Accounts Payable Software: Streamlining the AP Process with Efficiency

A 2022 State of AP Report by Pinnacle Financial Partners states that 71% of finance leaders state that their relationships with vendors grew in importance over the past year. That said, timely payments are essential for strengthening supplier relationships. Investing in accounts payable software ensures vendor payments are done on time and the entire accounts payable system is streamlined.

What are accounts payable software?

Why do you need accounts payable solutions?

Get answers to these questions and get a curated list of the top 15 accounts payable management software in this blog.

Accounts Payable Workflow at a Glance

To improve the accounts payable process, we need to first understand the flow of tasks in the accounts payable (AP) process. In the finance accounting concept, AP amounts are reflected as liabilities in the balance sheet. In double-entry accounting systems, AP totals are recorded as credits in Accounts Payable and as debits to the corresponding expense account. 

In simple terms, accounts payable involves the management of bills that a company has to pay. The bigger the business operations are, the larger the volume that the accounts payable process has to handle. The accounts payable and receivable processes are important for the business as they determine the cash flow.

A healthy cash flow is essential for business success. With such a vital role to play in business success, the accounts payable function often does not get the importance it warrants. Automated accounts payable solutions are needed to streamline the accounts payable process so that a steady and healthy cash flow is maintained. 

So, who is an AP vendor? An accounting vendor is an individual or a business that is contracted to supply goods and services to a business. Vendors may either be chosen at random for providing a particular item or service, or chosen from a vendor database, either way, it is important to maintain a good relationship with all your vendors. While the procurement department may play its part in nurturing vendor relationships, the accounts payable department also has a key role to play in maintaining good supplier relationships.

Challenges in the Accounts Payable Process

Now that we have understood the accounts payable process and its significance, let us move on to understanding the challenges faced by manual AP processes. The main challenge in the conventional accounts payable process is the reliance on paper bills/receipts and documents. Tracking and storing these documents is a headache for the finance team. Moreover, paperwork lacks standardization, which poses an issue during compliance audits. Misplaced or lost documents are another issue with paperwork. 

Accounts payable when managed manually are prone to human errors and inconsistencies. The incidence of double or duplicate payments is very high in manual processing. Situations where a bill is marked as paid, but the payment has not gone through are very common in manual AP processing. 

Another common challenge that manual AP processing faces is invoices having varied payment dates, making it difficult to make timely payments. Late or erroneous invoice payments strain vendor relationships. Consistent delays in payments result in losing vendors that deliver good quality items or services. 

Exception management is a challenge in the manual AP process. Something as simple as a mistyped invoice can cause delays in payments and impact other supplies from that vendor. The accounts department and process must be able to efficiently and quickly navigate such exceptions. 

Lack of visibility into the status of purchase orders and invoices is another challenge in manual processing. This makes it difficult to manage and analyze the accounts payable system and cash flows. 

Digital accounts payable solutions empower the accounting department with a streamlined AP process in which errors and inconsistencies are eliminated and efficiencies are elevated. 

Steps in the Accounts Payable Workflow

The steps in the accounts payable workflow vary in each business according to its type and size. The general accounts payable workflow is listed below

Receiving invoice or bill from the supplier – When the supplier delivers a consignment to the buyer. The buyer receives these goods and inspects them. Some vendors send the invoice along with the goods/services delivered to the buyer. 

1. 3-way matching

This is a critical step in the accounts payable process. When thoroughly carried out, the 3-way matching process ensures that there are no duplicate invoices or fraudulent payments. The supplier’s bill must be verified with the purchase order and goods received the note. The 3-way matching process ensures that the order has been supplied as per the purchase order and matches the items delivered. 

2. Updating the records

The details contained in the supplier invoice are recorded in the accounts payable system and cross-referenced with the original purchase order. The purchase order number is the point of reference for the accounts payable process. 

3. Approving payments

In most companies, approval is required for payments. The person in charge could be the finance manager or a person specifically designed for AP approvals. The invoice is duly verified by the person in charge of data correctness and budgetary guidelines. The person may either reject or approve the invoice based on the result of the review. 

