For decades, most organizations relied on traditional accounting workflows, especially in managing accounts payable (AP) and accounts receivable (AR). Processes such as paper invoices, manual data entry, printed receipts, and physical approvals were the standard methods used to track transactions, verify payments, and record incoming revenue.
However, as industries continue to shift and clients’ needs are becoming more complex, these long-standing manual systems are no longer enough to sustain the volume of work and the level of accuracy that every organization now requires.
In fact, research conducted by the Institute of Financial Operations & Leadership (IFOL) said that 52% of AP professionals still spend over ten hours a week processing invoices, while 60% of teams manually key invoices into their accounting software.
The numbers above only show a closer look to how much time and effort professionals are still allocating to manual processes. In addition, relying heavily on manual workflows not only slows down the entire approvals but also increases the risk of errors and operational strain across both accounts payable (AP) and accounts receivable (AR) functions.
Below are more reasons why manual AP and AR processes are no longer sufficient:
One of the reasons organizations must not rely on manual processes is that paper or email-based invoices require constant follow up, and sometimes they can get unattended in someone’s inbox, which can slow down the entire process.
On top of that, manually tracking incoming payments often leads to late collections, which can affect the cash flow of the organization.
Manual entry increases the chances of duplicate payments, incorrect amounts, or missing transactions.
Having no centralized system within the organization can be a challenging part for both AP and AR teams, as it becomes difficult to track invoice status, monitor incoming payments, identify bottlenecks, or forecast upcoming payables and receivables.
Another thing you should be aware of is that manual AP and AR processes often lead to delays in paying suppliers or collecting payments from customers. These delays can frustrate vendors, harm negotiations, and even result in late fees or disrupted supply chains.
On the AR side, slow follow-ups on outstanding invoices can affect cash flow and customer trust. With these inefficiencies, it can create friction and damage the organization’s reputation, making manual processes insufficient for maintaining healthy business relationships.
Lastly, every extra hour spent on manual work can quickly add up to labor costs that could be avoided with a structured automation process.
Now that we understand the challenges of manual processes, it’s important to see how automation can change the way organizations manage the process between accounts payable (AP) and accounts receivable (AR).
AP and AR automation uses technology to streamline the workflows that were traditionally done manually. So instead of relying heavily on paper documents, manual data entry, or email reminders, automation can then centralize everything into one system, helping both teams to work faster and gain better visibility across all transactions.
Here’s how automation works for both AP and AR:
Manual workflow: Invoices typically arrive through paper or email. The AP team then enters the details manually, follows up approvers individually, and monitors payment schedules using spreadsheets or email threads. This setup often leads to delays, duplicated work, and limited visibility.
Automated workflow: With the help of the AP team, invoices can be captured digitally from the start. The system then automatically matches them with purchase orders, routes them to the right approvers, and schedules payments automatically, helping the team to have clearer oversight of the AP cycle.
Manual workflow: Invoices are created and sent manually, often through email or printed copies. The AR team then tracks due dates, follows up with customers one by one, and updates records across spreadsheets or a dedicated separate system. This makes it harder for the team to track outstanding balances or spot delays early.
Automated workflow: By using automation, invoices are generated and sent digitally by the AR team. The system then records due dates automatically, sends reminders to customers, and updates payment status in real time. This helps the AR team monitor collections more efficiently and reduces the chances of missed or delayed payments.
If you are planning to go beyond manual bookkeeping, here’s a step-by-step guide to automating both your AP and AR functions.
Before introducing automation within the organization, the first step you should do is to make sure to document your current processes, such as:
Mapping out your current workflows will help you identify bottlenecks, delays, and errors that automation can address, providing a clear starting point for improvement.
After mapping out your workflows, you can proceed to converting paper invoices, bills, or printed receipts into digital format. This helps keep everything organized in one place and reduces the risk of lost documents or manual entry errors.
Another important step is to establish automated pathways for your organization’s approvals (AP) and collections (AR).
Having these kinds of processes helps both teams to reduce delays and keeps both processes efficient.
To make collections as smooth as possible, you may consider enabling multiple payment methods such as bank transfers, credit cards, online payment links, or QR codes. Giving clients easier payment options often leads to faster settlement times and fewer overdue balances.
