Streamlining Your Accounts Payable Workflow: A Complete Guide

Managing accounts payable can be complex and time-consuming for businesses of all sizes.  

A 2023 survey revealed that only 9% of accounts payable departments are fully automated, leaving the majority still grappling with manual processes. This reliance on manual methods often leads to inefficiencies, errors, and increased operational costs. 

However, the landscape is changing.  

Gartner predicts that 2026 spending on accounts payable automation and supplier electronic invoicing software will nearly double, reaching approximately $1.75 billion, up from around $925 million in 2021. 

Businesses increasingly recognise the value of automating their accounts payable workflows to enhance efficiency and accuracy. 

This guide will walk you through the essentials of accounts payable workflows, highlight the challenges of manual processes, and show how automation can transform the way you process invoices. 

What is an Accounts Payable Workflow? 

An accounts payable workflow is the step-by-step process your business uses to manage incoming invoices and make payments to suppliers.  

It's the roadmap that guides how invoices are:  

• Received  

• Verified 

• Approved 

• Paid 

Key Steps in an Accounts Payable Workflow 

1. Invoice receipt: Receive invoices from suppliers via email, mail, or an accounts payable invoice workflow automation system. 

2. Invoice verification: Check the invoice details for accuracy. Match the invoice to purchase orders and delivery receipts (often called three-way matching). 

3. Approval process: Route the invoice through your accounts payable approval workflow. Get the necessary approvals from managers or department heads. 

4. Data entry: Enter invoice information into your accounting system, unless you have accounts payable workflow automation to handle this. 

5. Payment scheduling: Decide on payment dates based on supplier terms and your cash flow. 

6. Payment execution: Process the payment using checks, Automated Clearing House (ACH) transfers, or other methods. 

7. Record keeping: Update your accounts payable records to reflect the payment. Store invoices and related documents for future reference. 

Challenges with Manual Accounts Payable Processes 

Managing your accounts payable workflow manually can feel overwhelming.  

Without the help of accounts payable workflow automation, many businesses encounter obstacles that hinder efficiency and accuracy.  

Let's explore some of these common challenges: 

1. Time-Consuming and Error-Prone Data Entry 

Entering invoice details by hand isn't just tedious - it also increases the likelihood of errors that can affect your financial records. Studies have shown that 88% of manual accounts payable documents contain data entry errors. 

Without accounts payable invoice workflow automation, your team spends excessive time on data entry instead of focusing on more strategic tasks. 

2. Delayed Approvals 

Waiting for invoice approvals can significantly slow down your accounts payable workflow.  

Without an efficient accounts payable approval workflow, invoices may sit unattended, causing payment delays. In fact, over half of companies surveyed reported that it takes too long to approve invoices and payments. 

3. Misplaced or Lost Invoices 

Handling paper invoices increases the risk of them getting lost or misplaced.  

A 2023 report indicated that 75% of medium-sized businesses still receive invoices primarily in paper or email formats, complicating tracking and management. 

4. High Operational Costs 

Manual processes often come with hidden expenses.  

From printing and storage to the time employees spend on repetitive tasks, costs can escalate quickly. 

5. Limited Visibility and Control 

Without accounts payable workflow automation, gaining real-time insights into your payables is tough.

This lack of visibility can hinder effective financial management. 

6. Difficulty Scaling 

As your business grows, a manual accounts payable workflow struggles to keep up with increased invoice volumes.  

In a completely manual process, an AP full-time equivalent (FTE) processes just 6,082 invoices per year, compared to 23,333 invoices in a fully automated system. 

7. Compliance and Audit Challenges 

Maintaining financial compliance is harder when you're juggling paper documents and manual records. This can pose risks during audits. 

The Benefits of Automating Your Accounts Payable Workflow 

If any of the above challenges hit home for you, automating your accounts payable workflow might be the solution you've been looking for.  

Let's dive into how accounts payable workflow automation can make a difference: 

1. Save Time and Boost Efficiency 

Imagine freeing up your team to focus on strategic tasks instead of repetitive administrative work. 

By automating your accounts payable workflow, you eliminate the need for manual data entry and paper-based processes. 

• Quick invoice processing: Automation software captures invoice data instantly, reducing processing time from days to minutes. 

• Streamlined approvals: An automated accounts payable approval workflow routes invoices to the right people automatically, speeding up approvals. 

2. Reduce Errors and Improve Accuracy 

Manual processes are prone to mistakes that can cost your business money and damage supplier relationships. 

Think about the peace of mind that comes with knowing your financial data is reliable and up-to-date. 

• Accurate data capture: Automation minimises typos and misentries by extracting data directly from invoices. 

• Consistent workflows: Automated systems follow predefined rules, ensuring each invoice is processed correctly every time. 

