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Accounts Payable (AP) Automation Tools Benchmarking '24

Accounts payable (AP) automation is a critical process for any business looking to streamline its financial operations and improve its financial efficiency.

The AP automation market is expected to grow strongly in the next few years due to an increasing demand for digitization of finance and accounting processes, as well as advancements in technology and increasing adoption of cloud-based solutions. 

However, this is an area where companies have invested for years without achieving substantial savings. A study conducted by E&Y and Deloitte found that approximately 50% of automation initiatives fail.1

In this article, we explain different AP automation solutions to help decision-makers identify the right tools for their company.

9 Key features to look for in AP automation

Figure 1. AP automation process

Source: Sysfore

AP automation consists of three main steps 

  • Capture 
  • Processing
  • Payment

Because companies want to simplify their invoicing processes and be compliant, the popularity of AP automation tools is on the rise: Gartner predicts AP automation expenditure to rise to $1.9B by 2025 with a CAGR of 17%.2

With the increasing popularity of automation tools, businesses need to understand which tools are the best fit for their specific needs. According to the same report, the AP automation solutions market is highly dispersed as a result of the diverse needs of companies such as:

  • Total invoice volume
  • Legal requirements by different countries
  • Matching purchase order (PO) requirements to invoices
  • Integration requirements
  • Internal policy

The constant expansion into adjacent markets has led to an oversaturation of services and also left consumers confused by the sheer number of available options.

After our analysis, we identified 9 essential features of AP automation tools that are critical in addressing the needs of an organization:

1. OCR capture

OCR or “Optical Character Recognition” is a technology that allows a computer to:

  • Scan 
  • Read
  • Turn the text into machine-readable text 

which can then be edited, searched, or indexed. 

OCR is important in AP automation because it allows the software to automatically extract data from invoices and other bills. This eliminates the need for manual data entry and reduces errors.

In AP automation, OCR technology is used to extract relevant data from invoices, such as

  • Vendor name
  • Invoice number
  • Total amount due

The extracted data is then used to automatically match the invoice with a purchase order (PO) and validate the amount.

2. Three-way matching

Three-way matching compares the invoice, PO, and receiving document to ensure that the goods or services have been ordered, received, and invoiced correctly.

  • Invoice matched with PO (invoice number, vendor name, item/service description)
  • Invoice matched with receiving document
  • Compare receiving document with PO to ensure goods/services were delivered as ordered

Three-way matching adds an extra security layer over two-way matching by ensuring payment’s hold before it has been received by the warehouse. 

3.  Approval automation

According to market research,3Automating validation is the primary purpose of most AP automation tools because during the approval process, local requirements and regulations, such as applying VAT, need to be checked to ensure that only valid invoices are paid.

Invoice approval (i.e., validation) process involves: 

OCR is typically used for automating invoice approval and workflow management, which ensures that the invoice is complete and accurate.

There can be a personalized PO matching set up by software that can:

  • Create guidelines to check if an invoice is linked to a PO
  • Use criteria such as the supplier or the amount of the invoice
  • If the invoice has a PO, the invoice will automatically be filled with the PO’s information.

Once the invoice has been validated, it is routed to the appropriate personnel for approval. This process can include multiple levels of approval, depending on the organization’s policies and procedures.

4. ERP Integration

ERP (Enterprise Resource Planning) integration with AP automation allows for a seamless flow of data between the two systems resulting in more efficient and accurate financial management.

When an ERP system is integrated with AP automation

  • Invoice data is automatically captured and matched with corresponding purchase orders and receipts.
  • Eliminates the need for manual data entry
  • Reduces the potential errors.
  • Provides real-time visibility into financial data, such as outstanding invoices and vendor balances

This improves communication between departments and makes it easier to track and manage financial transactions.

5. Duplicate and Fraud identification

Duplicate identification identifies and flags duplicate invoices. This can be done by matching invoice data, such as vendor name, invoice number, and invoice amount, with previous invoice records.

  • Fraud identification is a component of anti-money laundering (AML) initiatives that allow the system to detect and flag potentially fraudulent activity in financial transactions by analyzing invoice data and identifying any irregular patterns or anomalies.
  • Machine learning algorithms can be used to identify unusual patterns or anomalies in invoice data as part of fraud identification.
  • AML monitors financial transactions for suspicious activity such as large or frequent transactions, transactions involving known criminal organizations or individuals, and transactions that do not seem to have a legitimate business purpose.
  • AML includes regulations requiring financial institutions and other regulated entities to implement AML programs, including the development of policies, procedures, and internal controls to detect and report suspicious activity, as well as to maintain records and file reports with the relevant authorities.

