Accounts payable workflow

Every day, invoices arrive via email, mail, and fax. Your AP team processes each one, verifies details, routes for approval, and sends payment. It sounds simple, but with 80% of companies expecting invoice volumes to increase and nearly half reporting invoices are getting more complex, inefficient workflows create costly bottlenecks.

The accounts payable workflow refers to the complete end-to-end process of obtaining goods and services and the processing and payment of the invoices related to those transactions. It outlines exactly what everyone in the procure-to-pay process needs to do when an invoice arrives and moves through to payment.

What is Accounts Payable Workflow?

Accounts payable workflow lists the steps finance teams follow every time a company receives an invoice from a supplier. It's an end-to-end process from procurement to payment (P2P), including invoice processing, verification, approval, and payment tasks. The workflow can be manual or automated, with automated processes removing tedious manual work while building in control points that are important to CFOs and controllers.

Manual vs Automated Accounts Payable Workflow

Manual AP Workflow

Manual workflows require humans to initiate and carry out each step. This includes:

• Manual data entry of invoice information
• Physical routing of documents for approval
• Manual verification and matching processes
• Paper-based payment processing

Automated AP Workflow

Automated processes leverage technology to streamline operations while maintaining necessary controls. Features include:

• Automated invoice capture using OCR technology
• Digital approval routing based on predefined rules
• Automated three-way matching
• Electronic payment processing

Steps in the Accounts Payable Workflow

1. Invoice Capture and Coding

How an invoice is captured depends on how it is received. Invoices received via mail, email, or fax need to be entered into the ERP system. This involves capturing key data including:

• Invoice number and date
• Vendor information
• Line items and amounts
• Payment terms
• Tax information

Automated Solution: AP automation software incorporating optical character recognition (OCR) and machine learning can scan, GL-code, and digitize invoices automatically upon receipt.

2. Invoice Verification

After invoice data entry, teams must verify the invoice details to confirm it's for a valid purchase. This typically involves three-way matching:

• Purchase Order (PO)
• Shipping receipt/delivery confirmation
• Supplier invoice

Automated Solution: Automated three-way matching can perform real-time verification on every invoice, flagging mismatches or missing documents for investigation.

3. Invoice Approval Process

Once verified, invoices are routed for approval based on:

• Invoice amount thresholds
• Department or cost center
• Vendor type
• Custom approval rules

Automated Solution: Digital approval workflows can automatically route invoices to appropriate approvers with escalation rules and reminder notifications.

4. Payment Authorization

After approval, payments require separate authorization, typically involving:

• Payment run preparation
• Batch authorization by controller or CFO
• Final payment approval

Automated Solution: Automated payment batching and approval workflows streamline authorization while maintaining financial controls.

5. Payment Execution

The final step involves actual payment processing through various methods:

• Checks (33% of organizations use checks for over half their payments)
• ACH payments
• Wire transfers
• Virtual cards
• Digital payments

Automated Solution: Electronic payment processing with automated routing, retry mechanisms, and integrated reconciliation.

6. Vendor Management

Integrated throughout the workflow, vendor management includes:

• Vendor onboarding
• Payment preference management
• Communication and inquiry responses
• Performance tracking

Why is Accounts Payable Workflow Important?

Efficiency and Cost Reduction

The AP workflow focuses on efficiency, transparency, and accountability. Streamlined workflows enable faster invoice processing and supplier payments. The average cost of processing an invoice manually is $15, while automated systems can reduce this significantly.

Error Reduction and Fraud Prevention

Manual processes are error-prone, with about 39% of invoices containing errors. Automated workflows with built-in validation help prevent:

• Duplicate payments
• Data entry errors
• Fraudulent invoices
• Unauthorized transactions

Scalability and Growth Support

As businesses grow, manual processes become bottlenecks. In a fully automated system, an accounts payable FTE can handle 23,333 invoices per year, whereas a manual process limits that to just 6,082 invoices annually.

