Choosing AP Excellence: Finding the Right Solutions Amid S2P Suite Challenges

In the ever-evolving landscape of modern business, where efficiency and accuracy are paramount, navigating the realm of Accounts Payable Invoice Automation (APIA) can be perplexing. As companies strive to streamline processes and optimize financial operations, the importance of selecting the right solution becomes increasingly evident. An insightful report from Gartner®, "Market Guide for Accounts Payable Invoice Automation Solutions," shares the description, direction and analysis of this market and offers valuable guidance to understand how the status of an emerging market aligns to your future plans.

Navigating Market Complexity

Amid the competitive landscape, companies often find themselves bewildered by the array of solutions available. Source-to-Pay (S2P) or Procure-to-Pay (P2P) suite providers do not primarily focus on AP automation; instead, they offer AP functionalities as extensions of their core services – limiting their ability to execute.

In this quest for the right solution, it's essential to remember that companies should not revert to S2P reports when assessing AP capability. Doing so can lead them into the trap of merely examining extensions of a vendor's core services, missing out on the market leaders that exclusively concentrate on the APIA domain.

"Customers are often confused when looking at the APIA market, as many vendors offer a partial solution in this space. Often these vendors are not APIA-focused point solutions, but come from adjacent market spaces and offer APIA functionality as an extension of their core focus." - Gartner

The Gartner research states that “vendors that start in a specific domain typically have stronger capabilities in that starting domain”. To achieve excellence in a specific domain, such as AP and invoice automation, businesses must navigate the vendor complexity to find the dedicated solutions that truly embody their needs and goals.

As we delve further into the world of Accounts Payable Invoice Automation (APIA), let's define the intricacies and capabilities that set these solutions apart in their commitment to AP excellence.

Defining Accounts Payable Invoice Automation (APIA)

APIA solutions are used to streamline the process of capturing, processing and paying for inbound invoices within organization policy. Various country-specific standards and laws may need validating as part of the approval process to ensure that only legally valid invoices are paid. Automating as much of this process as possible is the primary purpose of such solutions. The primary goal of APIA solutions is to automate as much of this intricate process as possible, driving operational efficiency and compliance simultaneously.

"Understanding the entire scope of APIA is critical to understanding the market. This is because the market has evolved by combining the submarkets of e-invoicing (capture), accounts payable (AP) automation (match/code and workflow) and payments." – Gartner

Advanced AI/ML Capabilities: Elevating AP Efficiency

In today's era of artificial intelligence and machine learning, APIA solutions have evolved beyond basic automation. Forward-thinking vendors integrate advanced AI/ML capabilities, revolutionizing the efficacy of the AP process. The following is a list of advanced AI/machine learning (ML) capabilities that are becoming common in solutions:

• Intelligent Computer Vision and NLP Capture: Cutting-edge vendors are now utilizing AI-driven computer vision and natural language processing (NLP) to digitize image-based documents at much higher success rates out of the box. Touchless capture rates from these solutions can reach the high 90s percentiles.
• AI-Enhanced OCR Capture: These solutions use AI to correct common image issues that cause OCR capture errors that would normally force human corrections. Additionally, NLP and learning document structure to extract and identify data eliminate geography-based OCR extraction errors.
• Machine-Readable Invoices: ML parsing of machine-readable documents (where the document is not an image) can increase accuracy rates to the high 90% range.
• Automated Account Coding: Deployment of trained ML algorithms can assist AP staff and buyers with accurate, consistent account coding suggestions.
• Fuzzy Purchase Order Matching: AI-based intelligence to solve the problem that many invoices cannot be exactly matched due to factors that force the invoice to deviate from the PO; for example, services that are partially taxable.
• Duplicate/Fraudulent Invoice Detection: AI engines specifically look for potential duplicate invoices based on content rather than just invoice number.
• Smart Workflows: AI learns in the background how invoices with errors should be distributed so that the fewest people need to review the document.
• Supplier Identification: Suppliers are often duplicated in an organization’s master data for a number of reasons. Just looking at the name of the supplier on the invoice may not be sufficient to identify the exact vendor who issued the invoice. This can cause matching problems with purchase orders. AI engines learn from a number of data points on an invoice, and even via the email or other route the invoice was submitted, to identify the exact supplier.

Elevating AP Excellence through Dedicated APIA Solutions

Different organizations have varying requirements based on their size, complexity, and operational diversity. The Gartner report recognizes that the customers in the large-enterprise (More Than 1,000 Employees) market require the most complex set of requirements, often with existing technology that must be considered when designing a future-state solution. A requirement set may preclude the use of a single solution to fully meet their needs such as legal compliance across multiple countries, complex account coding and PO-matching rules, multi-language and currency support, cash management functions, such as dynamic discounting, are much more important, customers often look at advanced capabilities, such as artificial intelligence, real-time auditing, APIs and cross-border payments, as key differentiators, real-time integration via APIs is more common and functionality to support shared services models or center-of-excellence model and others, as mentioned in the Gartner report.

In the pursuit of AP excellence, while P2P and S2P suites can offer a broad array of procurement and payment automation features, they likely aren’t the best fit for organizations primarily seeking accounts payable and invoice automation. Before making a decision, It's important to assess your organization's specific needs, goals, resources, and existing systems.

Compliance in the AP Automation Landscape

The evolving landscape of legal compliance cannot be overlooked. Governments around the world are adding regulations on what is defined as a legal invoice. This continuously changing environment demands adaptable solutions that cater to evolving compliance standards, from post-audit practices to real-time clearance models.

Post-audit involves invoice auditing after the fact, whereas clearance requires invoices to be presented to the government in real-time. Organizations should anticipate that more countries will transition to the clearance model due to its effectiveness in ensuring tax compliance. This model places more responsibility on suppliers for generating compliant electronic invoices, simplifying the process of capturing e-invoices for the buyer.

Unlocking Strategic Value with AP Automation

Embracing AP invoice automation holds transformative potential for organizations. By implementing these solutions, companies stand to gain a multitude of benefits:

• Enhanced Cash Management: Automation provides greater flexibility and control over cash flow, leading to improved financial agility.
• Strengthened Supplier Relationships: Prompt and accurate payments lead to stronger supplier relationships, fostering collaboration and trust.
• Reduced Costs and Errors: Automation slashes the costs associated with invoice processing and decreases the likelihood of incorrect payments.
• Compliance and Efficiency: Companies can align with internal policies and industry regulations while maximizing efficiency.

Charting the Path to Excellence with AP Automation Solutions

As businesses embark on the journey toward AP excellence, the intricate features and capabilities of modern APIA solutions are transforming accounts payable from a burdensome process into a strategic advantage. By choosing the right solution amid the challenges and ambiguity of the S2P (and P2P) suite landscape, companies can unlock the true potential of AP automation to achieve financial excellence.

Explore this dynamic market further by downloading the Gartner 'Market Guide for Accounts Payable Invoice Automation Solutions’ report.

Market guide Research Methodology: https://www.gartner.com/en/research/methodologies/market-guide
Gartner, Market Guide for Accounts Payable Invoice Automation Solutions, Micky Keck, Balaji Abbabatulla,7 August 2023
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