3 questions to ask when choosing an AP automation provider

AP Automation Best Practices
  • May 7, 2020
  • Ryan Nelson
3 questions to ask when choosing an AP automation provider

3 questions to ask when choosing an accounts payable automation provider

Now that you’ve determined an accounts payable (AP) automation platform will benefit your company, it’s time to begin evaluating and choosing the right solution. When exploring AP automation solutions, the vendor options may feel endless. But, taking the time to research the right platform will ensure the software addresses your unique needs, mitigates risk, and lives up to your expectations.

During times of uncertainty, particularly like during the COVID-19 pandemic, it’s crucial that your tools and resources are designed to empower remote work and support business continuity. AP automation enables your AP teams to continue to function, from anywhere.

Digging deep into these three questions can help you begin the search process.

1. What does this solution offer?

Your search for an AP automation solution most likely began due to workflow challenges your organization’s hoping to resolve.

To understand how an AP automation solution will address these challenges, you’ll need to begin by pinpointing and defining the current problems and concerns within your AP department’s process. Once, you’ve identified and mapped out the inefficiencies and what causes them, you’ll be able to bring the right questions to your potential vendor.

You’ll want to share all the details and ask a vendor to walk you through how their solution can help solve process issues. If you send your workflow to a vendor ahead of time, they should be able to use this in their demonstration to showcase how their AP automation solution will help solve these specific problems.

Double-check to be sure the vendor isn’t creating workarounds to fit your needs and pinpoint areas where you may need to consider adapting your team’s workflow to the new solution. Regardless, the right AP automation tool will improve your accounts payable processes from start to finish. AP teams should have visibility into the status of an invoice at every step, allowing companies to address bottlenecks, accelerate payments, reduce cost-per-invoice, and improve profitability.

Next, you’ll want to find out what parts of the invoice-to-pay process are included.

Not all AP automation solutions are created equal. There are various solutions on the market that range from simple document scanning and management, to invoice workflow only, to sole payment execution. So, you’ll want to get clear on what’s included in any potential platform and make sure it provides an end-to-end solution. All-inclusive platforms should include invoice capture, invoice routing and approval, data capture, purchase order matching, and payment execution.

2. What does implementation, training, and support look like?

Consider the software

First, it’s important to recognize there are two types of software used: on-premise and cloud-based. On-premise software is installed directly onto a user’s computer. These solutions require an IT department or a consultant to help maintain the system, often require a longer implementation period, and are difficult to keep updated.

Cloud-based solutions are accessed through the Internet, do not require any external support from an IT department, and can be implemented within a few days. Product updates and fixes can be installed easily and almost immediately throughout your entire organization.

Consider the implementation process

You’ll want to assess the implementation, onboarding, and training process. Find out who your point of contact will be once you begin using the system, how your team will get trained after implementation, and what kind of customer support you’ll receive throughout the life of the service when you have questions or issues. You’ll want to be sure you can reach your customer service contact easily without any extra fees or charges.

Consider how a solution integrates with your accounting solution

Not all AP automation solutions will automatically synchronize with your accounting system, so be sure to ask if a vendor’s system includes API-level integration that allows for two-way sync. Two-way synchronization ensures invoice and payment data flows back and forth between the accounting system and the solution. If a vendor uses file-based integrations, beware: these require manual work on your end to export and import files and can be difficult to implement.

Two-way API-level integrations will also allow companies to leverage data from the ERP system regarding vendors, purchase orders, and receiving. AP automation solution worth your time should integrate with your current accounting or ERP system. So, think twice about a solution that requires migration to a new central platform.

Consider how payments get processed

Make sure to specifically ask if the vendor uses a settlement account or if payments come directly from your bank account. Some AP automation providers use settlement accounts to withdraw funds from your bank account. After being immediately withdrawn, your money sits in a settlement account before payment is released to your vendor, which allows the AP automation provider to earn interest on your money. When the payment is processed, your vendor will receive a check with your solution provider’s information, not yours. Settlement accounts make it difficult to track payments and can also cause reconciliation issues. Additionally, certain industries, like non-profits, can’t accept payments from settlement accounts.

3. What kind of return on investment will this solution provide?

You’re probably asking, “What are the true savings and costs of this solution?” Vendors typically provide AP automation implementation services in one of two ways: a time-and-materials or fixed-fee basis. A time-and-materials basis means the client will pay for actual services used on an hourly or daily basis. A fixed-fee basis means the client will pay a fixed fee for a specific scope of work.

An AP automation solution provider must have a strong team of experienced people and extensive knowledge of the AP solution services being implemented, including your specific needs, in order to offer a fixed fee. They must also be able to provide ERP system syncing solutions and a proven methodology that delivers predictable results.

Whether using time-and-materials or fixed-fee basis pricing, you’ll want to understand and be clear on:

  • All the cost line items
  • Charges by invoice and payment quantity
  • Charges for document storage for single and multiple users
  • What happens if you exceed your monthly invoice and payment allowance
  • Pricing tiers in case your company grows creating larger invoice processing volume.

You’ll also want to understand your own company data. Here’s a resource to help you determine your own cost-per-invoice.

Don’t forget!

There are many different AP automation vendors in the marketplace. Make sure you take the time to explore these multiple options so you can understand the differentiating features and determine the best fit for your organization. When you’ve found the right vendor, be sure to ask if they will help you build a business case for your management team. The answer should always be “Yes!”. Vendors should also be able and willing to provide a comprehensive demonstration of their software along with a trial or pilot period.

Just remember you have options! Your solution should provide a clear return on investment, help solve your workflow issues, and grow with your business. So, don’t settle for a vendor that doesn’t meet your needs.

A complete guide to AP automation

The average AP workflow is full of manual, time-consuming, hands-on tasks. Imagine how much easier tracking and amplifying AP performance would be with automated workflows & processes. To learn more about how automated AP processes can save your company both time and money, download our complete guide to AP automation.

Rethink what AP can be

Ryan Nelson

Ryan Nelson is the Co-Founder and CEO of Goby. He has over 20 years in enterprise software and management consulting experience, including supply chain software implementation and process optimization for fortune 50 companies. Since 2009, Nelson has been focused on turning big data into big opportunities at Goby.

Sign up for the Goby Mailing List!