How to evaluate an AP automation provider?
To our knowledge, that is a question too few AP automation providers try to address. Many of them try to answer that question by explaining to their future clients how they should understand their own needs or by describing their features. While this might help a company to recognise its pain points and to be aware of the AP automation capabilities, it does not directly answer the question of how to evaluate an AP automation provider.
Should you first need to learn more about the best practices surrounding the AP automation process, we wrote an entire guide about it, as well as a business case study that you might find interesting.
However, if you are already well versed in this subject, then it is time to look for a solution and what better than a checklist to do so.
In this article, we have shared our checklist’s top 10 most important features any AP automation solution should provide.
1. Seamless integration with REST API
If your goal is to have an automated process, this is the first feature you should look at and ask yourself: To what extent can I integrate my current structure to this AP automation solution?
There are 3 types of integrations with AP automation providers:
a. Files based integration: your team will have to manually export and import files, hence it requires manual data entry. This type of integration is a no-go.
b. API integration: the most common method among AP automation providers. API integration enables an automatic synchronisation with a company ERP system. However, not all API integrations include a two-way sync. Ensure your future AP automation solution can send data to your ERP and vice and versa.
c. REST API: a REST API is a standard protocol, an architectural structure for networked applications on the web, that is very user-friendly for developers to code it. As a result, this type of API is more flexible and allow to sync all types of data, in all directions. This is the golden standard.
2. OCR Capabilities
Although an OCR is a standalone solution, many AP automation providers either have a partnership with an OCR solution and provide both solutions together or have developed their own OCR. Either way, you should know that 68% of invoices processed with an OCR still require manual input. To minimise data entry, it is therefore wise to choose a solution with features such as machine learning capabilities, multi-currency handling and instant notifications.
Some questions you can ask your potential providers:
- Does the software provide automatic document classification of each invoice type – PO/Non-PO/Credit Note?
- Does the software provide a 3-way duplicate supplier invoice check – within capture/workflow/ERP?
- Does the software have an auto-online learning function to increase the accuracy of system data?
- Does the software have the ability to process the following image files as a minimum:- BMP, GIF, JPG, PNG, TIFF?
3. Exception Management
In accounts payable, exceptions are common. Whether it is because the numbers don’t match up or because the invoice is in a different form than usual, exceptions are part of the game, no matter which technology you are using. However, the way you can deal with it differs from one solution to another. More than often the amount of time devoted to spotting and resolving errors makes the entire invoice process cost surge drastically.
Unfortunately, a large number of companies looking for an AP automation solution do not take this feature into account when searching for a new solution which, as a result, ends up with an invoice processing cost relatively high, even after automation. Hence, exception management is one of the key features of any AP automation solution that truly can achieve best-in-class results.
Handling exception efficiently can be done with an AP solution providing smart business rules, coupled with instant notifications and flexible workflows.
4. Business Rules
What happens if an invoice is higher than $15,000? Who is actually in charge of these vendors, and at what stage? When do we know that these invoices need to be urgently processed? With flexible business rules, you can answer these questions easily.
Some AP automation solution providers offer unlimited possibilities when it comes to set up rules while others only provide a set of pre-configurated rules, difficulty customisable. If your workflow is complex and you require full automation over the entire process, then you need to take this feature into account.
Some questions you can ask your potential providers:
- Does the software auto-escalate an invoice based on financial delegation limits not being met with multilevel approval?
- Does the software have the ability to reassign an invoice to another user for collaboration and queries?
- Does the software have the ability to reclassify an invoice – PO/non-PO/credit note if the classification is incorrect?
- Does the software have the ability to apply different workflows and processes based on different types of invoices, vendors and areas of work?
- Does the software have the ability to GL code dissection look-up to add correct coding?
5. Invoice library
Not all AP automation providers have an invoice library. As you may know, an invoice library provides a clear landscape of all the invoices currently being processed. Some libraries provide more information than others but you should look at an invoice library that can provide you with the invoice’s stage, its attached group or person and the possibility to add notes and share insights with your AP team.
Some questions you can ask your potential providers:
- Does the solution come standard with an integrated invoice library out-of-the-box?
- Does the library contain a complete audit history on all actions performed during the invoice life-cycle?
- Does the software have the ability to add filters to refine searches based on multiple criteria?
- Does the system have to allow the segregation of multiple entities so there is a restricted view based on permissions?
- Does the software have the ability to add notes and other supporting documents to a record throughout the invoice life-cycle?
- Does the software have the ability to show the status of every invoice in-flight, even once it’s been paid within the ERP?
6. Fraud Detection
On average, 70% of businesses are impacted by fraudulent activities each year. 3 out of 10 times from someone internally.
An AP automation solution can set automatic checks on vendors, banking details and match these information with your ERP when integrated. Moreover, with a set of specific business rules, some situation could lead to a vendor or an invoice getting a red flag and thus notifying you of an issue. Transparency and smart checks are features that will help you in avoiding such problems.
7. Fast Deployment
That might not be the first thing that comes to mind when thinking about AP automation features but the implementation phase is what separates you from your future ROIs.
Some solutions’ implementation time-frame can exceed 18 months. That is a considerable amount of time when knowing that only one-third of these implementations succeed in achieving forecast figures. That means some companies have waited a year and a half to understand their automation was a failure.
Nonetheless, thanks to cloud-based solutions, this time-frame has been drastically reduced and new solutions have disrupted the current market with an implementation time of 3 months and less. Obviously, fast deployment is not correlated to an efficient implementation but still, it is an important factor to keep in mind when choosing an AP automation provider.
Cost is obviously one of the main factors that come to mind when choosing a new solution. Some companies charge much more than others because of their solutions’ features, while others charge these elevate prices because of their notoriety in other related industries. As is happening in other industries, new companies with disruptive technologies or methods are reshaping the AP automation landscape and provide best-in-breed services for a less expensive price tag than the key players. Hence, the importance of comprehensive feature comparisons.
9. Instant Notifications
Most AP automation solutions provide instant notifications. Some may only notify when a duplicate invoice has been detected, while others notify users solely when an invoice is due to payment. The right AP automation solution should provide a flexible and thus holistic notification capability to inform users in accordance to your needs. Obviously, avoiding duplicate invoices is important and will save costs in the long run, however your expectations should be much higher when considering today’s technologies and capabilities.
10. Training & Support
Last but not least, training and support are equally as important as any features stated before. While it is true that AP automation solutions become more and more user friendly, especially with the new SaaS models, it still requires an adaptation phase. Moreover, with cloud-based solutions, web-based applications are updated yearly with the development of new features that can be confusing at first glance. That’s where the support team comes into play. All in all, you want to find a provider that will partner with you and help you achieve your goals. Even if it means coming to your office and showing you how to use the solution.
Most of the time, choosing an AP automation solution takes time. The reasons behind this are plentiful and evidenced in this document.
Years ago, this automation was regularly pushed away as the entire invoice process was viewed as a cost centre and its automation as very costly despite not always being successful. The reality is that it is still a challenging and daunting project for CFOs whose choice could cost their company a lot of money for little benefits.
That being said, with new technologies disrupting the industry, AP automation is transforming this cost centre into a profit centre by drastically having reduced the implementation time-frame and by providing a large set of new features.
Choosing an AP automation solution remains difficult but if done well, the return on investment could appear within the 1st year.
Hence, the most effective route you can take when considering automation is to participate in each solution provider’s webinar or demo, filter the one that can integrate to your current structure and that provides all the features that you are looking for and then compare their respective proposals.
In other words: integration, features, deployment time-frame and cost.