With this feature

  • The risks of financial losses are reduced
  • The accuracy and integrity of financial data are improved

6. Indirect tax validation

Automating the tax validation process can help organizations to maintain compliance with tax regulations and laws.There are over 12,000 different rules for taxes in the US. These rules can change often and without warning.4Additionally, product taxability varies by area. By automating the process, organizations can ensure that all transactions are checked against the latest tax rules and regulations, reducing the risk of non-compliance and potential fines

Indirect tax (i.e., sales tax, value-added tax, excise tax) validation checks for compliance with indirect tax laws and regulations. It helps ensure

  • The correct amount of taxes is calculated and applied to invoices
  • The taxes are remitted to the appropriate government agency.

This feature also helps identify and prevent errors or discrepancies in the tax calculation process, which can result in financial penalties or other legal issues.  

7. Payment Scheduling

Automated payment scheduling allows companies to schedule payments to be made to vendors automatically. 

Use cases include: 

  • Setting up recurring payments for bills received regularly, such as rent or utility bills
  • Scheduling payments for individual invoices based on the terms of the invoice and the contract, such as the due date, early discount payments, etc.
  • Prioritizing bills based on importance and urgency. This involves categorizing, batching, and prioritizing important payments. 

Automated payments leverage payments API that enables the exchange of data between different ERP systems and the AP solution. Benefits of payment APIs include: 

  • Tracking payments directly from the software
  • Allowing  communication and exchange of information with other systems such as banks and payment processors
  • Enabling  electronic payments, such as ACH, wire transfers, or credit card payments
  • Generates and sends electronic invoices
  • Reconciles payments with invoices and financial records to reduce errors and improve efficiency.

8. Account coding 

Account coding suggestions help users assign the correct financial codes to invoices and other financial transactions. The suggested codes can include GL (general ledger) codes, cost center codes, and other codes that are used to classify and track financial transactions.

This feature can use AI or ML algorithms to analyze the invoice data and suggest the most likely codes based on the invoice’s content and other factors.

9. Automated amortization

Debt amortization is dividing the cost of a debt, such as a loan, over a period of time. Automated amortization breaks down the periodic payments into interest payments and principal payments, while showing the remaining balance of the loan over time. 

For example, if a company takes out a loan of $100,000 and purchases equipment with it to use over five years, it can amortize it to have a detailed view of how the loan expense with the income generated by it matches over time.

AP automation software screening

There are around 150 AP automation tools available on the market. To help you with your decision-making, we reduced the number of suppliers according to two, publicly-verifiable parameters: 

  1. Number of employees: Revenue correlates with employee count. So, we target 100+ employee companies.
  2. References: We choose vendors with significant market presence. The vendors we evaluated have at least 100 reviews on review platforms like G2, SoftwareReviews, and Capterra or have at least one Fortune 500 reference.

The following AP automation tools were chosen for this study based on the criteria listed above. We listed the vendors alphabetically.

AP automation tools

The information in this table was obtained from the vendors’ websites. You can find the relevant information regarding the 9 key features discussed above in Table 1:

