Let’s start with a simple question: Can you quickly count how many operational activities your business manages? Think about finance, procurement, inventory management, HR, and other day-to-day tasks.
It’s a lot, isn’t it? It can be overwhelming to keep track of all these processes, especially when they are done manually. And as your business grows, so does the complexity of these tasks.
Enterprise Resource Planning (ERP) solutions are designed to help businesses manage operational activities by integrating various departments and processes into one system. But even with an ERP in place, there may still be room for improvement and optimization, particularly in accounting and finance.
Now, you might be thinking, “Why would I need additional accounting software if I already have an ERP?” The answer is simple: to automate and streamline your processes even further and enhance the functionalities of your ERP.
Why Integrate AP Automation Software with ERP?
While an ERP system centralizes various business operations, it may lack specialized features for specific departments or processes. For instance, many of our clients, as highlighted in case studies, found their ERPs lacked advanced accounts payable (AP) automation capabilities, leading to time-consuming and error-prone manual tasks.
AP automation software, also known as accounts payable automation or simply “AP automation,” is a technology solution designed to streamline the entire accounts payable process—from receiving invoices to making payments.
Its core function is invoice processing. Instead of manually entering data from paper or electronic invoices into the ERP system, AP automation software uses optical character recognition (OCR) technology to extract data and input it automatically. It also automates approval workflows and offers features like vendor management, purchase order matching, and reporting and analytics.
Integrating AP automation software with your ERP maximizes the capabilities of both systems, creating a seamless and efficient workflow for your finance team.
ERPs vs. AP Automation Software: Understanding the Differences
AP automation software offers distinct advantages over relying solely on ERPs to manage accounts payable (AP) processes. While ERPs serve as comprehensive platforms designed for overall business management, AP automation tools are specifically crafted to tackle the inefficiencies, complexities, and repetitive tasks inherent in the AP process.
Here are the key limitations of ERP systems and the reasons users often choose AP automation software to complement their ERPs:
- Enhanced Efficiency and Speed
- Improved Accuracy
- Advanced Workflow Automation
- Better Invoice Management
- Faster Payments and Improved Vendor Relations
- Cost Savings
- Superior Reporting and Analytics
- Scalability
- Compliance and Audit Readiness
- Focus on Strategic Activities
1) Enhanced Efficiency and Speed
ERPs are designed to manage and integrate various business functions, from supply chain operations to human resources. However, their AP modules are often generic and require substantial manual intervention to process invoices and approve payments. Tasks like entering invoice data, routing invoices for approval, and matching purchase orders with receipts can be time-consuming and prone to delays.
AP automation software is specifically designed to handle repetitive AP tasks efficiently. It uses advanced technologies such as OCR to automatically extract data from invoices and machine learning to classify and validate this information. Automated workflows ensure invoices move through the approval process swiftly, avoiding the bottlenecks common with manual ERP processes.
By reducing reliance on manual labor, AP automation software enables businesses to process invoices in hours or days rather than weeks, ensuring timely payments and smoother cash flow management.
2) Improved Accuracy
Manual data entry and matching processes in ERP systems are prone to human errors, such as entering incorrect amounts, selecting the wrong vendor account, or processing duplicate invoices. Any of these errors can result in costly payment disputes, overpayments, or underpayments. ERP systems often lack robust mechanisms to detect anomalies or flag potential issues during the invoice processing stage.
AP automation tools address these challenges by utilizing intelligent data validation and matching algorithms to significantly reduce errors. For instance, they can automatically match invoices with purchase orders and goods receipts, immediately flagging discrepancies for resolution. Advanced solutions can even detect duplicate invoices before they are entered into the system, effectively preventing overpayments.
The outcome is enhanced accuracy in data handling, fewer corrections, and a reduced risk of financial mistakes, all of which translate into direct cost savings for the organization.
3) Advanced Workflow Automation
The workflow capabilities of ERP systems are often rigid, offering limited flexibility to meet the specific needs of the AP department. Customizing ERP workflows to manage unique approval chains, exceptions, or compliance requirements can be both expensive and time-consuming.
In contrast, AP automation software provides highly customizable workflows designed specifically for AP processes. For instance, the software can automatically route invoices to the appropriate approvers based on predefined rules, such as invoice amount, department, or vendor type.