4. Paying the invoice

An invoice that has been approved by the person in charge, is now moved up to the payment stage. The payment is usually made for the amount specified in the invoice as per the previously agreed terms and conditions. The appropriate ledgers are duly updated with the information and the accounts payable process is concluded. 

Along with the steps of the accounts payable workflow, it pays to know the various documents involved in each of these steps. A purchase order or PO is a document that is sent to the supplier outlining the details of the order. Once the vendor accepts the document, it becomes a legally binding document that confirms the order’s details. 

Goods received note (GRN) is the document that is generated by the buyer upon receipt of goods. This document contains the information on the goods that are delivered by the supplier. A mismatch between the PO and the GRN will spark further investigation and verification of the order. 

Supplier invoice is the document sent by the vendor billing the buyer for the goods/services delivered. This is an important document for the accounts payable department as it directly deals with the amount of money due for the order. 

Receipt vouchers are raised by the accounts payable department when the payment approval is completed. 

Streamlining the Accounts Payable Cycle

There are several steps in the accounts payable workflow that are repetitive and labor-intensive. The 3-way matching process for instance involves data verification in 3 different documents. Matching and verifying data for large-scale operations takes a toll on the accounts payable team. Invoice approval is another example of a task that entails repetitive actions. So, what is how the accounts payable cycle can be streamlined? Let us look at some of how the accounts payable workflow can be streamlined. 

• Eliminating paperwork. This is the simplest way to improve the efficiency of the AP process. Accounts payable software digitizes documentation which accelerates processing and minimizes human errors. 
• Integrating disparate systems. Eliminating data and systemic silos in the accounts payable workflow links all the documents through accounts payable solutions. 
• Automating repetitive tasks. Data-intensive tasks like 3-way matching can be automated with accounts payable management software. Not only does the accuracy of matching improve, but also duplicate payments are eliminated. 

Accounts payable automation software eliminates the inconsistencies and inaccuracies associated with manual processing. Investing in accounts payable systems pays rich dividends by way of shortened workflow cycles and cost savings.

What to Automate in the AP Workflow?

Several steps in the accounts payable workflow can be automated. Best results can be produced when tasks like invoice approvals, invoice capture, payment authorization, PO matching, supplier enrollment, etc. Let us look at the workflows in the AP process that are prime for automation. 

Invoice approvals

This is one of the most important steps in the accounts payable process. Approval of invoices when done manually is subject to delays, lack of visibility, and transparency. Automating invoice approval based on business rules eliminates the errors and inconsistencies, and accelerates the approvals.

Invoice Capture/Coding

This is the step that involves the extraction of data from invoices in paper or digital format. This is the first step in invoice processing. Traditional invoice capture methods present several challenges to the AP department when not managed properly. Best practices for invoice capture are achieved through automation with effortless capture, automated coding, and accelerated processes for approval and payments. 

Payment Authorization

This step follows invoice approval. In this step, businesses will categorize invoices based on their priority and payment deadline. Once categorization is completed, a batch of invoices with priority status is sent along for payment authorization. AP automation accelerates payment authorization by queuing up batch payments and then routing the batch to the right person for authorization. 

Payment execution

After payment authorization is complete, the AP department processes the payment based on internal processes and the vendor’s preferences. Manual handling of payment execution often leads to missed due dates, especially when it involves paper checks or manual follow-ups. Automation enables instant payments where authorized payments are sent out immediately on a scheduled date

PO matching

Upon receipt of goods/services from the vendor, the PO, Invoice, and goods received note are verified/compared. When PO matching is done manually, large-scale matching becomes a tedious process for the AP team.

