces human error, ensuring high levels of data accuracy. The software checks the extracted invoice data against purchase orders, contracts, and receipt confirmations to validate accuracy before processing. Any discrepancies trigger alerts for manual intervention, ensuring that only correct data is processed and recorded.

13) What role does AP automation play in data analytics?

AP automation serves as a foundational element for advanced data analytics within the finance function. By digitizing and centralizing invoice and payment data, it provides a rich dataset that can be mined for insights into spending patterns, supplier performance, and compliance with procurement policies. Analytical tools integrated with AP automation systems can identify good opportunities for savings, optimize working capital, and enhance supplier negotiation strategies.

14) How does AP automation impact supplier onboarding and management?

AP automation simplifies supplier onboarding and management by streamlining the process of collecting supplier information, validating credentials, and setting up payment terms. The automation software can store supplier data, track performance, and facilitate communication, making it easier to maintain up-to-date records and manage relationships. Automated systems can also alert finance teams to contract renewals or compliance issues, ensuring a more efficient and collaborative relationship with suppliers.

15) How to choose the right AP automation vendor?

Choosing the right vendor for your business involves assessing many factors, including the vendor's industry experience, the scalability and flexibility of their solution, and the level of customer support offered. It's also important to select a vendor whose platform can integrate seamlessly with your existing ERP or accounting systems and can adapt to your business's growing needs. Look for vendors who offer robust security features, compliance with relevant regulations, and a user-friendly interface. Additionally, consider the vendor's reputation, customer testimonials, reviews on sites such as G2 , and the ability to provide ongoing training and support to ensure a successful implementation and adoption. And when on a demo call, the most important question to ask your AP automation vendor is for them to tell you more about the company itself.

16) What support and maintenance services do AP automation vendors offer?

AP automation vendors typically offer a range of support and maintenance services to ensure their clients can effectively use and maintain the software. These services include technical support through phone, email, or chat, access to an online knowledge base or help center , and regular software updates and patches. Many vendors also provide dedicated account managers, on-site training sessions, and consulting services for process optimization. For you as a buyer, it is crucial to understand the levels of support provided and any associated costs when selecting a vendor. Keep in mind that quality support can significantly impact the success of the AP automation solution.

17) Are there industry-specific AP automation solutions?

Yes, some AP automation solutions are tailored to the specific needs of certain industries, offering features and functionalities designed to address unique challenges and regulatory requirements. For example, healthcare organizations might require AP solutions that comply with HIPAA regulations, while manufacturing firms may need robust inventory matching capabilities. These industry-specific solutions can provide additional value by incorporating best practices and standard workflows relevant to the sector, ensuring a more seamless fit with the organization's processes and compliance needs. When considering AP automation vendors, it's important to evaluate whether their solutions cater to your industry's specific needs.

18) What is the typical cost of implementing AP automation?

Perhaps you have noticed that most AP automation vendors offer custom pricing for their products. Decoding the different pricing models is often like solving a great mystery. The cost of implementing AP automation varies widely depending on the size of the organization, the complexity of its AP processes, and the specific functionalities required. Initial costs may include software licenses or subscription fees, implementation and integration services, and training for users. Ongoing expenses can involve maintenance fees, additional user licenses, and support services. Many vendors offer flexible pricing models based on the volume of invoices processed or the number of users, making it easier for companies of all sizes to find a solution that fits their budget.

19) What factors influence the cost of AP automation?

The pricing can vary depending on the number of users, transaction volume, integration complexity, required security features, software upgrades, and support needs. Customization, onboarding, training, and maintenance may also affect overall pricing. Some vendors offer add-on features, such as mobile capabilities or advanced analytics, for an additional cost. It's essential to understand the specific factors that drive pricing for each vendor and evaluate which ones are most important to your team before making a decision.

20) What are the most common pricing models for AP automation?

The three most common AP automation pricing models include payment per processed document, per user seat, and a very popular one, percentage on transactions. In the first model, vendors charge based on the number of processed documents, such as invoices, making it scalable and generally more cost-effective at higher volumes. The second model charges licenses for each user, so the fees are determined by the number of users accessing the platform, which may not be cost-effective for companies with many users. The third model charges a percentage fee on each payment transaction processed through the software, which can add significant costs.

21) Can small businesses afford AP automation?

