Modern accounts payable (AP) teams often use tools and techniques that are anything but modern. They use spreadsheets to track and enter expenses. They manually match invoices to purchase orders. And they reconcile vendor statements by hand. These practices are not only outdated, but they also create inefficiencies and errors that force finance professionals to work overtime, while creating blind spots in reporting.
AP automation transforms how businesses manage their AP operations, helping finance teams like yours improve accuracy, speed up payments and streamline their workflows. These benefits are particularly acute if your business uses NetSuite, thanks to several advanced automation capabilities that are deeply integrated into the ERP software.
In this guide, we’ll explore the essentials of AP automation, focusing on key NetSuite integrations and their role in helping you improve how you manage invoice and payment processing from start to finish. But let’s begin with an overview of how we define AP automation here at Zone & Co.
Listen to our podcast on automation in finance to learn more about how AP automation is transforming financial operations.
Table of Contents
1. What is AP automation?
2. The case for AP automation in NetSuite
3. Understanding AP automation ROI
4. Core components of NetSuite AP automation
5. Frequently asked questions about AP automation
6. The challenges and solutions of implementing AP automation
7. The future of AP automation
8. AP automation: more than the sum of its parts
What is AP automation?
AP automation uses technology to streamline the accounts payable function – from invoice receipt to payment – by eliminating manual intervention wherever possible. Using scan and capture, artificial intelligence (AI), purchase order approval workflow and invoice approval workflow tools, AP automation streamlines several functions:
- Capturing invoice data
- Validating invoices against purchase orders and receipts
- Guiding invoices through defined approval processes
- Assigning codes for the general ledger
- Initiating payment processing
The case for AP automation in NetSuite
Integrating AP automation directly into NetSuite offers a wide range of benefits. Since the functions mentioned above are carried out natively within the enterprise resource planning (ERP) system, it reduces manual data entry and improves the accuracy of financial operations. This helps prevent delays in invoice processing that lead to late fees, cash flow management issues and vendor relationship problems.
An integrated approach also brings your financial data together quickly, helping you gain insights early in the month, address issues before they escalate and improve the control you have over your financials. And when AP automation is integrated directly into NetSuite, it gives you access to advanced capabilities, including real-time tracking and visibility into financial data, multi-currency support and advanced reporting.
Wondering whether NetSuite is right for you? Read our blog about how to know when it’s time to transition to an ERP.
Understanding AP automation ROI
One of the key reasons to consider AP automation is the potential return on investment (ROI) it provides, most of which is related to the productivity gains it creates. Consider the following challenges for today’s AP professionals as opportunities for automation to improve processes and create value:
- Businesses that use manual AP practices can only process about 26% of the invoices per full-time equivalent (FTE) employee per year of those using AP automation, according to a study by the APQC.
- A survey conducted by the Accounts Payable Association found that 63% of finance professionals had received duplicated invoices (and 33% had actually paid them).
- The same study also found that 78% of those finance professionals admitted to paying supplier invoices late, and 58% of them needed to pay late charges to suppliers.
- According to PYMNTS.com, 40% of companies cite an “inability to validate invoices as the reason for late payments.”
- 56% of finance professionals surveyed said their businesses experienced cash flow forecasting problems due to AP issues.
- According to the Accounts Payable Association, 23% of businesses said at least one supplier had refused to work with them again due to AP issues.
By automating repetitive tasks, AP automation can save you time, reduce errors and free up your team to focus on more strategic work. The factors below create substantial cost savings for your business and accelerate the returns on the investments you make in AP automation.
· Slashing manual data entry by 83%
· Accelerating invoice processing time by seven days
· Reducing invoice processing costs by up to 90%
· Eliminating 62% of manual data entry errors
· Giving 300 hours per month back to your team for strategic tasks
Want to know how much your business stands to save? Our AP automation ROI calculator can help.
In addition to the savings above, businesses that deploy AP automation have reported several benefits that extend its value. They validate invoices much more quickly, reducing the financial impacts of fraud, duplicate invoice payments and expired credit notes. They report fewer missed payments and late fees – and instead take advantage of early payment discounts. They are forecasting cash flow faster and more accurately than ever, and reporting fewer payment problems with suppliers linked to AP issues.
Integrating AP automation with other financial processes, such as advanced revenue management (ARM), can further improve your ROI, particularly for companies with complex billing models. That’s because ARM can reduce the manual effort required, improve accuracy and make compliance easier for accounts receivable teams. When combined with AP automation, ARM improves the visibility you have into your business’ cash flow, which can inform decisions that truly improve your company’s financial position.
