AP automation, also referred to as Accounts Payable Automation, involves employing software to automate either the entirety or a segment of the accounts payable process. By digitizing the techniques employed in receiving, processing, and managing vendor invoices, it aims to enhance the effectiveness of the accounts payable workflow.

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This overview will focus AP Automation Market’s impacting factors, challenges, and key trends.

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Market Overview snapshots

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According to ReportLinker’s report in March 2023, The Global Accounts Payable Automation Market size is expected to reach $5.3 billion by 2028

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Deployment method:

The accounts payable automation market is divided into on-premise and cloud options. In 2021, the cloud category held a substantial portion of the revenue within the accounts payable automation market. This is attributed to the capability of cloud-based automation tools for AP to assess and present insights about accounts payable divisions.

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Through these tools, management can access valuable data concerning the efficiency of their AP workflow and the extent to which their team adheres to best practices, including invoice processing duration and automation utilization. With real-time data delivery via the cloud, businesses can leverage current operational information to make critical decisions and accurately assess the repercussions of these adjustments.

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Company size:

The accounts payable automation market is segmented into large enterprises and SMEs (small and medium-sized enterprises). The significant portion of revenue in the accounts payable automation market was captured by the large enterprises category.

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This is primarily due to the pivotal role accounts payable play in building and upholding trust with suppliers and creditors, particularly in small businesses. A well-functioning accounts payable process can potentially lead to forthcoming cost savings and benefits for the company. The significance of accounts payable lies in its potential to assist the company in saving money, as numerous vendors extend discounts to customers who settle their payments promptly.

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Component:

The accounts payable automation market is split into solution and service categories. The solution sector took the lead in the accounts payable automation market by generating the highest portion of revenue.

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This can be attributed to the automation of the company's accounts payable procedures and the streamlining of its operational framework. Consequently, the finance department can efficiently manage invoices across various financial systems that cover multiple departments, nations, languages, and currencies. This leads to reduced costs, expedited payment timelines, reduced employee engagement, heightened control, and improved supplier connections.

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Key players

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 Related: Accounts Payable Automation Market Size, Unveiling the Potential Scope for 2023-2030

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Regions

• North America  (U.S., Canada)
• Europe  (UK, Germany, France, Italy, Spain, Rest of Europe)
• Asia-Pacific  (China, Japan, India, Australia, South Korea, Rest of Asia-Pacific)
• LAMEA  (Latin America, Middle East, Africa)

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The largest market share for accounts payable automation was achieved in North America. This accomplishment can be attributed to the region's users actively pursuing accounting solutions that are customized to their individual requirements, rather than opting for generic accounting software. Additionally, businesses in this area are consistently enhancing their software and applications to align with the ongoing trend of digitization.

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Industry

• Consumer Goods and Retail
• IT and Telecom
• Manufacturing
• Healthcare
• Government
• Other
• BFSI

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Market Growth Factors

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The increasing demand to digitize financial audit operations

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Businesses that employ AP automation have a competitive edge and enabling AP departments to focus on strategic activities like identifying cost-saving opportunities. They can achieve this through the use of advanced, user-friendly software for automating AP processes. Many companies rely on this digital automation to expand financial operations, enhance vendor supply chain security, boost efficiency, free up cash, and gain insights into corporate expenses. As a result, the market for accounts payable automation is growing due to the heightened need for digitizing financial audit procedures.

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The increasing demand for accelerated payment procedures.

This system streamlines payments, maintains vendor relationships, and ensures precise approval, allocation, and expenditure control from invoice creation to receipt. It's easily integrated with ERP for enhanced flexibility and efficiency. Accounts payable automation ensures operational efficiency through dashboards, compliance regulations, routing rules, and approvals, further fuelling its market growth.

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Other factors

• The growing requirement to decrease paper usage in invoices for the purpose of environmental sustainability
• The increasing request for quicker payment procedures and streamlined payment approaches
• Government endeavours to promote automation and digitalization are playing a role in amplifying market growth for accounts payable automation.

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Challenges

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Little awareness of the benefits of AP automation.