Accounts Payable vs Accounts Receivable

Accounts payable and accounts receivable processes together factor into the cash flow. The accounts receivable (AR) is an accounting term that refers to one of the following –

• Unpaid or outstanding invoices
• Late payments
• Money that is expected from customers
• Sales issued on a credit card or any credit system to be paid at a later date

Accounts receivable also include payments for goods and services rendered by a business on specific credit terms. This system also includes anticipated payments that are legally binding and enforceable. Accounts receivable refers to the money that a company expects to collect from its customers, while accounts payable refers to the money owed by the business to its vendors. Accounts payable usually take the form of recurring bills, operational costs, and general expenses. 

Although AP and AR processes have a different purposes, they are similar processes with best practices that apply to both. For larger businesses, it helps to separate these two realms and designate an individual or team for each one of these processes. 

What is Accounts Payable Software?

What are accounts payable software? Software for accounts payable process is a system that streamlines and automates the process of paying bills and invoices. Accounts payable software helps businesses keep track of the bills and invoices due to vendors, schedule vendor payments, and generate reports on accounts payable activities. Accounts payable automation software is used by businesses of all types and sizes to streamline the accounts payable workflow. 

Accounts payable automation software is designed to automate business payment processes from start to finish with the help of a set of instructions that are customized to each business process. The accounts payable system is made up of the accounts payable software, software filters, categories, matches, and validates critical accounting information that is then updated through the accounting system to be recorded. 

Accounts payable is an umbrella term for niche software that serves functions under the accounts payable category. The functions of account payable software include – 

• Processing and recording vendor invoices for purchases and services 
• Account coding of short-term liability and the asset or expense
• Invoice approvals
• Document matching
• Early payment discounts
• Pay bills
• General ledger posting
• Accounts payable aging and cash disbursement reports

Accounts payable software creates the ultimate automated accounts payable system by reducing accounts payable workload, and human error. 

How to Automate the Accounts Payable Workflow?

In the previous sections, we discussed the tasks in the accounts payable workflow that can be automated. In this section, we will discuss how the accounts payable process can be automated. 

Determine the tasks to be automated – Tasks like invoice approval, invoice capture, PO matching, supplier enrollment, and payment authorization are repetitive and data-intensive tasks. Automating such tasks accelerates the accounts payable process. 

Build a case for automation – Once the automation tasks are determined, you should create a business case to show the ROI, costs, and benefits of implementing a solution. Building a strong business case will help get buy-in from the CFO and other stakeholders. 

Choosing the right accounts payable software – The choice of workflow automation software for automating the accounts payable process determines the success of automation. The must-have features of the workflow app include an easy-to-use interface, simple workflow setup, reporting and analytics, document management, and transparent pricing. 

Benefits of Accounts Payable Automation

Accounts payable software can provide the following benefits to your business – 

• Eliminates paper trails, enabling faster processing and fewer human errors
• Links all the documents in the accounts payable process for efficient management and tracking
• Prevents fraud and duplication in invoice processing 
• Fosters strong vendor relationships by ensuring timely invoice payments
• Speeds up data-intensive processes like 3-way matching
• Links the AP system with CRM and ERP for easier and better financial management 
• Helps manage and control spending through the accounts payable process
• Prevents delayed payments 
• Allows the company to have multiple checkpoints in the accounting software workflow that help in detecting discrepancies and bottleneck
• Provides clear visibility into the company’s spending for accurate analysis
• Simplifies report generation for financial reporting and tax filing
• Better management of the company’s working capital by providing deeper visibility and better control of the cash outflows

Top 15 Accounts Payable Software for 2024

As mentioned earlier, the choice of accounts payable software determines the success of automation. You can either choose a dedicated accounts payable software or an all-in-one workflow automation solution like Cflow. A no-code workflow automation software that can automate just about any type of business process workflow. To create a workflow in Cflow, you don’t need to write even a single line of code. The visual form builder in Cflow simplifies workflow creation. Let us look at some of the best accounts payable software to consider for your business. 

1. Cflow

A versatile workflow automation platform that can automate all business processes. Email approvals without having to log in to the application are the feature that stands out in Cflow. The visual form builder in Cflow can be used to create workflows by rearranging visual elements. API integration allows Cflow to be integrated with third-party apps for improved productivity. Digital document manager puts an end to paper-based forms. Email notifications and approval features in Cflow enable the sixers to breeze through task approvals. 

