Accounts payable (AP) automation is becoming increasingly popular among businesses of all sizes, and there is a good reason for it: it holds many benefits that improve accounting work.
Automating any aspect of your AP process is a great way to save both time and money.
To get the most out of AP automation, there are several best practices that you should keep in mind. These include choosing a software platform that fits your business needs, designing a workflow that reflects the sophistication of your team or organization, setting realistic expectations for implementation and adoption, and properly monitoring and managing data.
In this blog post, we will cover the top 11 best practices for optimizing AP automation and explain how they can help to improve process efficiency. With the right strategies in place, you can make sure your AP process is as efficient and risk-free as possible.
Key Takeaways
- Phased Implementation Works Best: Gradually introducing AP automation ensures smooth adoption and fewer disruptions.
- Centralize for Efficiency: A single platform for documents and invoices improves organization, visibility, and collaboration.
- Automated Workflows Save Time: Approval automation and streamlined processes reduce errors and accelerate payments.
- Stay Informed and Compliant: Keep up with tax changes and vendor agreements to avoid penalties and maintain strong relationships.
- Leverage Analytics for Insights: Data-driven insights help identify inefficiencies, control costs, and optimize cash flow.
- DOKKA Simplifies AP Automation: From document management to approvals and analytics, DOKKA provides an all-in-one solution to transform your AP process.
11 Best Practices For Implementing AP Automation
Whether you’re already using software to handle accounts payable or just thinking about implementing one, we bring you a list of best practices to follow in order to make the most out of AP automation.
- Split Automation Into Phases
- Integrate With Accounting Systems
- Centralize Document Management
- Strategically Define Workflows
- Stay Up-to-Date on Tax Changes
- Monitor Vendor Relationships
- Profit From Early-Payment Discounts
- Enter New Invoices Instantly
- Create An Effective Approval Process
- Monitor Invoice and Payment Data
- Use Analytics To Improve Processes
1) Split Automation Into Phases
Implementing AP automation in phases is a great practice because it allows the AP team to gradually adopt the technology and become accustomed to the changes it brings.
Introducing new components of an automated system in stages enables the team to learn how to use each piece of software or process one at a time, rather than feeling overwhelmed by a new system introduced all at once.
A phased approach also helps ensure that any issues that arise are addressed promptly before they develop into more widespread problems. Gradual implementation of AP automation gives the team time to test each feature and confirm that there are no bugs or glitches before releasing it into full operation.
2) Integrate With Accounting Systems
Integration of AP software with an ERP allows for better visibility into financial operations. Connecting data across an organization’s accounting ledger enables your team to track expenses more easily, creating timely records of all transactions while automating reconciliations and simplifying reporting.
Linking accounts payable to other areas of the business can reduce errors caused by manually entering duplicate information across different departments or systems.
Automation also provides improved fraud protection because it eliminates manual processes that are subject to errors or manipulation. In many cases, the AP software speeds up the processes that are time-consuming within regular ERPs.
3) Centralize Document Management
Most AP automation solutions provide a centralized dashboard that increases visibility into payments and makes it easier to stay organized. Centralizing documents into one system makes searching for and retrieving invoices much more efficient.
Centralizing document management can help:
- improve document control
- reduce the risk of data loss
- increase efficiency
- enhance security
- provide better analytics
It also makes it easier for teams to collaborate on invoices and payments. With all documents stored in one central location, multiple team members can access the information they need, collaborate on approvals, and ensure that invoices are processed quickly and accurately.
4) Strategically Define Workflows
Implementing a workflow in the AP process is an essential strategy for businesses to maximize their efficiency and optimize productivity. Strategically defining and setting up workflows in AP automation can help businesses:
- streamline the AP process
- increase productivity
- ensure compliance
- provide greater visibility
- control costs
Automated workflows can be designed to match your business’s existing policies and procedures, making it easy to manage payments quickly and efficiently.
When defining and setting up the appropriate AP workflow for your organization, you should include your team in the process from the very beginning. Providing ongoing training and support helps to keep AP staff members motivated and informed. After all, who knows your AP process better than they do?
5) Stay Up To Date On Tax Changes
Tax laws and regulations are constantly changing, and it is important to stay up to date to ensure compliance.
Failure to comply with tax laws can result in penalties, fines, or legal action, and it can also damage a business’s reputation. The result can be a loss of trust from customers, vendors, and investors.
