Your accounts payable journal is a link between your invoicing system and your purchase ledger. You need to record all of the purchases that your company makes and identify how much is owed at any point in time. This helps you to plan your cash better and identify how much you are going to need to pay your bills and when you need to pay them. Once an invoice is paid, it ceases to be accounted for in accounts payable.
So, accounts payable is always changing. It is a live record of your short-term obligations. It is not a reflection of the value of your inventory and it is not a complete preview of how much you are going to have to pay out. This is because a purchase only gets recorded in AP once the invoice arrives. So, you can expect the arrival of goods with a Purchase Order and receive the goods. However, if the invoice does not arrive with the goods, you are not yet ready to record in AP.
There will always be an amount in AP because you will always have invoices in the system that have not yet been paid. When the end of the year arrives, there will still be unpaid invoices in the system. This is when it is particularly important to have an accurate up-to-the-minute record of your AP balance because it will appear on your balance sheet.
Here is our list of the six best accounts payable automation software:
- Tipalti: Best accounts payable automation software for multinationals. A SaaS AP automation package that includes invoice management and a payment platform for multiple currencies.
- Oracle NetSuite: Best accounts payable automation software in a cloud ERP. This is one of the best enterprise resource planning (ERP) systems on the market. It is delivered from the cloud and includes business process support plus a built-in accounting package.
- Redwood Finance Automation: Best accounts payable automation software all-rounder. A cloud-based orchestration system that extracts data from your existing business process software, checks and transforms it, and then inserts journal entries in your accounting package.
- Lightyear: Best accounts payable automation software for SMEs. The package is delivered from the cloud and includes purchase-to-payment functions that can insert journal entries into third-party accounting packages.
- Intuit QuickBooks: Best accounts payable automation software for sole traders. Business management and accounting package for busy individuals who know nothing about accounting.
- Dolibarr: Best accounts payable automation software that is free to use. A free on-premises package that includes an ERP system and an accounting package in one bundle.
You can read more about each of our recommenced solutions in the following sections.
The importance of automated accounts payable
Many businesses are disorganized. In the case of small businesses, this is usually because the owner-operator is very focused on core activities and sees paying bills and writing up the accounts as an annoying distraction. Even large companies can be bad a managing their accounting process and this will be because the different departments of the organization don’t move information along quickly enough.
It is important to know the value of goods that you have on order, when they will arrive, and when you should expect to pay for them. If you don’t keep track of these upcoming liabilities, you risk the possibility of not having enough money in the bank to pay for your purchases.
Businesses that have thin margins need to rely on fast turnover to improve profit. Therefore, if you are over-cautious about ordering supplies in a pipeline, you would not be optimizing your opportunities and you could also run out of supplies. Having accurate knowledge of how much money you have in the bank and how much you should have over the next month helps you to create a smooth flow of activity in the business that will keep the company viable. Therefore, knowing how much you owe on unpaid invoices is vital to the ongoing profitability of your business. That means you need to keep AP constantly up-to-date and automation is the best way to achieve that.
The best accounts payable automation software
Account payable automation gives you live updates on your obligations to unpaid invoices. These packages are usually also able to demonstrate the position of all invoices and how they flow through to the accounts.
What do we look for in the best accounts payable automation software?
When looking for the best automated AP compilation systems, we prioritized the following factors:
- SaaS platforms – Systems that are offered from the cloud include hosting and temporary storage space. These features make running the AP software a lot easier and the ease of integrating these of accessing cloud-based dashboards through any standard Web browser makes getting users access to the new system very easy.
- Automated journals – A key need from an AP automation system is the ability to scrape data from business process software and use it to automatically generate AP journal entries.
- Payment tracking – The AP automation system should be able to identify when payments on invoices are made so that it can adjust AP and other journals in the accounts immediately and give a constantly updated position.
- Security – Protection for data at rest and in motion is very important, particularly for cloud-based systems that will be transferring all data across the internet. Individual accounts for activity tracing are also needed.
1. Tipalti
Best accounts payable automation software for multinationals
Tipalti is a cloud-based invoice processing system that is joined to a payment processing service. The tool can interface with purchasing systems and accounting packages to match invoices before automating payments. The arrival of invoices and the payments related to them have registered automatically in your AP journal.
The payment processing service in Tipalti is its core strength. It can manage international payments in many currencies, so if you have branch offices overseas, you can control their financial activities from one central location. Being in a different country doesn’t slow down the payments for services and goods. This feature would revolutionize and simplify the operations of international businesses, particularly those that deal with import and export.
A great feature of the Tipalti system is that you can hedge currency movements. This means that you can fix your exchange rate for the year, which greatly simplifies consolidation or reporting for businesses that deal with multiple currencies.
As Tipalti manages all of your payments, you can get a live report on your cash position at any time. The system is also able to present a schedule of obligations from unpaid invoices, so you can forecast your cash position for the short term. The Tipalti system’s cloud position allows planning and accounting teams to collaborate across borders, so expansion of a new overseas branch gets a lot easier. The tool is particularly useful for growing international businesses and enables them to exploit the best deal for supplies.
The Tipalti system interacts with ERP systems and accounting packages.