Exception-handling workflows can be integrated to address issues like missing purchase orders or discrepancies without disrupting the overall process. This workflow flexibility ensures that invoices are processed consistently, efficiently, and in compliance with internal policies, all while minimizing the need for manual oversight.
4) Better Invoice Management
Managing invoices in an ERP system can be cumbersome, especially when handling high volumes. Invoices often get lost or delayed in manual approval chains, and retrieving historical invoices for audits or vendor queries can be a time-consuming process. Furthermore, the lack of visibility into the invoice lifecycle can lead to uncertainty about payment statuses.
AP automation software streamlines invoice management by centralizing it within a single platform, offering end-to-end visibility into the invoice lifecycle. Businesses can track invoices from receipt to payment, ensuring transparency and accountability at every stage. Most solutions also include robust search and retrieval capabilities, allowing AP teams to quickly locate invoices using filters such as vendor name, date, or amount.
With all invoice-related data securely stored and readily accessible, often via cloud-based systems, organizations can respond to vendor inquiries or audit requests with confidence and speed.
5) Faster Payments and Improved Vendor Relations
Manual AP processes in ERPs often lead to payment delays due to bottlenecks in approvals, missed deadlines, or errors requiring corrections. These delays can strain relationships with vendors, particularly when they depend on timely payments to manage their cash flows.
By automating critical steps in the AP process, finance teams can process and pay invoices more efficiently. Many AP tools also include features like dynamic discounting, allowing organizations to benefit from early payment discounts offered by vendors.
AP automation software typically includes vendor portals, enabling suppliers to check payment statuses and resolve issues independently. This reduces the workload on AP teams and further strengthens vendor relationships.
6) Cost Savings
Processing invoices manually in an ERP system involves significant costs, including expenses for labor, paper, storage, and the impact of errors and delays. As invoice volumes grow, the per-invoice cost tends to increase due to the need for additional staff or resources.
Automation significantly lowers the per-invoice processing cost by reducing manual labor and inefficiencies. With fewer errors, faster processing times, and streamlined workflows, businesses can achieve substantial cost savings. Many organizations report cutting their AP processing costs by up to 80% after adopting automation software.
Curious about your potential savings with AP automation? Explore our AP automation ROI calculator to find out.
7) Superior Reporting and Analytics
While ERPs offer general reporting tools, they often lack the granularity needed to analyze AP-specific metrics. As a result, AP teams frequently face challenges in identifying process bottlenecks, tracking payment trends, or gaining insights into vendor performance using standard ERP reports.
AP automation tools, on the other hand, provide advanced reporting and analytics capabilities, delivering detailed insights into invoice processing times, approval delays, vendor payment patterns, and cash flow trends. These insights enable AP teams to identify areas for improvement, streamline processes, and make data-driven decisions.
Real-time dashboards further empower finance leaders by allowing them to monitor key performance indicators (KPIs) such as average invoice processing time and approval rates, facilitating proactive management of AP operations.
8) Scalability
Scaling AP processes within an ERP system often demands extensive customization or the addition of new modules, which can be both costly and complex. As invoice volumes increase, manual processes become increasingly unsustainable, resulting in inefficiencies and delays.
AP automation software complements ERP capabilities without requiring significant customization. These tools integrate seamlessly with existing systems and are designed to scale effortlessly, managing higher invoice volumes or supporting additional business units with minimal effort.
The scalability of AP automation tools ensures that businesses can maintain operational efficiency as they grow, eliminating the need for frequent system overhauls.
9) Compliance and Audit Readiness
Maintaining compliance with tax regulations and preparing for audits can be particularly challenging with manual AP processes. ERPs often lack specialized tools to ensure proper documentation or to streamline the audit process for AP transactions.
AP automation software addresses these challenges by maintaining detailed records of every transaction, including approvals, payments, and exception handling. Built-in compliance checks help businesses adhere to tax regulations and other legal requirements, reducing the risk of errors or penalties.
During audits, automation software simplifies the process by providing auditors with secure access to relevant documents and transaction histories, saving time and ensuring accuracy.
