Accounts Payable Software: 9 Key Features to Look For

Few technologies are as important to managing an organization’s finances as accounts payable (AP) software.  Digitizing and simplifying the processing of invoices submitted by suppliers enables organizations to achieve greater efficiency, accuracy, and cost savings in their financial operations.  

Manual approaches to processing supplier invoices are labor-intensive, slow, and error prone.  Manually tracking supplier invoices through an approval process is cumbersome, often resulting in lost or misplaced documents, missed approval deadlines, and supplier frustration.  And the lack of real-time visibility into the status of invoices complicates compliance and risk mitigation efforts. 

Automated accounts payable solutions significantly reduce the manual, repetitive tasks that hold AP departments back.  Automatically capturing data from supplier invoices reduces overhead, decreases the possibility of human error, and streamlines the invoice-to-pay cycle.  Digital approval workflows ensure timely payments and strengthen vendor relationships.  Integration with enterprise resource planning (ERP) applications and accounting software packages ensures the smooth exchange of data, reduces discrepancies, and enhances financial reporting accuracy.  Real-time analytics and reporting provide valuable insights into cash flows, enterprise spending, and operational performance.  And built-in controls ensure adherence to regulatory standards and mitigate the risk of fraud and errors.  

But these tantalizing benefits are only possible with the right AP automation software.  This article provides a checklist of seven critical features to look for an automated invoice processing solution. 

What to look for in AP automation solution

Imagine a system that not only eliminates tedious manual invoice processing tasks but also seamlessly integrates with your ERP or accounting software and provides real-time insights and robust compliance features.  The best AP automation solutions make that vision a reality.   

Here are the features to look for in an AP automation solution to achieve optimum results. 

1. Invoice data capture.  One of the cornerstone features of AP software is the extraction of data from scanned or digital invoices.  The best AP software use optical character recognition (OCR), Natural Language Processing (NLP), and other technologies to identify and capture relevant invoice data fields such as invoice number, date, amounts, vendor name and number, and line-item details items.  Eliminating the need to key invoice data not only speeds up invoice processing but also significantly reduces errors associated with manual data input.
2. Data validation.  Data validation is another critical component of AP software.  Automated invoice processing systems validate the data extracted from invoices against predefined rules, databases, or information residing in an ERP application or accounting software package.  Validating extracted invoice data ensures the integrity of the information and flags any discrepancies or missing details – such as a purchase order number – for review.  The best AP automation solution can match invoice data to PO or delivery receipt information residing in a system of record and post the invoice as ready to pay, without human operator intervention.    
3. Digital routing.  There are instances where someone may need to review an invoice, such as unmatched invoices, high-dollar invoices or invoices from new or strategic suppliers.  That’s where digital approval workflows come in.  Automated invoice processing systems can route invoices through the appropriate approval channels based on predefined workflows.  The software notifies stakeholders of invoices awaiting their review, alerts stakeholders when invoices are approaching their due date, or the expiration of an early payment discount offer, and escalate invoices that have not been reviewed in a timely manner.  Unlike email-based approaches to routing invoices, digital workflows provide AP staff with real-time visibility into the status of invoices, and complete logging of all actions taken on an invoice.  And the mobile access built into some AP software allows users to process and approve invoices from anywhere.  Mobile notifications keep users informed about pending actions, ensuring that approvals and reviews are not delayed even when stakeholders are on-the-go.  Digital approval workflows reduce bottlenecks and accelerate the overall processing time.
4. Seamless integration.  An ERP or accounting software package is the financial nerve center of an organization.  Seamless integration with these systems of record is a must-have feature for any AP solution.  The smooth transfer of data transfer between AP software and an ERP or accounting software ensures that all financial data is synchronized and up to date.  Look for AP software that supports multiple data formats and standards to integrate with legacy systems and streamline deployment.  Some AP solutions use robotic process automation (RPA) to export data to legacy systems without the need for computer programming.
5. Reporting.  The best AP software puts smart insights at the fingertips of the people who need them.  Graphical dashboards display the real-time status of invoices and Key Performance Indicators (KPIs).  Drill-down capabilities enable AP staff to identify trends and uncover the source of issues.  Mobile access keeps decision-makers in-the-know while on-the-go.  Exports get information to downstream systems and processes fast.  And ad hoc reports make it easy for AP departments to adapt their reporting as their business requirements change.
6. Built-in controls.  From phishing schemes and Business Email Compromise (BEC) attacks to account takeovers and phony invoices, high-tech conmen are targeting AP departments to perpetrate fraud.  Mitigate your organization’s risk of falling victim to cyberattacks and payment fraud by looking for AP software with built-in controls such as user access permissions, automated separation of duties, systematic workflows, automatic logging of all actions taken on an invoice, advanced data encryption, and automated document retention.
7. Audit logging.  If it feels like it’s harder keeping up with all the regulations, guidelines, industry standards, and laws about how invoices should be processed, you are not alone.  The right AP automation solution can help ease your organization’s compliance burden.  Audit logging ensures that all actions taken on each invoice are recorded meticulously.  This comprehensive record-keeping is vital for internal audits and regulatory compliance, providing transparency and accountability in the invoice processing workflow.  Automated AP systems also enforce compliance with internal policies and external regulations.
8. Artificial intelligence (AI).  AI and machine learning (ML), a subset of AI, further enhance the capabilities of automated invoice processing systems.  AI and ML can improve invoice data extraction accuracy through pattern recognition and predictive analytics.  AI and ML also enable continuous improvement, learning from past invoices to enhance processing efficiency and accuracy over time.  And AI can analyze vast amounts of data to predict cash flow needs, model anticipated spending, or identify anomalies that may indicate fraud.
9. Scalability.  AP software is foundational technology, not a throwaway solution.  Look for an AP solution that can scale and adapt to your organization’s changing business needs.  Configurable workflows, support for multiple scanners, and cloud architecture, ensure that a solution can scale can keep pace with your needs, without compromising performance.

Finding an AP automation solution that includes these key features will help an organization transform its invoice-to-pay process and achieve greater efficiency, accuracy, and transparency.

Conclusion 

Investing in AP software with the features outlined in this article isn’t just about saving time and reducing errors.  It’s about empowering AP to become a strategic asset to an organization.  With streamlined workflows, improved accuracy, and enhanced transparency, your AP department can work smarter, not harder, ultimately contributing to the financial well-being and continued success of your organization.  The future of invoice processing is automated, and now is the time to embrace it.