3. Enhance Visibility and Control 

Do you find it challenging to track where invoices are in the approval process?

Automation provides real-time insights into your accounts payable workflow. 

With better visibility, you can make informed decisions and avoid surprises. 

• Transparent processes: Use an accounts payable workflow diagram to visualise each step, making it easy to monitor progress. 

• Customised dashboards: Get a clear overview of pending approvals, upcoming payments, and overall cash flow. 

4. Strengthen Supplier Relationships 

Building strong supplier relationships can give you a competitive edge in pricing and service, but late or missed payments can strain your relationships with suppliers.  

Automation helps you pay on time, every time. 

• Automated reminders: Never miss a payment deadline with automatic notifications. 

• Improved communication: Suppliers appreciate timely payments and clear communication, leading to better terms and collaboration. 

5. Cut Costs and Save Money 

Reducing operational expenses is always a priority. Automation helps you achieve this by: 

• Eliminating paper costs: Save on printing and storage of expense documentation by going digital. 

• Preventing late fees: By streamlining invoice approvals, you can ensure timely payments, avoiding penalties and positioning your business to take advantage of early payment discounts. 

6. Ensure Compliance and Simplify Audits 

Keeping accurate records is essential for compliance and auditing purposes.  

• Secure document storage: Store all invoices and approvals digitally, making them easy to retrieve when needed. 

• Audit trails: Automated systems keep detailed logs of every action, simplifying the audit process. 

7. Scale Your Business with Ease 

As your business grows, manual processes can hold you back.  

Automation allows your accounts payable workflow to scale effortlessly. 

• Handle increased volume: Process more invoices without needing additional staff. 

• Adaptable workflows: Easily adjust approval hierarchies and processes as your organisation evolves. 

8. Gain Strategic Insights 

Automation provides valuable data that can help you negotiate better terms with suppliers and improve your bottom line. 

• Advanced reporting: Generate reports on spending patterns, approval times, and supplier performance. 

• Better cash management: Forecast cash flow needs with real-time financial data. 

9. Enhance Security 

Protecting your financial information is critical.  

• Secure systems: Automation platforms often come with advanced security features to protect sensitive data. 

• Fraud prevention: Automated checks and balances help detect and prevent fraud. 

10. Improve Employee Satisfaction 

A happier team leads to better productivity and employee retention. 

Reduce the workload on your finance team and improve job satisfaction. 

• Eliminate mundane tasks: Free your team from repetitive tasks, allowing them to focus on more rewarding work. 

• Professional development: Employees can develop new skills in data analysis and strategic planning. 

See the Difference: Manual vs. Automated AP Workflow 

Understanding the real impact of automating your accounts payable workflow becomes much clearer when you compare it directly with the manual process.  

Let's walk through both approaches so you can see how accounts payable workflow automation can truly transform your business. 

Manual Accounts Payable Workflow 

In a manual workflow in accounts payable, every step requires human intervention, which can lead to inefficiencies and errors. 

Steps in a Manual Workflow: 

1. Receiving invoices: Invoices arrive via mail or email. Staff manually sort and distribute them. 

2. Data entry: Team members enter invoice details into spreadsheets or accounting software by hand. High risk of typos and data entry errors. 

3. Approval process: Physical documents or emails are sent to approvers. Delays happen if approvers are unavailable. 

4. Payment scheduling: Due dates are tracked manually. Possibility of missing early payment discounts or incurring late fees. 

5. Payment execution: Checks are written and mailed, or manual bank transfers are initiated. 

6. Record keeping: Paper copies are filed away. Retrieving past invoices for audits or inquiries is time-consuming. 

Automated Accounts Payable Workflow 

With accounts payable workflow automation, many of these steps are streamlined or handled automatically.

Steps in an Automated Workflow: 

1. Automated invoice capture: Invoices are received electronically or scanned via a mobile app. Accounts payable invoice workflow automation extracts data using OCR technology. 

2. Automatic data entry: Invoice details are populated in your system without manual input. Reduces errors significantly. 

3. Digital approval process: Invoices are routed through a predefined accounts payable approval workflow. Approvers receive notifications and can approve invoices from anywhere. 

4. Payment: With invoices approved quickly and efficiently, it’s easier to stay on top of payment schedules. This ensures you avoid late fees and can make the most of early payment discounts. 

5. Digital record keeping: All documents are stored securely in the cloud. Easy retrieval for audits or supplier inquiries. 

How to Make Your Accounts Payable Workflow More Efficient 

Improving your accounts payable workflow doesn't have to be difficult.

By making strategic changes, you can streamline processes, reduce errors, and save valuable time.  

