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AP Automation Byers Guide

AP Automation feature overview

Businesses adopting AP Automation solutions can expect to experience the benefits of improved working capital, lower AP processing costs, increased staff efficiency, improved financial controls and reduction in incidents of fraud.

End-to-end AP Automation is the digitization of three separate but connected processes:

  • Invoice processing: receive, approve and post invoices
  • Cash management: engage suppliers, plan payments, optimize working capital
  • Payment processing: authorize, pay and reconcile payments

These three processes collectively accomplish the goal of accepting invoices from suppliers and safely sending them payments while optimizing the use of your cash and working capital.

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Automate AP

AP Automation can save money, boost efficiency, mitigate fraud, and improve cash flow.


Invoice processing: Receive, Approve and Post Invoices

1. Invoice capture
Support all common invoice formats  Accept invoices in any common file format: PDF, PNG, TIFF, JPEG
Accept invoices via email Use a dedicated email address where your suppliers and staff send invoices
Upload invoices in bulk Scan and upload invoices in standard formats in bulk batches directly into the AP solution
Enable direct entry of invoice information Enable invoices to be created; necessary if an invoice document is damaged or missing
Extract invoice header and line-level data Automatically convert invoice data into distinct fields (e.g. invoice number, amount, due date)
Split documents with multiple invoices When a single document contains multiple invoices (e.g. when scanning a set of paper invoices together), ensure that the invoices can be separated
Detect and flag duplicate invoices When a payment is past due, a supplier may send an invoice again; detecting duplicate invoices mitigates risk of duplicate payments
Accept invoices in any currency Foreign suppliers may present invoices local currency and expect to be paid in local currency
Accept credit memos Support ability to detect credit memo documents and capture all credit memo information for posting to general ledger
Accept statements Identify documents as statements (rather than invoices); ensure that statements are not routed for approval or posted to general ledger
Recognize supplier name and information in invoice Intelligently match supplier name in invoice to supplier name in General Ledger; support alternate, misspelled and partial names
Enable creation of new suppliers When invoice is received from a new supplier, support ability to create supplier based on entitlements and permissions
Split invoice line items by category Split an invoice line into multiple lines: either manually or based on other criteria
Auto-categorize invoices Automate invoice coding at invoice level or line-item level based on supplier names, line item descriptions, or other invoice properties
2. Invoice approval
Define invoice approval routing rules Define invoice routing rules based on amount, category, department, location, class and other parameters
Automatically route invoices for approval Automatically route invoices for approval based on amount, supplier, category or other parameters
Support tiered invoice approval workflows based on invoice amount Support definition of invoice approval workflows where approvals are tiered based on the invoice amount.
Provide dedicated Invoice approval web and mobile application Mobile and web application to enable invoice approvers to view, approve and reject invoices
Support common invoice approval functions  Enable functions to approve, recall, hold, dispute, or reject invoices
Enable invoices awaiting approval to be reassign Allow previously assigned invoices to be reassigned to different approver
Support two-way matching of invoice to purchase order Match received invoices against purchase orders: header and line-level
Support three-way matching of invoice to purchase order and receipt Match received invoices against purchase orders and goods received: header and line-level.
Support automatic price checking Automatically compare each lines' product code with the supplier's agreed contract price; flag cases where the amount put on an invoice is higher than the agreed upon amount
Maintain invoice approval audit trail Enable review and audit of all invoice related approval actions
3. Invoice posting
Post invoices and invoice documents to the General Ledger  Automatically post approved invoices and invoice documents to the General Ledger via a bi-directional sync, removing the need for manual record keeping