Thanks to the wide range of solutions available on the market, small businesses can also reap the benefits of AP automation. Many vendors offer cloud-based, subscription-model solutions that require minimal upfront investment and can be scaled in the future. These solutions often provide essential automation functionalities suitable for small businesses looking to improve their AP processes without the need for extensive customization.

22) How is the ROI of AP automation calculated?

A simple way to measure the ROI of AP automation is by comparing the cost savings achieved through the system's efficiencies against the investment made in the solution. Cost savings can arise from reduced labor costs due to automation, lower error rates, early payment discounts captured, and the avoidance of late payment penalties. Increased productivity and the ability to reallocate resources to higher-value tasks also contribute to the ROI. Calculating ROI requires a detailed assessment of current AP costs, the investment in the automation solution, and the post-implementation costs and savings. If you want to quickly find out how much you can save with AP automation software, try out our ROI calculator here .

23) Can AP automation be integrated with existing financial systems?

Yes! All AP automation solutions are designed with flexibility in mind, allowing for seamless integration with a wide range of existing financial systems, ERP platforms, and other business software. This integration ensures that data flows smoothly between systems, reducing manual data entry and the potential for errors. It's best to work with vendors who understand the importance of system compatibility and can provide custom integration services if needed. Effective integration is key to creating a seamless, streamlined workflow.

24) How customizable is AP automation software?

The level of customization available varies by vendor, but many offer a range of options to tailor the software to the specific needs of a business. Customization can include configuring workflows, setting up custom approval hierarchies, and creating personalized reporting dashboards. Some solutions also allow for the development of custom integrations and modifications to fit unique business processes.=

25) How does AP automation facilitate data integration from multiple sources?

AP automation platforms are designed to aggregate and integrate data from multiple sources, including ERPs, procurement software, and other financial systems. Integration tools and APIs (Application Programming Interfaces) enable the seamless transfer of data, automating the consolidation process which reduces manual effort. Customizable integration settings allow businesses to define how and when data is synchronized, ensuring that the AP system is always up to date with the latest information from across the organization.

26) What considerations should companies make for data migration when implementing AP automation?

When implementing AP automation, companies should consider how their existing data will be migrated to the new system. This includes determining which data is relevant and should be transferred, ensuring its accuracy and integrity during the migration process, and setting up protocols for ongoing data management. It's wise to also establish a timeline for migration that minimizes disruption to AP processes and work closely with the vendor to ensure a smooth transition, including testing and validation phases.

27) What is the impact of customization on the scalability of AP automation solutions?

While tailored functionalities can provide immediate benefits, overly customized systems may face challenges when scaling, as each new feature or modification might require additional adjustments. To maintain scalability, it's important to balance customization with the use of standard features that can easily adapt to changing business needs. Choosing a solution with flexible architecture and ensuring that customizations are built in a modular fashion can help preserve the ability to scale without extensive reconfiguration.

28) How does AP automation works on mobile devices?

Mobile capabilities are a must-have, and most vendors offer mobile access to their platforms through dedicated apps or web portals. This access allows users to submit, review, and approve invoices on the go. Mobile access makes it easier for companies with multiple locations or remote employees to manage the AP process efficiently and keep track of approvals and payments anytime, anywhere.

29) Is AP automation safe to use?

Security is a top priority for AP automation vendors, and most software solutions are designed to protect sensitive financial data. The security features include data encryption, secure login procedures, and detailed audit trails. Vendors regularly update their software to address emerging security threats and comply with regulatory changes, helping organizations maintain compliance and protect their financial information. Here at DOKKA, we take data security seriously .

30) What are the best practices for ensuring data security in AP automation?

To keep your AP data safe , it's recommended to adopt a multi-layered security strategy. This strategy should include using strong authentication methods, regularly updating and patching software, and training employees on cybersecurity best practices. Additionally, conducting regular security audits and risk assessments is crucial to identify and address vulnerabilities.

31) How does AP Automation ensure regulatory compliance?

AP automation software helps ensure regulatory compliance by automating and standardizing the AP process according to relevant laws and guidelines. They provide detailed audit trails , which are essential for demonstrating compliance during audits. The systems can be configured to enforce internal controls and approval limits, reducing the risk of fraud and ensuring adherence to financial governance standards. Staying up-to-date with regulatory changes and updating the software accordingly are also among the best practices.

32) Does AP automation mitigate financial risks?

AP automation mitigates financial risks by introducing controls and visibility into the entire accounts payable process. Automated workflows ensure that invoices are processed and approved according to established policies, reducing the risk of fraudulent transactions and payment errors. Real-time reporting and analytics provide insights into spending and cash flow. By automating the reconciliation process and ensuring timely payments, AP automation also helps avoid late payment penalties and maintain positive supplier relationships.