In emerging economies, there is a limited understanding about the advantages of AP automation, along with a lack of recognition regarding its benefits. This presents a significant challenge for the market. The global accounts payable automation market is projected to face obstacles due to inadequate awareness about the digital landscape and insufficient knowledge about the benefits associated with accounts payable automation.

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Data breaches and cyberattacks

With manual tasks, human errors can result in unintended sharing of sensitive information or weak password usage. Mistakes such as revealing passwords, account details, or falling for phishing scams contribute to security vulnerabilities. Therefore, data breach and security concerns are anticipated to hinder the growth of the accounts payable automation market.

Related: Accounts Payable Automation Market Outlook (2022 to 2023)

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Key Trends

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AI is at the core of enhancing Accounts Payable automation processes.

Integrating AI into AP automation systems reduces the need for manual tasks like data entry, invoice matching, and routing. Combining Machine Learning (ML) with Optical Character Recognition (OCR) technology facilitates efficient document categorisation and data extraction. Touchless payments, supported by software, streamline the process further. For instance, a small publishing firm processing 1,000 invoices annually can use OCR and ML to automate data extraction and approvals, enabling payments without manual intervention. Although high-value invoices require some review, this approach saves time and money for AP departments, enhancing vendor bill processing and payments.

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ERP and AP automation systems are converging for efficiency.

Businesses utilise enterprise resource planning (ERP) systems for operations, including accounting. Integrating AP automation with ERP avoids redundant data entry. This practice enhances AP automation and other payable processes. This integration ensures timely ingredient delivery, accurate invoice matching, and prompt supplier payments, fostering strong supplier relations.

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Immediate reporting enhances the significance of Accounts Payable automation.

The extensive data within an accounting department's AP records holds valuable insights for the broader business. Utilising analytics from Accounts Payable data and software, especially generated through automated processes, can enable various departments to pinpoint areas requiring focus. For example, these analytics might assist the accounting department in predicting impending cash flow issues, assist procurement in identifying price hikes and transitioning to extended contracts, or highlight shifts impacting travel and entertainment expense policies in times of economic decline.

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Cloud technology enhances Accounts Payable operational effectiveness.

Numerous enterprises have adopted cloud technology, where hardware maintenance and system oversight are often outsourced to service providers. Consequently, many companies require fewer in-house IT experts, resulting in cost reductions. Additionally, cloud-based systems commonly offer mobile interfaces and accessible dashboards, enhancing convenience for Accounts Payable automation tasks and boosting productivity, even in remote settings.

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AI takes control over Accounts Payable security.

Given that Accounts Payable team is a critical and primary business department that responsible for payment distribution, it becomes a frequent focal point for cyberattacks and fraudulent endeavours.
AI has the capability to detect anomalies in invoice patterns and signal the need for document scrutiny. Another emerging method of control that Accounts Payable departments are beginning to adopt involves virtual credit cards. These cards are swiftly generated and designed for secure transactions.

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Mobile and Automated Payments Can Foster A Good Relationship between Suppliers and Businesses

Smaller enterprises might face challenges in staying competitive in the market. However, they can bridge this gap through an alternative approach: establishing a track record of early or on time payments. By reliably paying vendor invoices, the business not only earns supplier recognition but also opens the door to potential early-payment discounts. These possibilities provide Accounts Payable departments extra incentives to explore automated payments and leverage the available intelligent technologies.

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Moreover, certain suppliers might prefer receiving payments through platforms such as Venmo or Google Pay. Embracing diverse payment methods offers Accounts Payable team an additional means to establish themselves as prompt and trustworthy payers.

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Related: 10 Accounts Payable Automation Trends to Watch in 2023

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Over the next several years, there will be a significant increase in the adoption of AP automation solutions. Numerous enhancements, such as touchless payments, will be driven by artificial intelligence and machine learning. Additionally, technology will play a crucial part in enabling AP departments to identify duplicate or fraudulent invoices, minimising the risks of online theft and unauthorised transactions. The implementation AP automation has the potential to alleviate certain issues that have contributed to strained supplier relationships.