The proof of Accounts Payable (AP) automation effectiveness is clear from the ROI evidence. Even the most effective Account Payables departments can’t keep the costs of inefficient and outdated manual workflows under control. In fact, AP efficiency and AP cost are primarily controlled by the degree of manual work your processes require. More automated, more efficient.
Why automated AP beats manual AP (and it isn’t even a fair fight)
It’s not hard to see why: AP is recognized by CFOs across the globe as the most time-consuming, laborious and paper-intensive process in finance operations. Here’s a few of the main reasons:
1. Manual processing inflates AP costs
Research has found the average cost to process a single vendor invoice can be up to $15. When organizations adopt AP automation, they see their AP costs fall anywhere from 60-80% bringing the average invoice cost down to $5 or less.
2. Manual AP processes mean discount opportunities get missed
Companies capture discounts from less than 20% of their suppliers. What’s more, the cost of fraud associated with manual methods can decimate budgets.
The higher the percentage of manual processes in use, the greater the likelihood of payment fraud occurring. It’s simply not possible for AP operators to spot all discrepancies. Especially if they’re dealing with hundreds or thousands of different supplier requests per week.
3. Manual AP processes mean longer approval times and higher exception rates
Bottom-performing companies that process more invoices manually also face longer invoice approval times and more exceptions than their peers.
4. Manual AP workflows mean processes that don’t scale—even with increased headcount
Lack of automation is not only reflected in staffing needs, it also ripples out into the quality of talent you engage, since most workers would prefer to seek employment opportunities with forward-looking companies engaged in digital practices and innovation.
5. Manual AP workflows mean poorer vendor and customer relationships
Without a streamlined and efficient accounts payable process, there’s no guarantee that vendors will be paid in a timely manner. Disjointed, fragmented processes that involve multiple layers of approvers also impact your customer’s business, their future ability to collaborate with you, and your capacity to remain competitive.
But AP’s highly procedural nature also makes it fairly simple to automate. And AP automation brings clear ROI across a number of easily observable metrics.
1. AP automation solutions are faster than even the most diligent human operator
67% of teams manually key invoices into their ERP/accounting software—and take an average of 10 days to process an invoice
Retiring repetitive and hands-on processes reclaims a lot of time for your AP teams, from capturing invoices to validating data, matching invoices to purchase orders and goods receipts, and lastly posting invoices so vendors can be paid.
Every minute that can be saved by increasing AP efficiency will increase your potential AP Automation ROI.
2. Error rates drop fast with AP automation
Even error-free manual input demands time and resources that could be spent elsewhere. But automated systems not only make error less likely, they also make many invoices that would be bound for exception handling in a manual workflow into straight-through cases.
Automated AP systems with flexible rules can be updated instantly without room for communication errors or ambiguities, meaning invoices always end up where they’re supposed to go—and get flagged for extra inspection if they don’t meet requirements, have suspicious features, or don’t match other data sources.
3. Automated AP means duplicate invoices don’t get an opportunity to cause problems
Vendors know AP is a slow process. Many of them therefore submit the same invoice to different channels (like email and snail mail) in order to boost their chances someone will see it and process it.
But this wastes already limited time and makes the process even less efficient. Automation fixes this by making it easy to identify duplicates, correctly flag them as such, and reduce volume requirements.
How AI takes AP automation to another level
AI is already advancing the efficiency and accuracy of AP systems. Serrala’s customers in AP automation already report their solutions’ AI-powered capabilities represent a significant improvement on speed, efficiency, cost effectiveness, and overall visibility and control of both the AP process and strategic working capital flows across the organization.
AI isn’t just a theoretical exercise in either AP or payments automation. Let’s walk through some of the more established use cases, then we can explore what more advanced and experimental applications can do for your AP workflows.
How many organizations already use AP in accounts payable automation
At the moment, most businesses deploying AI in accounts payable are using it to:
1. Extract data from documents and invoices
Principles like optical character recognition make Al-enabled AP systems a powerful ally in expediting the manual work associated with data entry and re-entry. Especially in areas like invoice processing.
Al, and in particular Intelligent Document Processing technology (IDP), can instantly extract relevant information including supplier IDs, purchase orders, invoice amounts, and the like with an extremely high degree of accuracy. IDP technology far surpasses the accuracy level that is possible with OCR technology, and significantly streamlines the process of entering invoice details manually into a system, which can take a human AP operator several minutes to do the same task.