VendorOCR Supported ChannelsOCR Demo SupportThree-way MatchingERP IntegrationDuplicate and Fraud
Identification
Indirect Tax ValidationPayment SchedulingAccount Coding Auto Amortization
Airbase
– XML – CSV – PDF – Excel – EDI (Some versions) – JSON
Yes
2-way & 3-way matching* *Some implementations of Airbase can be configured to perform 3-way matching if that is a requirement of the business, but this is not a standard feature of their software.
– SAP – Oracle – Microsoft Dynamics – Infor – Epicor – Sage – NetSuite – Deltek – Workday
YesNA– Yes
– Provides payments API
Through QuickBooks integrationYes
AvidXchange– XML
– CSV
– PDF
– Excel
– EDI
YesYes
Provides over 220 integration partners including – SAP – Oracle – MS Dynamics – NetSuite – Infor – Sage – Yardi – Deltek – JD Edwards – Intacct
YesNA
– Payments are scheduled and can be done online through AvidXchange’s AvidPay. – AvidXchange offer payments API integration to help connect the software to other systems.
YesNA
BILL– XML
– CSV
– PDF
YesYes
– QuickBooks – Xero – NetSuite – Oracle – SAP – MS Dynamics GP – MS Dynamics 365 – Sage – Infor – Acumatica – Zoho Books
Provides AML/OFACNAYesYesYes
Hyland OnBase
– XML – CSV – PDF – TIFF – JPEG – PNG – Microsoft Office documents (Word, Excel, PowerPoint)
YesYes
– SAP – Oracle – MS Dynamics GP – MS Dynamics 365 – Infor – Epicor – Sage – NetSuite – Deltek – Workday – FinancialForce
Provides AMLBrainware by HylandNANANA
Kofax
Kofax TotalAgility uses OCR technology to extract data from the receipts, invoices, and other documents. – PDF – TIFF – XML – CSV – Excel -JSON – EDI
Kofax TotalAgility demoYes
– PeopleSoft – Infor Lawson – MS Dynamics – SAP S/4HANA – Oracle ERP – QuickBooks – NetSuite – Workday – Salesforce – ADP – Great Plains – Xero
Provides Kofax FraudOneNAYesProvides Kofax CaptureNA
Quadient AP by Beanworks
– XML – CSV – PDF – TIFF – JPEG – PNG – EDI
YesYes
– SAP – Oracle – MS Dynamics – Infor – Epicor – Sage – NetSuite – Deltek – Workday – FinancialForce
Provides AML NAYesYesNA
Sage Intacct
– XML – CSV – PDF – Excel – EDI – JSON – ODBC: Sage Intacct support Open Database Connectivity (ODBC) which is a standard for connecting to and querying databases.
YesYes
– Salesforce – NetSuite – MS Dynamics – Oracle – SAP – QuickBooks – Xero – ADP – Workday – Bill.com
YesNA– Yes
– Provides payments API
NAProvides Sage Intacct Accelerator
SAP Concur
– XML – CSV – PDF – Scanned – Excel – JSON – EDI
YesYes
– The Concur Connector for NetSuite allows for Cloud-to-Cloud Integration. – Imports data with QuickBooks Connector.
Provides Concur Detect by Oversight YesPayments are automate with a payments APIYesNA
Stampli– CSV
– PDF
– Excel
YesYes
– Oracle NetSuite – SAP – MS Dynamics GP – MS Dynamics 365 – QuickBooks – Xero – Zoho Books – Intacct – Sage – Acumatica – Infor
YesNANAYesNA
Tipalti
– XML – CSV – PDF – Excel – EDI (some versions) – JSON
Yes2-way, 3-way and 4-way matching
– Oracle NetSuite – SAP – MS Dynamics GP – MS Dynamics 365 – QuickBooks – Xero – Zoho Books – Intacct – Sage – Acumatica – Infor
Provides AML/OFACYes– Yes
– Provides payments API
NANA

Disclaimer

Automated approval is the main purpose of most AP automation projects; it is therefore a key feature in AP software. However, all vendors that we listed provide approval automation, so we did not consider it a difference and did not include it in the table. 

AIMultiple is data-driven. Check out this list to learn more about AP automation software by evaluating 140 services based on comprehensive, transparent, and objective AIMultiple scores.

If you have any additional queries regarding AP automation tools and best practices, do not hesitate to get in touch with us:

Find the Right Vendors

This article was drafted by former AIMultiple industry analyst Kübra İpek.

Access Cem's 2 decades of B2B tech experience as a tech consultant, enterprise leader, startup entrepreneur & industry analyst. Leverage insights informing top Fortune 500 every month.
Cem Dilmegani
Principal Analyst
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Cem Dilmegani
Principal Analyst

Cem has been the principal analyst at AIMultiple since 2017. AIMultiple informs hundreds of thousands of businesses (as per similarWeb) including 60% of Fortune 500 every month.

Cem's work has been cited by leading global publications including Business Insider, Forbes, Washington Post, global firms like Deloitte, HPE, NGOs like World Economic Forum and supranational organizations like European Commission. You can see more reputable companies and media that referenced AIMultiple.

Throughout his career, Cem served as a tech consultant, tech buyer and tech entrepreneur. He advised businesses on their enterprise software, automation, cloud, AI / ML and other technology related decisions at McKinsey & Company and Altman Solon for more than a decade. He also published a McKinsey report on digitalization.

He led technology strategy and procurement of a telco while reporting to the CEO. He has also led commercial growth of deep tech company Hypatos that reached a 7 digit annual recurring revenue and a 9 digit valuation from 0 within 2 years. Cem's work in Hypatos was covered by leading technology publications like TechCrunch and Business Insider.

Cem regularly speaks at international technology conferences. He graduated from Bogazici University as a computer engineer and holds an MBA from Columbia Business School.

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