Another key step is to integrate your automation system with your accounting platform such as QuickBooks, Xero, or NetSuite. This keeps your books updated in real-time and reduces the need for manual journal entries across AP and AR records.
Make sure to take advantage of dashboards and reporting features. These tools will allow you to track:
With better visibility, finance teams can easily spot bottlenecks and make informed decisions.
For repeat vendors and clients, consider automating recurring invoices or schedules of payments.
Lastly, make sure your automation system includes built-in controls that flag issues like mismatched invoice amounts or unusual transactions. Audit trails should also record every approval, update, or payment, which then helps with compliance and makes internal reviews easier.
Once you’ve mapped out and prepared your workflows, the next step is to choose the right automation tool that fits your team’s needs. Here are the key features you should look for:
A key feature to look for in a tool is its ability to capture data or important documents automatically. This is especially helpful for AP invoices and AR billing documents.
Key points:
Each company has its own approval setup. One way to manage this better is to use a tool that lets you:
This helps keep things moving without constant follow-ups.
A good tool should give you a clear view of what’s happening, such as:
This helps your AP and AR teams stay on top of tasks and make faster decisions.
Automation should help your team, vendors, or clients know when action is needed. A good tool can:
A good AP and AR tool should automatically check that invoices match purchase orders, receipts, or payments. This helps:
The tool should make payments easy and safe for both AP and AR. Look for options that:
Your AI tool should work seamlessly with your current accounting software. This helps:
Finally, a good tool should make it easy to understand what’s happening. Look for features that:
Implementing automation can be a big change for your finance team, but a thoughtful approach makes it much easier and more effective.
One effective way to implement automation successfully is to involve your AP and AR team early in the process. Share the plan with them, ask for their input on current pain points, and listen to their ideas for improvement. This not only reduces resistance but also ensures the system addresses real challenges your team faces.
As mentioned above, before rolling out any automation, make sure to document your existing AP and AR workflows. Identify where bottlenecks occur, which tasks are repetitive, and where errors often happen. Having a clear picture of your current processes helps you set up automation in a way that truly addresses your team’s challenges.
Selecting the right system is the most important thing you can do. Look for a tool that fits your organization’s needs without including overcomplicated features that your team may never use. Focus on solutions that simplify workflows and make both AP and AR processes easier to manage.
Even the best system won’t work if the team doesn’t know how to use it. Provide hands-on training, walk them through the new workflows, and make sure everyone understands their responsibilities in the automated process.
In the case of D&V Philippines, we have a dedicated team called the Excellence Team, which creates practical, work-based learning programs scheduled throughout the year. These sessions help employees improve their skills and give new hires the confidence to grow, adapt, and eventually mentor others.
Alongside this, our IT Department reinforces the responsible use of automation and AI through mandatory, companywide AI utilization training. This ensures teams understand how to use AI-enabled tools properly, follow internal guidelines, and apply automation in a way that supports accuracy, security, and compliance.
It’s best to pilot test the automation tool with a small team or a subset of invoices first. This lets you test workflows, approvals, and payment processes without overwhelming your team. Once everything is running smoothly, you can gradually expand to cover the entire AP and AR processes. Starting small reduces mistakes and builds confidence among your staff.
After implementing automation, it’s important to keep an eye on how things are going. Track key metrics like invoice processing time, payment delays, and error rates. Regularly reviewing dashboards helps you spot issues early and make adjustments to workflows or system settings. Continuous monitoring ensures the automation delivers consistent results.
Finally, keep your vendors and clients in the loop. Let them know about automated invoicing, payment reminders, and digital payment options. Clear communication reduces confusion, improves relationships, and ensures that everyone adapts smoothly to the new system.
Modernizing and implementing AP and AR automation may seem like a big step, but with a clear plan, the right tools, and proper training, your organization can achieve significant benefits such as saving time, reducing errors, and giving your team the space to focus on strategic growth.
Are you looking to modernize your AP and AR processes or integrate automation into your accounting workflows? Partnering with a finance and accounting outsourcing provider that stays up to date with the latest technology trends can make all the difference.
If you want to know more, contact us today and we’ll help you with scalable solutions perfect for your company.
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