Staying up to date on tax changes ensures that your accounting books remain compliant with all tax laws and regulations and helps maintain a good business reputation. Automating processes reduces the manual workload of tracking and filing taxes; however, keeping up to date with the most recent updates is still a must.
6) Monitor Vendor Relationships
Automation can help keep you informed of all invoices, PO status updates, and payment frequencies so there are no surprises when it comes time to renew contracts or renegotiate rates.
AP automation software can help monitor vendor relationships by providing real-time visibility into:
- invoice status
- PO updates
- payment frequencies
- vendor performance
- compliance with contractual agreements
Having access to these insights helps businesses build stronger relationships with vendors, improve negotiation power, and identify opportunities for cost savings.
7) Profit From Early-Payment Discounts
Establishing consistent methods of approaching payments is extremely important when utilizing an automated AP solution, especially regarding how discounts are taken from vendors or how interest charges are applied if payment terms are not met prior to the due date specified on the invoice.
AP automation software can help your organization profit from early-payment discounts because many vendors allow this option if their invoices are processed and paid on time.
Automated workflows and faster payments can result in significant cost savings.
8) Enter New Invoices Instantly
It is a good practice for AP teams to enter new invoices into the system as soon as they arrive because it ensures that invoices are processed quickly and accurately.
Needless to say, this can help save the company time and money by avoiding late payments or lost invoices.
Having an automated software in place to record incoming invoices gives the team more insight into their accounts payable processes and helps them identify any potential issues or areas for improvement.
Early entry of new invoices provides:
- faster and more accurate invoice processing
- prevention of late payments
- prevention of lost invoices
- better visibility into the financial position
- more effective tracking of spending
- improved forecasting of payments
Finally, early entry of new invoices allows an AP team to proactively plan and forecast payments accurately in order to improve their bottom line savings.
9) Create An Effective Approval Process
An effective AP workflow should include an approval process that is easy to use, efficient at routing documents for review, and secure in protecting confidential information.
Setting up rules for who needs to review which types of invoices will ensure compliance with internal regulations as well as external laws governing payments.
Multiple-level approvals are great to have in place because they provide detailed visibility into each transaction while allowing supervisors or managers to review invoices prior to payment being finalized.
Having this kind of control over spending helps prevent unauthorized purchases or duplicate payments, while ensuring that all invoices are approved according to company policy before they are paid out by AP staff.
10) Monitor Invoice and Payment Data
Invoice and payment data are essential for improving financial objectives and forecasting; however, managing them manually can be an incredibly time-consuming process.
AP software allows you to:
- monitor overdue invoices more easily
- maintain better visibility into cash flow
- gain insight into payment performance trends
- increase accuracy with secure centralized records
- eliminate the need for double-checking scattered data
- analyze invoice submission and payment due dates more accurately
- receive immediate alerts regarding discrepancies or risks of late payments
These capabilities help AP staff strengthen overall accounts payable operations and reduce unnecessary costs.
11) Use Analytics To Improve Processes
Advanced analytics and reporting capabilities are some of the best features of modern AP automation software. With the right platform, any company can automate tedious manual processes and utilize deep analytical insights to further inform their decisions.
Automation software typically offers the ability to analyze detailed spending data, which helps AP teams gain greater visibility into when and where money is being spent. This allows them to identify:
- potential areas of fraud
- inefficiencies in workflows
- opportunities for cost savings
- patterns that influence financial decision-making
Taking advantage of machine-learning platforms with powerful analysis capabilities enables companies to boost productivity and optimize their processes for long-term success.
Bringing It All Together: Why DOKKA is the Right AP Automation Solution
Implementing AP automation can transform the way your organization handles accounts payable, but achieving the full benefits requires the right tools and approach.
From centralizing documents and streamlining workflows to monitoring vendor relationships and leveraging analytics, each of the best practices outlined above plays a crucial role in optimizing efficiency, reducing errors, and improving cash flow.
DOKKA supports every stage of the AP automation journey:
- Centralized Document Management to keep all invoices and financial records in one secure, cloud-based location.
- Approval Automation to streamline multi-level invoice approvals, ensuring compliance and faster processing.
- Advanced Analytics to provide actionable insights into spending patterns, cash flow, and process efficiency.
Businesses using DOKKA not only automate routine tasks but also gain the visibility and control needed to make smarter financial decisions. Combining best practices with a platform built for modern AP needs allows your team to save time, reduce errors, and unlock cost savings, transforming accounts payable from a burden into a strategic advantage.
Take your AP automation to the next level by booking a demo with DOKKA today and discover how it can transform your accounts payable process.
