Evaluating AP Automation Software – Tips for Selection & Key Differentiators

When it comes to AP Automation software, the devil is in the details. It’s not just the ‘what’ or ‘why’ with AP Automation; reaching the desired value state has to do with ‘how’ technology automates your business processes. Read this teaser from our whitepaper to learn how to evaluate Accounts Payable (AP) automation solutions and successfully select the best fit for your firm.

According to a report from The Project Management Institute (PMI), 14% of IT projects fail. And, of the projects that didn’t fail, 31% didn’t meet their goals, 43% exceeded their initial budgets, and 49% were late. How can you prevent this from happening to your Accounts Payable (AP) Automation project?

We recommend 5 key steps:

  1. Identify the symptoms of failure in enterprise software selection.

  2. Know what a ‘touchless invoice’ really is and how you can shift away from manual invoice handling with true automation.

  3. Make sure you can capture 100% of your invoices electronically with solutions that automate the intake of all invoice formats – paper, PDF, EDI/cXML, etc. – without disrupting your supply chain.

  4. Ensure you can automatically match purchase order (PO) backed invoices in complex and varying situations without anyone in AP having to be involved.

  5. Go beyond a ‘no PO, no pay’ policy because let’s be honest – that doesn’t work and not all spend can be shifted to a purchase order.

1. Identifying the symptoms of failure in enterprise software selection

There are a few tell-tale signs that your organisation is heading down a dangerous path while selecting an AP automation solution: scope creep, analysis paralysis, matching processes to the technology, not re-imagining processes, and prioritising cost overvalue.

For AP Automation, we typically see scope creep happening when some stakeholders in the business start to like the idea of automation and want to consider it for other parts of the procure-to-pay (P2P) process, like procurement, strategic sourcing, payments, contract management, supplier relationship management, and more. While we certainly recommend considering how all parts of your business will transform in the future and embrace technology to maximise efficiency and cost savings, it is best to take an iterative approach and start with 1-2 functions at a time.

For a successful AP automation selection, you’ve got to pull your discussions out of the weeds. Too many data points to compare, too large of a project team providing too much feedback, and unnecessary complexity in the approach, the scoring method, or the pricing structure ultimately cripples your ability to make a proper selection and move the project forward.

Mistakes also occur when companies attempt to bend their processes to a specific software solution and when stakeholders stay too rigid and attached to their current state, therefore refusing to think about how they can improve and work differently in the future.

And finally, when organisations prioritise the cost of an AP automation solution over the value it can deliver (and its overall ROI) they’re more likely to get stuck with a solution that proves to be more costly in the long run.

2. Know what a ‘touchless invoice’ actually is

Some vendors say that their invoice process is touchless, but in reality, that’s not the case. Very few vendors offer a totally hands-off invoice process and most cannot automate a huge portion of your invoices due to a lack of understanding of the AP process, limited technology, and format restrictions.

At Basware, when we say ‘touchless invoice’ we mean that when an invoice is sent to your company a few things happen behind the scenes:

  • the invoice data is automatically extracted from that invoice and mapped into Basware AP Automation

  • PO-backed invoices are automatically matched to POs, goods receipts, and any other required matching points

  • non-PO invoices are automatically sent to the right individual(s) for review/approval

  • and once matched or approved, invoices are automatically sent to the Enterprise Resource Planning (ERP) tool for payment without involving anyone from your AP department.

3. Capture 100% of your invoices electronically

If you aren’t able to capture all of your invoices electronically, what’s the point? A proper touchless invoice ingestion process captures 100% of your invoices, electronically extracts the data, and maps it into your AP solution without human involvement.

The vendor you choose should be able to support and ingest all invoice formats, whether it be paper, PDF, EDI, or any other type. They should also make it as easy as possible for your suppliers to continue transacting with you in the way they find easiest.

At Basware, we believe in enabling options where suppliers do not have to do anything extra – especially when you are just getting started with automation and want to realise ROI quickly. We do not require supplier onboarding so that you get to that value more quickly.

4. Automatically match POs – regardless of situation

Traditional matching leads to manual exception handling. So, if you’re looking into an AP Automation solution, the ability to match POs automatically is of the utmost importance if touchless processing and saving time are top priorities. There are many different challenges when it comes to matching invoices to POs, such as:

  • When invoices arrive with no line-level details

  • Your PO is in a different currency type than the invoice

  • The price on the PO is different than the price on the invoice

  • There are more lines in the invoice than in the PO

  • The invoice is for a lease without a PO, just a leasing contract

  • The invoice doesn’t have a PO and isn’t linked to an agreement

Without an elite AP Automation solution, each one of these instances would require manual intervention from your AP team. Therefore, making it vital that the AP solution you choose can handle all matching automatically, freeing up time and energy for more strategic initiatives.

5. Go beyond a ‘No PO, No Pay’ policy

Throughout your AP automation project, you may hear providers telling you that you should instate a “no PO, no pay” policy with your suppliers before processing their invoices, or that you should get more spend under management by focusing on the procurement side of the house first and issue more POs. But let’s be honest, that’s not realistic and will not help with your AP problem. “No PO, no pay” policies simply do not work and there are certain categories of spend that will mostly stay non-PO (e.g. like utility bills) – and that’s ok. At Basware, we recommend an iterative approach that helps you realise ROI quickly and enables automation of the non-PO invoices.

Get all the tips for selecting an AP Automation solution

What you’ve just read is only a sampling of the tips and tricks we have when it comes to selecting the right AP Automation solution for your organisation. Get the full report here.