What were the top 3 AP automation trends in 2020?

accounts payable automation

The adoption of accounts payable (AP) automation has been growing steadily over the years, with organizations — from large enterprises to SMEs — harnessing these tools at different rates and stages of their business cycles.

When we think of a highly automated AP function, we might envision a touchless, paper-free environment in which invoices received are automatically routed for approval and payment — all without the need for human intervention. Instead of spending valuable time and resources on manual data entry and tracking down approvers for each invoice, AP professionals can spend their time on mission-critical tasks that add value to the bottom line, transforming the department into a profit center.

But how close are organizations to this perfect-case scenario? Let’s find out.

The top 3 AP automation trends

Here are the key trends from the 2020 Levvel Research Payables Insight Report:

1. Data capture is on the rise

More organizations are automating the invoice data capture process compared to 2019, with 78 percent of respondents saying data capture is an important feature of their AP software. With this technology, your organization captures the information in invoices at the source — eliminating the need for staff to manually key in data.

By using optical character recognition (OCR), AP management software automatically recognizes text, regardless of the format in which it receives the invoice. The AP system then extracts the relevant data and verifies that against a set of configurable rules, such as invoice or PO numbers.

Advanced automation goes a step further, pairing OCR with artificial intelligence (AI) that can intelligently enter information into the applicable invoice fields. It accomplishes this by using information from similar vendors and invoice formats to build an invoice pattern for an organization and invoice type. This ensures that invoicing is increasingly more accurate and requires less human intervention as time goes on.

Automating data capture reduces the amount of time-consuming, low-value tasks for AP clerks and accountants, especially data entry. It also reduces the volume of paper, which ultimately lowers department costs and invoice processing time.

2. Digital invoices are increasing among mid-market organizations and SMEs

Compared to last year, organizations now receive a greater percentage of invoices in a structured digital format, namely via web upload or supplier portal. Traditionally, larger organizations have received a greater percentage of electronic invoices than smaller companies because it was more likely that both the suppliers and buyers had electronic invoicing technology.

But adoption of digital invoices is increasing among mid-market organizations and SMEs.

In fact, digital invoices made up 21 percent of the invoices received by mid-market organizations and 16 percent of SMEs – double that of last year. This is largely because more AP solution providers are adding self-service functionality to their toolsets, which is something the client organizations themselves are prioritizing.

With a self-service supplier management feature as part of the AP automation solution, organizations can centralize supplier data and enable suppliers to upload invoices, check on payment statuses and update payment information on a self-service portal. Consolidating all queries onto one platform reduces the manual work required to address disputes and queries, increasing time and cost savings and enhancing transparency among all parties. This leads to better visibility and communication, which improves both supplier relationships and supply chain operations as a whole.

That’s why it’s no surprise 80 percent of organizations surveyed deem supplier management to be an important part of their AP software.

3. More SMEs are automating approval workflows

Most enterprises and some middle market organizations have automated approval workflows to improve AP efficiency, but it has remained a manual step for most SMEs. However, this is now changing, according to the 2020 Levvel report, as the number of SMEs with manual approval workflow has decreased by 10 percent.

With approval workflow automation, AP departments customize workflows to their specific needs — doing away with authorization via hand, email or even stamp-to-paper approvals. Instead of AP staff spending time tracking down the correct approver for each invoice — keeping in mind there may be multiple approvers needed — AP software automatically routes invoices to appropriate managers electronically.

It also automatically sends notifications and reminders to prevent delays, reducing the time necessary to approve payments. Although large enterprises may see the biggest benefits here, SMEs are clearly recognizing the value of automating approval workflows as well. In fact, more than 90 percent of organizations surveyed said this is an important feature in their AP automation software. Approval workflow also had one of the highest satisfaction ratings from users.

Manual processes still a top pain point in AP

piles of paper

Despite the strategic benefits of AP automation, invoice processing remains a manual, labor-intensive and time-consuming process for many organizations. For example, a quarter of respondents said they are still receiving a large portion of invoices in unstructured formats like paper, emailed PDF or fax – which means data entry and inefficient processes continue to be top challenges faced by AP teams.

Just over half of the AP professionals surveyed cited manual data entry and inefficient processes as a major challenge; while 37 percent said the manual routing of invoices during the approval process is a major obstacle.

To understand the current state of the AP automation market and where you stand among your peers in terms of AP efficiency, download the full 2020 Levvel Research Payables Insight Report.

Mike Malzacher has expertise in marketing high-tech software and has been a contributor to the Hyland blog.
Mike Malzacher

Mike Malzacher

Mike Malzacher has expertise in marketing high-tech software and has been a contributor to the Hyland blog.

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