Best for – Cflow is best suited for small and medium businesses, and large enterprises as well. All approval-based tasks in key business workflows can be effectively automated with Cflow. 

Pricing – Three pricing plans – Happy at $7 /month/user; Joy at $11/month/user; Bliss at $16/month/user.

2. Tipalti

A cloud-based integration and SaaS add-on software solutions for automating the accounts payable process. The company offers top accounts payable automation software features, which include self-service supplier onboarding, invoice automation, and automated invoice approval workflows. An AP software solution offers bill pay, tax compliance, and fraud reduction to help maintain compliant accounting practices. This software automates supplier management, procurement, tax compliance, AP reporting, and ERP integration.

Best for – Tipalti is suited for high-growth potential small businesses, mid-market companies, and large enterprises, to ease out AP workload.

Pricing – Pricing details are available on request.

3. QuickBooks Online

This software is a cloud-based version of QuickBooks accounting software. QuickBooks Online accounting software offers seamless integrations with third-party add-ons for accounts payable automation. The Intuit Merchant Services for payment processing allows users to accept credit cards, debit cards, Apple Pay, PayPal, and ACH electronic transfers. 

Best for Small and mid-market companies that take a wide range of payment methods. 

Pricing – Pricing details are available on request.

4. Nanonets

This is an intelligent automation AI solution for business processes with AP automation as one of its most popular use cases. Nanonets provides 2 different AP automation solutions – one for automating/streamlining existing accounts payable workflows, and another that serves as a complete end-to-end AP automation solution. You can manage supplier communication, and process invoices in seconds with Nanonets. You can scan and approve invoices instantly with Nanonets. 

Best for – Small-to-medium businesses that are looking to automate their AP process in a fully customizable manner. 

Pricing – 3 pricing plans – Starter Plan at $49/user/month; Pro Plan at $69/user/month; Plus plan at $99/user/month.

5. Bill

Bill.com offers a wide range of financial automation tools that are particularly suited for freelancers, sole proprietors, and small businesses. In addition to AP automation, this software offers flexible lines of credit to let owners smooth out cyclical business periods and facilitates a range of accounts receivable options. Core offerings include the creation and payment of bills, sending invoices, and getting payments. 

Best for – Freelancers, self-employed professionals, independent accountants, small businesses

Pricing – 4 pricing plans – Essentials at $45/user/month; Team plan at $55/user/month; Corporate plan at $79/user/month; Enterprise plan at custom pricing

6. Airbase

This software combines a simplified user interface with advanced workflow optimization and customization. Airbase helps create an enterprise-level AP automation solution that can be easily deployed with a quick learning curve. Core offerings of this software include seamless approval workflows that are highly customizable. Bill payments, corporate cards, and expense reimbursements are other processes that can be automated with Airbase. 

Best for – Small businesses, independent accountants, and mid-sized to enterprise-level businesses. 

Pricing – Standard plan for up to 200 employees; Premium plan for up to 500 employees; Enterprise plan for up to 5000 employees.

7. Ramp

This software offers a range of financial products and automation solutions to businesses focused on the tech sphere. Ramp offers a spectrum of services, including vendor management, corporate credit cards, and billing to smaller companies and startups. The core offering includes an all-in-one spend management, price intelligence, and automation. 

Best for – Large enterprises, mid-sized businesses, public administrations, small businesses, and non-profit organizations. 

Pricing – Ramp plan for free; Ramp Plus starts at $15/user/month; Ramp enterprise plan at custom pricing.

8. Stampli

This is a custom automation software that can be used by organizations looking to automate their AP processes. Stampli can integrate with more than 70 existing ERPs for folding AP automation and improved management into your existing ecosystem with minimal hassle. This is a plug-and-play solution chosen by companies seeking M&A. Core offerings include AP communication, document workflows, and payments. 

