AP automation
Software that handles supplier invoices from arrival to payment with as little manual entry and chasing as possible.
In short
- It automates capture, coding, matching, approval routing and payment scheduling.
- The measure of success is the share of invoices that go through with nobody touching them.
- Exceptions still need people. Automation makes them visible instead of buried.
AP automation means using software to run the accounts payable process: receiving invoices, reading them, checking them against orders and receipts, sending them for approval, scheduling payment and posting them to the ledger. The aim is to replace manual data entry and email chains with rules and workflows.
What gets automated
- Capture: invoices arrive through a dedicated email address, supplier portal or e-invoicing network, and their data is extracted.
- Coding: suppliers, accounts, cost centres and tax codes are suggested from past invoices.
- Matching: invoices are compared with purchase orders and goods receipts, and those within tolerance clear on their own.
- Approval: invoices route to the right approver based on amount, department or supplier.
- Payment: approved invoices are scheduled for their due date, or earlier if a discount is worth taking.
Measuring it
The most telling number is the touchless rate: the share of invoices processed from arrival to posting without anyone editing them. Cost per invoice and days from receipt to approval are also common measures. Automation rarely reaches 100%, because some invoices have genuine problems. Its real value is that those exceptions are flagged with a reason, rather than sitting in someone's inbox.
Worked example
Before and after
A manufacturer receives 1,800 invoices a month. With manual entry, two clerks key each one and chase approvals by email, and invoices take nine days on average to approve. After automation, 1,260 invoices (70%) match their order and receipt and post untouched. The team spends its time on the 540 exceptions, and approval time drops to three days.