2. Oracle NetSuite
Best accounts payable automation software in a cloud ERP
Oracle NetSuite is an ERP system that is delivered from the cloud. This package supports business processes and stores all transaction data in a central database. This enables outputs from one department to be input to another. Thus, data is flowed from purchasing and inventory to invoicing to enable three-way matching and invoice data can automatically populate the accounts.
The NetSuite system allows for individual accounts to be created for each employee in the business. Each user account is allocated to a group, which dictates the screens that the user can access and the level of actions that can be performed. User accounts are also organized into an approvals hierarchy.
The integration of all company functions and data makes compiling the books an automated process. AP is automatically updated when invoices arrive and when they are paid. That data flow continues through to account reconciliation. It is possible to close each month and that makes year-end closing a lot easier.
The NetSuite system can be automatically adapted to different accounting standards, enabling it to operate in different countries by local tax regulations. Multinationals can use one NetSuite account to supply ERP and accounting functions for all of their branches. This eases the process of account consolidation for parent company financial reporting.
3. Redwood Finance Automation
Best accounts payable automation software all-rounder
Redwood Finance Automation is an orchestration system. This means that the package interacts with other software packages. The orchestration strategy enables Redwood to run other software, feeding in parameters, and then extracting data from it. This is a sophisticated bach job script creator and you can use it to automate any process by running existing software in sequence.
The Finance Automation system is pre-written to deal with financial processes. In the sphere of AP, this means accessing invoicing, purchasing, and inventory management systems to check on the validity of arriving invoices. The system can also implement an approvals hierarchy, which means that it can automatically flag invoices for payment.
Once invoices have been registered in your invoice management system, the Redwood automation platform will insert AP journal entries in your accounts. When payments are made, Redwood will reflect that action in your AP journal.
The ability of Redwood to search through business process systems enables it to check all accounts and generate journal entries to automate the account reconciliation and closing process. The system automates all that can be done in matching transactions to journals, notifying accounts department staff of the few entries that need to be dealt with manually. The system is also able to consolidate accounts for parent company reporting.
Redwood Finance Automation is a SaaS platform. It can interact with software on any site, so it can be used to unify the accounts of many divisions behind the scenes. The cloud location of the system also makes it ideal for businesses that include home-based accounting professionals.
BEST ACCOUNTS PAYABLE AUTOMATION SOFTWARE ALL-ROUNDER:
Redwood Finance Automation is a smart choice because it extracts data from third-party packages, processes that information, and generates journal entries. This system will constantly adjust AP to match the events that get recorded in business process support systems.
4. Lightyear
Best accounts payable automation software for SMEs
Lightyear is a cloud-based platform that supports purchasing and accounts payable. It automates the data flow between those two functions while providing data entry services to business departments. Lightyear doesn’t include an accounting package. However, it can perform matching and approval support to automate invoice validation and generate AP journal entries to insert into third-party accounting systems.
The Lightyear package is ideal for SMEs that rely on operatives working out permanently in the field. It is also good for companies that operate a virtual office and ditch the costs of running premises by connecting home-based workers.
The Lightyear platform includes analysis and forecasting services that enable companies to plan their cashflows, purchases, and short-term debt obligations. It can be deployed for many company branches, automatically centralizing corporate cash flow data.
The system can interface with QuickBooks, Sage, Xero, NetSuite, and other accounting packages. Choosing an online accounting system heightens the benefits of working with the Lightyear cloud platform.
The Lightyear service is offered in three packages, which makes it suitable for different types of business. For example, companies that don’t handle goods won’t need the Inventory Management module. The Lightyear platform is available for a 30-day free trial.
5. Intuit QuickBooks Online
Best accounts payable automation software for sole traders
People who work independently or start up their businesses can often be solely responsible for administering a company while still trying to maximize working hours to pull in more income. Something’s got to give and it is very common for owner-operators to let business administration slide while they prioritize exploiting their key skills.
Intuit QuickBooks is designed for owner-operators because it fronts its accounting package with a business administration system. The tool is accessible through a Web browser or mobile apps.
Invoice management is an important element in the QuickBooks system. It doesn’t take much time for operators to enter invoice details and the system can be linked to the business bank account. Paying bills can be implemented with the touch of a button. While Intuit presents these functions to the user, it silently interprets activity into journal entries. So you get a mini-ERP and an integrated accounting package with the QuickBooks Online deal.
The QuickBooks system can exchange data with major eCommerce systems, such as Shopify and PayPal to create further data processing automation.
6. Dolibarr
Best accounts payable automation software that is free to use
Although our search criteria for the best accounts payable automation software states that cloud platforms are preferable, we have included an on-premises system for those who prefer not to use SaaS systems. Dolibarr runs on Windows or Linux and includes an ERP and an accounting system as well as HR, CRM, and Web management services.
With the ERP and accounting services bundled together, Dolibarr can automatically flow purchase-to-pay data into the books. This creates automatically updated AP journals. The bundle includes a vast number of data entry screens. It can be networked to allow access from anywhere in the business – even across the internet. Each user gets access through an individual account, which controls the screens that can be seen and the data that can be inserted or modified. All actions are logged.
The main attraction of Dolibarr is that it is completely free to use.