10) Focus on Strategic Activities
Manual AP processes within ERPs require significant time and effort, leaving AP teams with little bandwidth for strategic activities such as negotiating vendor terms or optimizing cash flow.
By automating routine tasks, AP automation software frees up time for AP teams to focus on higher-value activities.
With less time spent on data entry and chasing approvals, teams can prioritize vendor negotiations, evaluate early payment discount opportunities, and contribute to broader financial strategies. This shift from transactional to strategic work enhances the overall value that AP teams bring to the organization.
How to Choose the Best AP Automation Software to Integrate with Your ERP
As more businesses recognize the benefits of automating AP processes, the market for AP automation software is growing rapidly. With a wide range of vendors offering unique features and capabilities, choosing the best tool to integrate with your ERP system can be challenging.
To ensure a successful integration, consider factors such as compatibility with your existing ERP, ease of use, and scalability. Additional features, like advanced reporting and analytics, compliance tools, and vendor portals, may also influence your decision, as well as pricing.
It’s important to involve all relevant stakeholders in the evaluation process to understand their needs and concerns before making a final decision. Taking a comprehensive approach will help you identify the right AP automation tool to meet the specific requirements of your organization.
To help you get started, check out some of the names below.
Top 5 Best AP Automation Software with ERP integrations
1) DOKKA
DOKKA is an AI-powered AP automation software that combines advanced processing power with best in class user interface, in a package made for Small and Medium sized companies. It cuts down the time spent on data entry, approvals, PO-matching and 3-way matching.
DOKKA automates the collection, processing, and archiving of vendor invoices and bills through a centralized system. It gathers invoices from a variety of sources (including email), analyzes them, and creates journal entries for you, so all you need to do is review and click a button to upload the transaction to your ERP.
DOKKA is compatible with NetSuite, SAP Business One, Microsoft Dynamics, Acumatica, Priority, QuickBooks, Xero, and also offers custom API integration.
2) AvidXChange
AvidXchange is a software company that provides automated accounts payable and payment processing solutions for mid-sized businesses, primarily in sectors like real estate, construction, and financial services.
AvidXchange streamlines the AP process into one comprehensive workflow. Vendors submit invoices digitally, approvals are routed according to custom workflows, and payments are processed securely and quickly through the AvidPay network.
AvidXchange is compatible with a variety of ERPs and accounting software, including NetSuite, Sage, Acumatica, QuickBooks, Microsoft Dynamics, MRI, and Rent Manager.
3) Tipalti
Tipalti specializes in global payments, procurement, tax compliance, and end-to-end AP management. This platform is a good choice for companies that work with international suppliers and require comprehensive tax and regulatory compliance, particularly large companies.
Tipalti streamlines the AP process from vendor onboarding through to payment. Using a self-service vendor portal, suppliers can input their information, track payment status, and select their preferred payment method, reducing the administrative burden on AP teams. Tipalti also automates tax form collection and compliance checks, simplifying cross-border transactions.
Tipalti is compatible with Oracle NetSuite, SAP, Microsoft Dynamics, Infor, Acumatica, and many others.
4) Stampli
Stampli is a collaboration-focused AP automation platform that combines AI-driven invoice processing and payments in an easy-to-grasp interface. Stampli’s platform is good for companies looking to centralize communication within the AP process, making it easier for teams to collaborate and resolve discrepancies directly within the platform.
Stampli also automatically captures and extracts data from invoices, assigns it to appropriate workflows, and provides a dedicated communication thread on each invoice for team members to discuss and resolve issues.
Stampli is compatible with SAP, Microsoft, Sage, Oracle and QuickBooks and many other ERPs.
5) Nanonets
Nanonets is an AI-driven document processing tool that extracts and classifies data from documents, including invoices and receipts, for use in accounts payable automation and other workflows.
Using machine learning models, Nanonets automatically recognizes and captures key data fields, enabling companies to reduce manual data entry and improve accuracy. The platform allows users to train custom models tailored to their document types, enhancing the precision of extracted data.
Nanonets is compatible with popular ERP and accounting platforms, but also with CRMs and workplace apps.
Still not sure which solution is best for you? Check out our list of the 10 Best AP Automation Software Solutions for 2025 to learn more about each vendor and their offerings, or book a demo to see how AP automation works in action.
