Guide
Accounts payable automation: the steps, what AI can do, and how to measure first.
Accounts payable (in the UK often called the purchase ledger) is how a business handles the invoices it owes. Accounts payable automation means software does the repeat steps, such as reading an invoice and drafting its coding, and a person keeps the decisions. This page is for the finance lead or owner of a small business, and for small accounting practices, in the UK and the US.
We are not a software vendor and we name no products. Software vendors rank their own tools, and most pages on this topic are their lists. This page tells you what the process is, where AI helps, and how to count your own time before you spend money.
What is accounts payable automation?
It is the path of a supplier invoice from arrival to payment, with software handling the repeat parts. The path has five steps.
- Capture: the invoice arrives by email, upload or post and its details are read into a record.
- Matching: the invoice is checked against the order, the delivery or what you expect from that supplier.
- Coding: the cost is assigned to an account, a department or a client.
- Approval: the right person agrees that the invoice is correct and should be paid.
- Payment run: approved invoices are paid on their due dates.
Software vendors sell the whole path as one product. You can also automate single steps. Which is right for you depends on where your hours go, which is covered below.
Which steps can AI draft reliably today, and which need a person?
Reliably means the step repeats, the rules can be written down, and a person checks the result. By that test the split looks like this.
- Capture: AI reads supplier, date, net amount, tax and total from invoices in different layouts. Draft, then checked.
- Matching: AI compares supplier and amount with what you expect and flags a possible duplicate. Anything that does not match goes to a person.
- Coding: AI proposes the account from your past postings. A person confirms. New suppliers need a person.
- Approval: software can route the invoice to the right approver and send a reminder. The approval itself is a person.
- Payment run: a person releases it. A changed bank account on an invoice should be confirmed with the supplier, by a person, using contact details you already hold.
The pattern is the same at every step. AI drafts, a person checks, and nothing is paid on a draft alone.
What does accounts payable automation not do?
It does not decide whether an invoice should be paid. It does not settle a dispute with a supplier or negotiate terms. It does not fix messy supplier records or a missing purchase order process. It does not remove the need for a reviewer.
It also does not pay off at any volume. If you receive a handful of invoices a month from the same few suppliers, setup can cost more time than it saves. Whether that applies to you is a question for your own count, below.
How do you measure your current time per invoice before buying a tool?
Take one real week. Not an estimate, not a typical week from memory. For that week, do the following.
- Count the invoices that arrive, and how many arrive by email, by post and by portal.
- Time each step for a sample of invoices: capture, matching, coding, approval, payment run. Use active minutes at the screen, not elapsed time.
- Count the exceptions: missing orders, wrong amounts, duplicates, unknown suppliers. Time them separately.
- Count the chasing: reminders to approvers and questions to suppliers.
Your own number. Active minutes per invoice, times invoices per week, times the number of people who handle them. Multiply by the weeks in a month and divide by 60 for hours per month. Do it for each step. The step with the largest total is where to start.
We give no average minutes per invoice or cost per invoice here, because an average from other businesses says little about yours. Your measured week does.
How do you implement it in a small business?
Go in this order. Each step stands on the one before it.
- 1. Measure one week as above. Write down which step costs the most hours.
- 2. Fix capture first. Get every supplier invoice into one place: one inbox or one upload folder. Ask suppliers to send invoices there. Reading and coding cannot work well while invoices arrive in six places.
- 3. Add reading and coding drafts with a review queue. A named person approves each posting.
- 4. Add matching and approval routing once the first two run cleanly.
- 5. Move the payment run last, and keep a person on it.
Buy a package or build a small workflow on tools you already own? That is a second question, and your numbers answer it. If you already pay for Microsoft 365, part of a build can sit in tools you own, as described on Power Automate and Copilot Studio. For an accounting practice running this for clients, see AI for accountants.
What does it cost?
The first step costs nothing. In the free 20-minute diagnosis we check whether and where AI pays off in your business. After that come fixed prices, net + VAT:
- The Time Audit: every recurring task in your business measured, each with a written decision: automate, drop or keep. Invoice handling is one row of it.€1,490 ($1,700) net + VAT · fixed price · delivered within 5 working days
- The Cost Audit: what each recurring delivery really costs, on fully-loaded hourly costs.€1,790 ($2,040) net + VAT · fixed price · delivered within 5 working days
- The Build Sprint: rebuilds the task you choose. Order it within 30 days and the full audit fee is credited against it.€4,900 ($5,570) net + VAT · fixed price · 5 working days
The Time Audit is credited 100% against a Build Sprint ordered within 30 days. We work with companies in any country, remote-first. Prices are net. VAT or other taxes are applied according to the rules of your country.
Software licences are separate. They vary by product and by invoice volume, and we do not sell them. Get quotes from the vendors on your shortlist after you know which step you are fixing. Our admin tasks page covers office admin more broadly.
Is AI replacing accounts payable?
Not the checking. AI reads, matches and drafts. A person approves, handles exceptions and releases the payment. What shrinks is repeat keying, and how much of your current accounts payable work that is, is a measurement question for your business.
We would not predict headcount for any business, and you should be wary of anyone who does. Count your week and see how much of it is keying.
How do we start?
With the Time Audit. It measures every recurring task, including invoice handling, and writes a decision on each row: automate, drop or keep. Before it comes the free 20-minute diagnosis. We go through your routines and decide whether the Time Audit is the right tool. If it is not, I say so.
Free, 20 minutes, no sales pitch.
Frequently asked questions
How do you automate accounts payable?
Start with capture: get every supplier invoice into one place, then have software read it. Next add matching and coding drafts that go to a review queue. Approval and the payment run stay with a person. Measure one real week before you buy anything.
How much does AP automation cost?
Our side is fixed: a free 20-minute diagnosis, then the Time Audit at €1,490 ($1,700) net + VAT, the Cost Audit at €1,790 ($2,040) net + VAT and the Build Sprint at €4,900 ($5,570) net + VAT. Software licences are separate and vary by product and by invoice volume. We name no products and give no benchmark; your own measured week is the basis.
What are the steps in the accounts payable process?
Capture, matching, coding, approval and the payment run. The invoice arrives and is read, it is matched against the order or what you expect, coded to an account, approved by a person, and paid in a payment run.
Is AI replacing accounts payable?
AI takes over repeat keying, matching and drafting. A person still approves, handles exceptions and releases payments. How much of your current work is repeat keying is a measurement question for your business.
How to implement AP automation in a small business?
Measure one real week first. Then fix capture so invoices arrive in one place. Add reading and coding drafts with a review queue. Add matching and approval routing next. Move the payment run last, and keep a person on it.
About the author. Merryl DMello, founder of DMello Advisory. Eighteen years building and leading products at Intel, HP, Rackspace, BioNTech and Phoenix Contact.
At HP, Merryl automated seven manual steps and cleared a three-year backlog in five weeks, a 90% reduction in effort. At BioNTech, Merryl built a reporting dashboard for 35+ stakeholders that saved 10 hours a month per stakeholder. This is earlier employment, not DMello Advisory client work.
Every delivery from our development team is reviewed personally by Merryl DMello before it reaches you.
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