3 Levels of AP Automation: Choosing the Best Option for Your Business

Basic Level: OCR-Based AP Automation

The most elemental form of accounts payable automation is optical character recognition-based. With a basic level solution, your invoices are received and then digitize the paper documents and convert the digital files into the proper format. OCR technology will capture the data from your invoices, which will then be digitally routed for approval.

While this is undoubtedly a step up from a completely manual process, human intervention is still required. This is particularly true when processing emailed invoices since OCR cannot handle non-conforming file types or multiple invoice PDFs.

What’s more, despite what many AP automation companies boast, OCR engines don’t yield near-100% data accuracy rates. Many OCR solutions said to have 95%+ data accuracy rates are using indexed character errors for measurement, not word or field errors. The result is an inflated accuracy percentage.

It’s also important to remember that OCR-based solutions are only as effective as the scanned images they’re pulling data from. If your invoices aren’t properly digitized, the data will not be properly captured – regardless of accuracy rate.

All these factors bring us to a major con in opting for a basic level invoice processing solution: they can be costly. Afterall, you will still need to employ personnel to handle manual tasks, and experts found that manually processing a single invoice costs roughly $11. Plus, expensive errors could still arise, further increasing costs.

If your organization is on the smaller side and your team isn’t responsible for processing a lot of invoices each month, a basic solution could still be a viable option for you. You’ll just need to ensure that your staff has the bandwidth to intervene when needed and carefully monitor the software for errors.

Intermediate Level: Advanced Capture & Application Integrations

The next level up from a basic, OCR-based AP automation solution is one with more advanced capture capabilities and application integrations that facilitate further process optimization.

Intermediate level solutions still leverage optical character recognition technology – they just build on it. These solutions use other technologies, like robotic process automation (RPA), to better capture line items and automate purchase order (PO) matching. They also leverage rules-based workflows to pre-match PO invoices and apply default general ledger coding to non-PO invoices, drastically reducing manual data entry.

With the ability to integrate with popular applications, including enterprise resource planning software like NetSuite, SAP, and Microsoft Dynamics, intermediate automated accounts payable solutions drastically improve efficiency. You won’t need to look to another solution or manually convert invoice data to your system of choice.

However, manual work is not a thing of the past with this type of solution. Your team will still be required to manually correct exceptions. And while rules-based workflows reduce data entry for invoice approvers, they can be difficult to manage overtime and, therefore, are not a long-term solution.

Advanced Level: AI-Powered, Human-in-the-Loop Invoice Processing

Want to eliminate as many manual tasks as possible and achieve a 99.95% data accuracy rate, so you can further expedite invoice processing and increase cost savings?

Then, an advanced level AP automation solution is for you.

This type of solution leverages both artificial intelligence and expert business process management services to fill in the gaps left in both basic and intermediate level solutions.

According to the experts who spoke at the Institute of Finance and Management (IOFM)’s August 2023 Virtual Town Hall Meeting, 24% of AP teams have already adopted AI. There are several advantages that likely contributed to these teams’ decision to leverage the technology, including:

• Optimized data capture: AI improves data accuracy through contextual analysis. Solutions powered by AI miss typos and transposed numbers far less often than traditional, OCR-based systems.
• Improved error rate: Duplicate invoices are automatically detected, invoice data is checked against master records, two-way and three-way matching is optimized, and invoice balances are validated with AI-based AP automation solutions.
• Enhanced fraud detection: AI-based solutions have the ability to analyze historical payment data and identify anomalies in invoices, so you can efficiently pinpoint fake invoices, duplicate payments, and any unusual vendor behavior.
• Reduced manual tasks: With the ability to learn how invoices are coded, artificial intelligence technology eliminates the need for manual keying in most instances. It, therefore, gives AP professionals back the time they need for more important work.
• Increased cost savings: In addition to eliminating manual work and, in turn, reducing labor costs, AI-powered invoice processing also minimizes costly errors and overpayments.

And let’s not forget about the role business process management services play in advanced accounts payable solutions. One of the biggest issues with intermediate level solutions is that they can’t effectively handle exceptions.

That’s where a human-in-the-loop approach comes in. With the advanced option, software is used to identify exceptions and experts with substantial experience can resolve most of them on your behalf. In other words, experienced professionals are at-the-ready and are looped in when needed – no additional work required on your end.

Get the Right Accounts Payable Automation Solution

At MetaSource, we take pride in helping each client determine the right level of AP automation for their organization. We continuously enhance our solutions, leveraging the latest technologies and testing new methodologies within our business process management service offerings.

We’ve helped several AP teams across various industries – from healthcare to financial services to higher education – reduce costs by 75%, minimize manual handling by 90%, and expedite invoice approvals by 70%. And we can help you too.

Contact us to get started today or check out our free guide to choosing the best AP automation partner for more information.