33) What are the security risks associated with AP Automation and how are they addressed?

The primary security risks associated with AP automation software include data breaches, unauthorized access, and fraud . These risks are addressed through comprehensive security measures such as data encryption, multi-factor authentication, role-based access controls, and regular security audits. Vendors also implement sophisticated fraud detection algorithms to identify and prevent suspicious activities.

34) Can AP automation handle global regulatory compliance?

Yes, AP automation solutions are equipped to handle global regulatory compliance by incorporating features that support various international standards and regulations. For global businesses, this includes managing multiple tax rates, adhering to country-specific financial reporting requirements, and ensuring data protection compliance as per GDPR and other privacy laws. Vendors often update their software to reflect changes in regulations, helping global organizations remain compliant across different jurisdictions. Customizable workflows and reporting capabilities also allow businesses to meet specific compliance needs in various countries.

35) What training is required for the finance team to start using AP automation software?

Effective training is the first step to ensure the smooth adoption and optimal use of AP automation software. Training programs should cover system functionalities, including invoice processing, data entry, approvals, and reporting. Customized sessions based on user roles and responsibilities can enhance understanding and efficiency. Many vendors offer a mix of online tutorials, webinars , and in-person training sessions. Ongoing support and refresher courses can help address new features or updates, ensuring users remain proficient and can leverage the system to its full potential.

36) Is AP automation software user-friendly?

Modern AP automation systems are designed with the user experience in mind, featuring intuitive interfaces and straightforward navigation to ensure ease of use for all employees, regardless of their technical expertise. These systems often include customizable dashboards, one-click approvals, and easy-to-use search functionalities, making it simple for users to manage their tasks. User feedback is regularly incorporated into software updates to improve usability and meet evolving needs.

37) How to overcome employee resistance to AP automation?

For many CFOs, the challenge is how to get their team to adopt new AP technology . Start by explaining the benefits of the system, not just for the organization but for individual employees, such as reduced manual work and the opportunity to focus on more strategic tasks. Providing comprehensive training and support can help alleviate fears and build confidence in using the new system. Engaging employees early in the decision-making process, allowing them to provide input and feedback, can also foster a sense of ownership and ease the transition.

38) How long does it typically take for new users to adapt to AP automation software?

The adaptation period for users can vary depending on the complexity of the AP automation solution and the users' familiarity with digital tools. Generally, basic functionalities can be grasped within a few days to weeks, while full proficiency with all features may take a few months. Continuous support, access to training materials, and practical experience with the system can significantly shorten the learning curve, enabling users to quickly become efficient in their daily tasks.

39) How scalable are AP automation solutions?

AP automation solutions are built to scale with the growth of an organization, accommodating increases in invoice volume and complexity without a loss in performance or efficiency. Scalability is achieved through cloud-based architectures, modular designs, and flexible configurations, allowing for the addition of new users, integration with additional systems, and expansion into new markets or regions. This ensures that businesses can continue to benefit from AP automation as they grow, without the need for significant system overhauls or replacements.

40) Can AP automation adapt to organizational changes?

Most AP automation products are designed to be adaptable, enabling them to accommodate organizational changes such as mergers, acquisitions, restructurings, or shifts in business strategy. They can be reconfigured to reflect changes in workflows, approval hierarchies, and user roles. This flexibility ensures that the systems remain aligned with the organization's evolving needs, supporting efficient and compliant AP processes through periods of change.

41) How can multinational companies overcome the challenges associated with AP automation?

Multinational companies face challenges such as managing diverse regulatory environments, accommodating multiple languages and currencies, and integrating with various local and global ERP systems. Overcoming these challenges requires selecting an AP automation solution that offers flexible, configurable options to meet diverse needs, robust integration capabilities, and strong global support. Working closely with the vendor to tailor the system to specific regional requirements and providing local teams with the necessary training and resources can also help ensure successful implementation and adoption across all operations.

42) What are the future trends in AP automation?

Future trends in AP automation include the increased use of artificial intelligence (AI) and machine learning for predictive analytics, enhanced decision-making, and the further automation of routine tasks. Additionally, the integration of AP automation with other fintech solutions and platforms is expected to grow, offering more comprehensive financial management tools. The focus on user experience will continue, with developments aimed at making systems even more intuitive and accessible.