This is by far the most common current application of Al on accounts payable. At this point, we consider the value add and reliability of this use case to be a settled matter – as do many of our customers.
2. Smart fraud detection
Al-enabled fraud detection systems can identify and escalate suspicious invoices and payment requests for review instantly. Hugely improving your organization’s capacity to make homely and accurate payments. This is one of the major applications of machine learning in AP automation currently being rolled out by organizations worldwide.
Organizations with higher payment volumes and complex financial ecosystems see particular value here, as it’s almost impossible to accurately validate all invoices and requests manually while still maintaining efficiency. Particularly as AP fraud becomes increasingly common and sophisticated – according to the 2024 AFP Payments Fraud and Control Survey Report, 80% of organizations are now victims.
3. Touchless validation, matching, and invoice posting automation
Another tried and tested application of Al in accounts payable – and another which goes a long way be eliminating the onerous manual work associated with invoice processing—making truly automated invoice processing a reality for a majority of supplier transactions.
Al based invoice coding tools in modern AP automation software can learn from historical trends how to correctly code, match, and post invoices without any manual input. Even in instances where purchase orders and other information traditionally required for straight-through processing is absent.
Again, none of this is speculative: there are areas where Al has already proven its worth for thousands of organizations worldwide on their AP and payments processes. And while they still have the highest ROI of all AP use cases for Al, they’re only scratching the surface of what the technology can do for your business.
Some more advanced AI use cases for accounts payable automation
Some of our customers – and other cutting-edge organizations and large enterprise systems providers like Microsoft – are already leveraging much more futuristic applications of AI.
Here’s where Serrala sees AI playing a role in the future of accounts payable:
1. Expediting approvals with smart app integration
Al doesn’t just help to process AP data – it provides the basis for powerful improvements in how we all handle AP workflows. Serrala is currently developing microservices that improve collaboration between your AP department and business users, allowing them to access information easily from the apps they’re already using every day.
For example, Serrala’s MS Teams app allows everyone involved in your AP workflow to access, take notes on, and even approve invoices exactly as they would from their central SAP workstation. Exceptions and escalations, therefore, are easier to handle even for users like the CFO and other leaders who aren’t regularly plugged in to your core finance platform.
2. Making better use of data for more powerful analytics
AI is the perfect partner in cleaning, organizing, and reporting on your organization’s historical AP data. But machine learning principles also make for a powerful tool for predictive analytics based on that data.
Using AI to automate reporting and analytics in AP helps organizations bridge the gap between data and action. Creating more accurate and timely reports, forecasts, and recommendations from a master dataset that’s fully trustworthy and always up to date.
3. Using generative AI for real-time insight
Generative Al is now advanced enough to allow your AP teams and financial leaders to get instant insight without the need to even create custom reports. LLMs (“Large Language Models”), the same models that underlie tools like ChatGPT, now give you the power to have a conversation with your data in real time. For example, if you want to know which discounts are about to expire, if your spend is higher or lower than usual, if there’s strategically important working capital needs to address, or even if you have any current invoices flagged for exceptions like fraud or additional approvals, all you need to do is ask. All of which helps your AP team contribute to the growing importance and expectations placed on your organization’s CFO as a key strategic advisor and business partner.
When combined, these use cases allow organizations to:
1. Maximize AP speed & accuracy
Organizations reduce manual tasks and save valuable time and effort with automated invoice processing workflows that increase both 3-way match and straight through processing rates.
2. Establish a global invoice processing hub
AI-powered AP automation allows your organization the same standardized AP process for all invoices globally to increase efficiency, improve compliance, and support global shared services centers.
3. Handle greater invoice volumes
Smart RPA alone allows organizations to process more invoices faster and with greater accuracy, and to quickly onboard new business units. Other AI use cases augment this capability by refining the process over time and providing continuous predictive and prescriptive oversight to ensure smooth running.
What’s more, AI-powered AP automation scales to whatever volume your business requires, with processes adapting and growing alongside the organization.
4. Flexibly route invoices for approval
The finance team gains the power to send invoices direct to nominated individuals for handling using flexible business rules. This keeps human touches to a minimum for each invoice for maximum efficiency. It also provides an additional barrier against fraudulent invoices, with any suspicious activity routable immediately for closer examination.