Core components of NetSuite AP automation
Several features of NetSuite’s AP automation make it a powerful tool for your business:
- Invoice capture automatically scans and extracts invoice data using optical character recognition (OCR) and AI technology. OCR eliminates the need for manual data entry, significantly speeding up your cycle time while reducing errors.
- Approval workflows route invoices to the appropriate stakeholders to expedite approval and ensure all required steps are completed before payments are scheduled.
- 3-way matching connects invoices to their respective purchase orders and receipts, reducing the need for manual verification and allowing finance teams to focus on exceptions.
- Automated coding assigns general ledger codes to invoices based on preset rules, reducing the risk of misclassification and ensuring consistency across transactions.
These features help streamline the AP function and provide real-time insights into financial operations. By eliminating manual tasks, AP automation helps businesses improve efficiency, accuracy and the overall speed of their financial workflows.
Frequently asked questions about AP automation
What problems does AP automation solve?
AP automation addresses inefficiency, manual data entry errors and delays in processing invoices and payments. Automation eliminates the need for manual checking of invoices and matching, reducing bottlenecks and improving financial management.
Why should I use AP automation?
AP automation improves the accuracy of financial data, speeds up invoice processing and reduces operational costs by minimizing manual tasks. It can also help you spot trends early and act proactively, streamlining your financial operations.
What are the most important things to consider for AP automation?
It’s important to assess the volume of invoices you typically handle and to explore how automation can integrate with your existing ERP system, like NetSuite. These two factors help guide key decisions such as whether AP automation is right for your business, and which solution will work best. It’s also important to be forward-looking when it comes to AP automation technology and ensure that the solution you choose is ahead of the innovation curve. Look for AI and other advanced features, and be sure to ask solution providers about what’s next.
Will AP automation render certain accounting and bookkeeping jobs obsolete?
No. AP automation is designed to reduce repetitive tasks, not to replace jobs. Instead, it eliminates mundane tasks and allows finance teams to focus on more strategic and valuable work, such as data analysis and financial planning.
Can AP automation handle multi-currency and international payments?
Yes, many AP automation systems, including those designed for NetSuite, can handle multi-currency and international payments, making it easier for you to manage cross-border transactions.
The challenges and solutions of implementing AP automation
Implementing AP automation can come with challenges, particularly around data quality, employee adoption and change management. It’s important to ensure your data is accurate and standardized before implementing automation, as poor data quality can lead to errors and inaccurate financial reports. Automated invoice capture solutions like ZoneCapture can help improve data quality using OCR and generative AI technologies.
Another common hurdle is getting buy-in from employees who have grown comfortable with manual processes. To help ease the transition to AP automation, be ready to communicate clearly and provide thorough training. It also helps to choose automation systems that are flexible and can adapt to your business needs and operating practices.
One example of how an AP automation solution can be integrated into an organization’s operating practices can be found in our case study with Escalante Golf. Their deployment allows AP professionals to view relevant invoice transactions and documents without leaving NetSuite or navigating external software. It also makes uploading and coding invoices easy and accurate by providing a side-by-side view of the invoice and its details. This not only reduced invoice processing time for the company by 70% each month, but it also improved the morale of the AP team.
Want to learn more about how Escalante Golf used invoice capture and data extraction to reduce human errors and improve data quality? Read the case study here.
The future of AP automation
AP automation is only increasing in sophistication. Solutions are evolving to provide deeper insights than ever before and integrate even more seamlessly with other financial processes such as ARM and accounts receivable automation. New features are on the horizon that make it easier for your business to handle complex approval workflows, international payments and customized vendor management tasks. And in the not-too-distant future, these platforms will provide you with a comprehensive view of your business’s financial health – in real time.
And, of course, we must not forget AI and machine learning technologies. They’re already driving advanced capabilities that improve data quality and streamline financial operations, and they’re evolving quickly. With the help of AI and machine learning, AP automation will soon help businesses further improve accuracy, detect anomalies and even prevent fraud.
Looking for some insights on your future automation projects? Give this guest blog a read.
AP automation: more than the sum of its parts
AP automation solutions for NetSuite, such as ZoneCapture, give you an effective way to streamline your financial operations, improve data accuracy, reduce manual workloads and gain new levels of visibility. While the importance of tools like invoice capture, approval workflows, 3-way matching and automated coding cannot be overlooked, AP automation is at its best when they are tightly integrated within NetSuite. That’s where these tools can truly work together and provide value that goes beyond the sum of their parts, helping your business improve its bottom line and giving your people time to focus on strategic activities.
If you're ready to explore how AP automation can benefit your business, consult with an expert from Zone & Co for a personalized demo today.