Best for – Small and mid-sized businesses.

Pricing – Stampli offers quote-based plans and pricing. 

9. AvidXchange

This software focuses on B2B middle-market clients who are too big for a basic start-up financial automation solution, but not yet needing enterprise-level solutions. AvidXchange streamlines vendor payments by nesting itself within the existing accounting software, so that you do not have to rewrite standard operating procedures for automating the accounts payable function. The core offering of this software includes AP automation and bill payment software. 

Best for – Medium to large middle-market companies.

Pricing – Only quote-based plans are offered by AvidExchange. 

10. Freshbooks

This accounting software is a one-stop solution for small businesses, freelancers, and accountants who work on behalf of clients. Freshbooks looks beyond basic financial payments and includes comprehensive double-entry accounting tools that minimize complexity for solo operators. Features like time tracking, invoicing options, and project management, help solo operators keep track of clients and work. This solution can be integrated with popular tax filing software to minimize disruption and difficulty during tax filing periods. 

Best for – Small business owners, solo operators, and accountants

Pricing –Lite plan at $7.60 /month; Plus plan at $13.30/month; Premium plan at $24 /month

11. NetSuite

This software offers a comprehensive suite of accounting, inventory management, vendor management, and payroll management capabilities. This is a cloud-based automation software suited for dispersed teams or companies that entail frequent travel. NetSuite can be integrated with CRM workflow tools for creating a single-stop management platform that includes common accounting, financial, and management needs that SMBs need to handle. 

Best for – startups and SMBs

Pricing – Offers quote-based pricing only

12. Xero

This is a cloud-based accounting software that targets small businesses. With Xero, you can maintain flawless records and automate processes to save time. Xero also provides unique business intelligence insights that enable management to make informed decisions. Core offerings include payment processing, records management, bills, and expense management. 

Best for small businesses

Pricing – Early plat at $3.75/month; Growing at $10.50/month; Established at $19.50/month

13. MineralTree

This software helps businesses of various sizes to manage accounts payable and payment ecosystems. This end-to-end AP platform automates and streamlines accounts payable operations. The rough edges that B2B operators often experience when managing multiple systems are smoothed out by MineralTree. Core offering includes B2B payment management and accounts payable automation. 

Best for –Medium to larger businesses, B2B operators.

Pricing – Offers quote-based pricing only

14. Sage Intacct

This software leverages advanced, next-gen cloud technology to deliver advanced business solutions for small- and medium-sized businesses. Customer satisfaction management, supply chain functions, business intelligence, compliance, and inventory management are the core offerings of this software. Sage Intacct can be considered as a one-stop-shop for users seeking holistic finance automation and support. The company also hosts frequent user informational sessions and webinars to guide clients to maximize the platform’s benefits. 

Best for Accountants and small to medium businesses

Pricing – Sage Intacct offers custom quote-based plans only

15. SAP Concur

Sap Concur is part of the SAP ecosystem and one of the most preferred solutions for businesses that frequently send their employees offsite. SAP Concur offers various travel and expense management solutions, such as guided trip documentation, expedited invoicing, and automated expensing. Typically, business travel spend tends to balloon quickly, which is why SAP Concur leverages AI and analytics to help business owners identify spending trends and prevent maverick spend. With SAP Concur, business owners can deliver the best value to offsite clients by enabling them to focus on the task at hand rather than the manual uploading of expense tickets. Core offerings include invoice management, expense, and employee travel management.

Best for – Medium to large businesses with over 1000 employee headcount

Pricing – SAP Concur offers quote-based pricing only

Bottomline

Companies are digitizing their accounts payable process to address efficiency challenges, but there is room for deeper adoption. Cflow enables end-to-end automation of the accounts payable process that gives finance leaders deeper visibility into every invoice and payment across the organization.

Accounts payable software provides key data and insights to spot and address process bottlenecks. The right accounts payable management software streamlines the accounts payable process, which in turn strengthens vendor relations. Take a test drive of Cflow right away. Sign up now.

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