43) How can companies prepare for future developments in AP automation?

To prepare for future developments in AP automation, companies should stay informed about industry trends and advancements in technology. This involves attending conferences, webinars, and networking with other professionals to learn about new solutions and best practices. Companies should also regularly review their current processes and systems to identify areas for further improvement or automation.

44) What is the future outlook for AP automation technology?

Continued growth and innovation are expected in AP automation technology. As businesses increasingly recognize the benefits of automating their AP processes, demand for more sophisticated, integrated, and user-friendly solutions will rise. Technological advancements will drive further efficiencies, cost savings, and strategic insights, transforming AP from a back-office function into a key contributor to business success. The integration of AP automation with broader digital transformation initiatives will enhance its value and impact across organizations.

45) How can companies stay ahead with AP automation technology?

Companies can stay ahead with AP automation technology by adopting a proactive approach to system evaluation and upgrades, ensuring their solutions incorporate the latest features and best practices. Building strong relationships with vendors and participating in user communities can provide insights into emerging trends and innovations. Additionally, fostering a culture that values digital literacy and innovation can empower employees to leverage AP automation technology effectively, driving continuous improvement and competitive advantage.

46) How will touchless invoice processing shape the future of AP automation?

Touchless invoice processing represents a significant evolution in AP automation, promising to streamline the accounts payable process by nearly eliminating manual intervention. This technology leverages advanced AI and machine learning algorithms to automatically capture, process, and pay invoices, requiring human intervention only in cases of exceptions or discrepancies. It ensures greater accuracy, faster processing times, and reduced costs. As this technology matures, companies can expect a substantial increase in efficiency, allowing AP teams to focus on strategic tasks rather than routine processing.

47) What role does continuous accounting play in the evolution of AP automation?

Continuous accounting plays a pivotal role in the evolution of AP automation by integrating real-time data processing with financial management. Automating the recording of financial transactions as they occur ensures that financial records are always up-to-date, providing businesses with continuous insights into their financial status. This approach alleviates month-end close pressures and evenly distributes accounting tasks over time. In the context of AP automation, continuous accounting facilitates better cash flow management, timely financial reporting, and strategic decision-making, further integrating operational and financial processes.

48) How might the integration of AP automation with eProcurement platforms affect procurement and payment processes?

The integration of AP automation with eProcurement platforms redefines procurement and payment processes by creating a seamless, end-to-end procurement-to-pay cycle. This integration enables automatic 3-way matching , streamlining approvals and payments, and ensuring compliance with procurement policies. It enhances spending visibility, improves vendor relationships through timely payments, and leverages analytics for better procurement decisions. As these integrations become more common, businesses can expect streamlined operations, enhanced controls, and strategic sourcing benefits, leading to significant cost savings and operational efficiencies.

49) What impact will predictive analytics have on future AP automation strategies?

Predictive analytics will profoundly impact future AP automation strategies by leveraging historical data to forecast future financial obligations, optimize cash flow, and identify potential savings opportunities. Analyzing payment histories, invoice data, and spending patterns, predictive analytics can provide actionable insights for improved financial planning and decision-making. This could lead to more strategic vendor negotiations, timely use of dynamic discounting, and enhanced budgeting processes. As AP automation solutions increasingly incorporate predictive analytics, businesses will benefit from more proactive financial management, enhancing their ability to respond to market changes and optimize financial operations.

50) How can businesses ensure their AP automation solution remains flexible to accommodate future changes?

To ensure their AP automation solution remains flexible, businesses should opt for platforms known for scalability and modular design. Investing in solutions with a robust ecosystem of integrations and an active development roadmap is crucial. Regularly reviewing and updating automation rules and workflows to reflect changes in the business environment can maintain operational efficiency. Additionally, partnering with a vendor that offers comprehensive support and continuous updates will help the system evolve alongside the business, accommodating new processes, regulations, and technologies as they emerge.

How DOKKA Fits In The Picture

DOKKA stands out in the AP automation landscape by offering a robust, AI-driven platform that seamlessly integrates with existing financial systems. It simplifies and accelerates the accounts payable process, from invoice capture to ERP integration, making it an ideal choice for businesses aiming to enhance efficiency, accuracy, and financial insights. With a focus on scalability and user experience, DOKKA is tailored for organizations of all sizes, ensuring a future-proof solution that adapts to evolving business needs and technological advancements.

Book a free demo here to learn more about us and how we can help with your business.