Here's how you can create a more efficient accounts payable workflow: 

1. Embrace Accounts Payable Workflow Automation 

Start by automating repetitive tasks to free up your team's time and minimise errors.  

Automation software can handle invoice data entry, matching, and routing for approvals. 

• Implement invoice automation tools: Use accounts payable invoice workflow automation software to automatically capture invoice data and input it into your system. 

• Set up automated approval workflows: Configure your accounts payable approval workflow so invoices are automatically sent to the right people based on predefined rules. 

• Integrate with your accounting system: Ensure the automation tools integrate seamlessly with your existing accounting software for real-time data updates. 

2. Standardise and Document Your Processes 

Creating clear, standardised procedures ensures everyone follows the same steps, reducing confusion and errors. 

• Develop an accounts payable workflow diagram: Map out each step of your process to visualise the flow from invoice receipt to payment. 

• Document procedures: Write down detailed guidelines for handling invoices, approvals, and payments. 

• Train your team: Make sure everyone understands the workflow in accounts payable and their specific roles. 

3. Centralise Invoice Receipt and Management 

By having all invoices go through a single channel, you simplify tracking and processing. 

• Use a dedicated email address: Ask suppliers to send all invoices to a specific email monitored by your accounts payable team. 

• Implement electronic invoicing: Encourage suppliers to submit invoices electronically for quicker processing. 

• Leverage invoice approval software: Use a system that stores and organises invoices in one accessible place. 

4. Streamline Your Approval Process 

Simplify and expedite approvals to avoid bottlenecks that delay payments. 

• Define clear approval hierarchies: Specify who needs to approve invoices based on factors like amount or department. 

• Enable mobile approvals: Allow approvers to review and approve invoices from their devices, wherever they are. 

5. Improve Communication with Suppliers 

Effective communication prevents misunderstandings and delays. 

• Set clear invoicing guidelines: Inform suppliers of your preferred invoice formats and submission methods. 

• Address issues promptly: Resolve any discrepancies or questions quickly to maintain strong relationships. 

6. Monitor and Analyse Your Workflow 

Regular assessment helps you identify areas for improvement and optimise efficiency. 

• Track key metrics: Monitor processing times, approval durations, and error rates. 

• Use analytics tools: Leverage reporting features in your automation software to gain insights. 

• Adjust based on data: Use the information gathered to refine your processes continually. 

7. Invest in Team Training and Development 

Your team's expertise is crucial for a smooth accounts payable process. 

• Provide training: Ensure your team is well-versed in both the automation tools and best practices. 

• Encourage open communication: Create an environment where team members feel comfortable suggesting improvements. 

• Recognise achievements: Acknowledge and reward efficiency and innovation within your team. 

8. Secure Your Accounts Payable Process 

Protecting financial data is essential for your company's integrity and compliance. 

• Implement robust access controls: Limit system access to authorised personnel based on their roles. 

• Use secure systems: Ensure your automation software has strong security features like encryption and two-factor authentication. 

• Maintain detailed audit trails: Keep records of all transactions and changes for accountability and compliance. 

9. Plan for Scalability 

Ensure your workflow can handle growth without sacrificing efficiency. 

• Choose scalable solutions: Select automation tools that can accommodate increased invoice volumes and more complex workflows. 

• Stay flexible: Be prepared to adjust your processes as your business evolves or as new technologies emerge. 

• Anticipate future needs: Consider potential expansions or changes in your industry when designing your workflow. 

Meet ExpenseIn: Your Partner in Automating Accounts Payable 

So, are you ready to finally make your accounts payable workflow more efficient and less time-consuming?  

ExpenseIn is here to help you automate and simplify the entire process, so you can focus on what really matters - growing your business. 

Why Choose ExpenseIn? 

ExpenseIn's invoice approval tool is designed to streamline your accounts payable processes with ease: 

• Real-time scanning: Instantly extract all relevant information from your supplier invoices. 

• Easy submission: Upload invoices directly or forward them via email - no more manual data entry. 

• Advanced approval flows: Set up multi-level approvals that fit your business structure. 

• Supplier policies: Configure rules for each supplier, such as limiting maximum invoice values. 

• Purchase requests: Pre-approve spending before purchases happen, ensuring budget compliance. 

• Out-of-office functionality: Keep approvals moving even when key team members are unavailable. 

• Real-time reports: Access up-to-date invoice data to make informed financial decisions. 

• Seamless integration with accounting software: Post supplier invoices straight to your accounting system. 

“The invoice module allows us to spend more time working towards better outcomes for children and families as well as delivering cost savings for the organisation.” 
- Frontline 

Experience firsthand how ExpenseIn can transform your accounts payable process. Book a demo and take the first step towards a more efficient, automated workflow.