5. View real-time invoice information
Your teams can monitor AP workflow performance at the level of individual invoices and quickly detect and resolve issues from a centralized dashboard that presents detailed invoice status information with the ability to drill down to transaction details.
6. Ensure compliance
Process controls for legal, fiscal and industry requirements including country-specific e-Invoicing mandates, data privacy regulations and other standards becomes easy within an automated framework. An additional AI layer also provides greater visibility into both the cost of compliance and paths by which your teams can improve efficiency and minimize overhead.
Frequently asked questions about AI-powered AP automation
Q: Why is AP automation (Accounts Payable automation) important for a business?
A: AP automation is vital for businesses because it streamlines the accounts payable process, reducing manual work, and increasing efficiency. It results in cost savings, minimizes errors, and provides better financial control. Businesses can process invoices more quickly, improve vendor relationships, and gain real-time insights into their financial data. Additionally, AP automation helps with compliance and reduces the environmental impact by reducing paper usage.
Q: Who needs AP automation?
A: Any business handling high volumes of invoices or payments will benefit from a fully optimized AP automation (accounts payable automation) process. AP automation is also valuable for companies looking to scale rapidly without proportionate increases in staff. In essence, any business seeking to enhance financial efficiency, reduce costs, and improve accuracy can benefit from AP automation.
Q: Does AP automation improve the invoice approval process?
A: Yes, AP automation significantly improves the invoice approval process. It automates approval workflows, allowing invoices to move through the system faster, reducing approval bottlenecks, and ensuring timely payments. The system can also send automated reminders and escalations to buyers, who can then review and approve invoices using a web browser or mobile application. The ability to approve invoices anytime, anywhere enhances the overall efficiency and transparency of the process.
Q: How does AP automation prevent duplicate payments?
A: AP automation uses automated data matching to cross-reference invoices with purchase orders and receipts. When a duplicate invoice is detected, the system flags it and sends it back to the vendor, preventing double payments. Automatically detecting duplicates also reduces unnecessary work by the accounts payable team.
Q: Can AP automation solutions handle cross currency and international payments?
A: Yes, many AP automation solutions are capable of handling cross-currency and international payments. They can automatically convert currency and ensure compliance with international regulations, making them suitable for businesses with global operations or vendors in different countries.
Q: What is the cost of AP automation?
A: The costs of AP automation will depend on your organization size and the volume of invoices you process. It’s important to conduct a thorough cost-benefit analysis to determine the exact cost and the potential savings for your specific business. We recommend using Serrala’s AP calculator to evaluate the potential ROI of AP automation for your business.
Q: What is AP automation vs AR automation?
A: AP automation focuses on streamlining the accounts payable process, automating tasks such as invoice processing and payment management. On the other hand, Accounts Receivable (AR) automation automates the processes involved in receiving payments from customers. While AP automation deals with outgoing payments, AR automation deals with incoming payments, including invoicing, payment processing, credit and collections. Both processes are essential for optimizing a company’s financial operations, with AP focusing on payables and AR on receivables.
Q: How does AI improve AP automation?
A: AI-assisted workflows improve AP automation effectiveness by making automated data extraction from different invoice formats smoother and more effective, allowing for a higher rate of touchless processing of supplier invoices. They also improve rates of touchless validation, matching, and approval, provide stronger safeguards against fraud, and (in more advanced use cases) further improve visibility and insight into performance with generative insights for improvement and process fixes.
How can Serrala’s software solutions help your organization automate its accounts payable workflows?
Serrala’s AI-powered AP automation solutions are trusted by over 2,800 world-leading brands to achieve the highest possible process automation rates. Eliminating over 80% of manual efforts in accounts payable, saving weeks’ worth of time, and unlocking new possibilities in strategic decision making and company achievement.
Serrala solutions enable fully-touchless processing and improve working capital availability through intelligent cash flow optimization, allowing global organizations to confidently to power key strategic investments.
Serrala’s AP automation software solutions are available as fully standalone cloud or hybrid deployments with multiple ERP integrations, or as fully-embedded extensions of SAP S/4HANA and ECC.
If you’re interested in learning more about what we can do for you – and how we can help you guarantee a seamless S/4HANA migration – get in touch with us today to book a demo.