Vendor Relationship Management

Efficient AP workflows improve supplier relationships through:

• Faster payment processing
• Transparent communication
• Reduced payment inquiries
• Better terms negotiation opportunities

Accounts Payable Workflow Statistics

The AP automation landscape is rapidly evolving with significant efficiency gains:

• 60% of organizations manually key invoices into ERP systems, down from 85% in 2023 (SAP Concur)
• 52% of AP professionals now spend fewer than 10 hours per week processing invoices (SAP Concur)
• Global accounts payable automation market projected to reach $17.05 billion by 2032 at 13.9% CAGR (Allied Market Research)
• Two-thirds of finance professionals expect full AP automation by 2025 (NetSuite)
• 41% of organizations have automated invoice approval workflows (DocuClipper)
• Average manual invoice processing time is 14.6 days (DocuClipper)

Common Challenges in AP Workflow

Manual Data Entry and Human Error

68% of organizations still manually input invoices into ERP systems. Manual processes are prone to errors, with humans making mistakes in data entry, coding, and processing.

Missing and Lost Invoices

When invoices arrive via multiple channels (mail, email, fax), they can easily get lost or delayed, leading to late payment fees and strained vendor relationships.

Approval Bottlenecks

Traditional approval processes create delays when:

• Documents sit in physical inboxes
• Approvers are unavailable or traveling
• Email approvals get overlooked
• Multiple approval levels cause delays

Scaling Problems

Manual workflows don't scale well with business growth. 61% of organizations that invested in AP automation could process more invoices with the same team size.

Physical Document Storage

Paper-based processes require physical storage space and make documents difficult to search, access, and secure against damage or loss.

Multiple Payment Methods

Managing different payment methods manually creates complexity and inefficiency, especially when vendors prefer different payment formats.

Benefits of Streamlined AP Workflow

Operational Efficiency

Automated AP workflows can reduce processing times by 60-70%, enabling:

• Faster invoice processing
• Reduced manual effort
• Improved accuracy
• Better resource allocation

Financial Benefits

• Capture early payment discounts
• Avoid late payment fees
• Improve cash flow management
• Reduce processing costs

Enhanced Security and Compliance

• Automated fraud detection
• Complete audit trails
• Regulatory compliance support
• Secure document storage

Strategic Value

Moving from manual to automated processes allows AP teams to focus on:

• Data analysis and insights
• Vendor relationship management
• Strategic financial planning
• Exception handling and optimization

Mysa's Smart AP Workflow Solution

Mysa transforms traditional accounts payable workflows through intelligent automation designed specifically for Indian businesses:

Automated Invoice Processing

• AI-powered OCR for instant invoice capture
• Automatic GST and TDS validation
• Intelligent data extraction and coding
• Real-time duplicate detection

Smart Approval Workflows

• Customizable approval rules based on amount, vendor, or department
• Mobile-enabled approvals for remote accessibility
• Automated escalation and reminder systems
• Multi-level approval support

Integrated Payment Processing

• Automated vendor verification across 700+ banks
• Smart payment routing (IMPS, NEFT, RTGS)
• Real-time payment tracking and notifications
• Automatic reconciliation with bank statements

Compliance and Audit Support

• Built-in GST compliance and TDS management
• Complete audit trails for all transactions
• Automated regulatory reporting
• Fraud detection and prevention

Key Benefits:

• Reduce invoice processing time from days to minutes
• Eliminate manual data entry and errors
• Ensure 100% GST and regulatory compliance
• Improve vendor relationships through faster payments
• Gain real-time visibility into AP operations

Transform your accounts payable workflow from manual complexity to automated precision with Mysa's comprehensive solution.

Conclusion

The accounts payable workflow is the backbone of financial operations, directly impacting efficiency, vendor relationships, and business scalability. As organizations face increasing invoice volumes and complexity, automated workflows become essential for maintaining competitive advantage.

Modern AP automation solutions eliminate bottlenecks, reduce errors, and free finance teams to focus on strategic activities. With two-thirds of finance professionals expecting full automation by 2025, the transformation of AP workflows is not just a trend—it's a business necessity.

Ready to revolutionize your accounts payable workflow? Book a demo with Mysa today and discover how our intelligent automation platform can transform your AP operations while ensuring compliance and control.