Cash management: engage suppliers, plan payments, optimize working capital

4. Supplier engagement
Provide a dedicated web and mobile supplier portal application An application to manage engagement with suppliers. Functions include ability for supplier to set and change payment profile, download remittance detail, review status of submitted invoices
Validate suppliers Confirm supplier identity, assess AML and OFAC risks, check supplier reputation
Capture payment preferences and terms Allow suppliers to set and change preferred payment method and terms (e.g., prefer payment by ACH, NET 15)
Capture early pay discounts Allow suppliers to specify whether one or more prompt payment discounts are offered
Capture and validate ACH account details Allow suppliers to specify bank account information to support direct deposit by ACH; also validate that the bank account: i) is valid and ii) belongs to the supplier
Confirm card acceptance payment and terms Allow suppliers to specify whether they accept payments by credit card, and associated criteria: e.g., maximum payment, prompt payment, surcharge, virtual card
Communicate invoice and payment status Share invoice and payment processing status with the supplier
Support engagement with overseas suppliers Capture and manage payment details for suppliers that need to be paid in foreign currency
5. Plan payments
View AP aging reports  Clearly see all payables by aging buckets (e.g., due in 30/60 days) with drill down detail
View cash forecasts View cash forecast to see the impact of payables on cash flow
Plan payment runs Plan payment runs: who and when to pay, and how much
Support cash impact scenario planning and analysis View the impact of payment plan on cash (e.g., how will cash be impacted by changing the mix of supplier payments, dates, and payment methods)
Show real-time cash impact of credit-card payments View the impact on cash and cash flow when using credit cards
Show real-time cash impact of deferred payments View the impact on cash and cash flow when supplier payments are deferred
Support application of early pay discounts, including dynamic discounting View all available early pay discounts — ensure proper timing and optimal use of dynamic discounting
Support application of credit notes View all available credit notes — ensure use of credit to optimize use of cash
6. Optimize working capital
Support use any business credit card to pay any supplier  Extend balance sheet cash by 20-50 days (about 1 and a half months) by using your own credit card to pay any supplier (even if supplier does not accept credit cards)
Support use native AP virtual cards to pay suppliers Use credit cards embedded in AP solution to pay card-accepting suppliers. Supplier pays fees, you benefit by extending balance sheet cash
Enable deferred payments to suppliers Use available credit to instantly extend balance sheet cash by 30 days (about 4 and a half weeks). Supplier is paid based on terms.
Provide cash back on credit card payments Earn valuable cash back when paying by credit card — your own or native AP virtual card
Track Key Performance Indicators of cash Track and report on cash, cash flow, Days Payables Outstanding, payables performance: status and trends

Payment processing: Authorize, pay and reconcile payments

7. Authorize payments, mitigate payment fraud
Ensure ability to support fine-grained user entitlements Control access to critical payment functions and reports based on fine-grained user entitlements and roles
Require two-factor authentication Mitigate risk of account takeover by implementing out-of-band tokens for all critical authentication functions (e.g., login by payment authorizer)
Support tiered payment approvals Implement segregation of duties and dual authority controls by establishing payment authorization limits based on payment amount.
Provide common payment approval functions Support ability to approve, recall or reject payments as part of approval process
Provide a dedicated payment approver view Ensure clear segregation of duties with multi-level payment authorization controls
Monitor all payment transactions Track and report high-risk payments to limit fraud (e.g., first payment to new supplier)
Maintain and report approval audit trails Ensure audit trails of all payment-related actions for subsequent reporting.
8. Make payments
Support disbursement by all US domestic payment methods Disburse domestic payment to suppliers directly from customer’s own account (by check, ACH, credit card or wire)
Support cross-border payments: USD and FX Disburse international payment to suppliers directly from customer’s own account
Send detailed payment remittance information Send payment remittance details to suppliers as soon as a payment is issued to facilitate reconciliation
Provide real-time payment status Provide detailed tracking and payment progress information to both you and your supplier.
Track check delivery Track and report check delivery from origination point to final deliver post office
Support expedited check payments Support two-day and overnight delivery of checks to suppliers
Support same day and real-time electronic payments Ensure that all electronic payments are delivered either in real time, or on the same business day (ACH)
Eliminate intermediate payment “hold” Ensure that there are no payment delays in settling payments to suppliers. In particular — that AP solution does not “hold” payments
9. Reconcile and report payments
Post payments against open invoices Ensure that all payments — whether fully or partially paid — are automatically posted against open invoices and invoices closed
Mark invoices paid When payments are initiated by suppliers (e.g., card-on-file or auto-debit on bank accounts) or payments are made “out-of-band” (e.g., directly on supplier website), support ability to mark invoices paid
Track payables Key Performance Indicators Track payment performance: Days Payables Outstanding, payment delays, payments made on time, invoices approval performance
View AP aging reports Clearly see all payables by aging buckets (e.g., due in 30/60 days) with drill down detail.

End-to-end AP Automation is the digitization of three separate but connected processes that collectively accomplish the goal of accepting invoices from suppliers and safely sending them payments.

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