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Procurement Strategy » What is Advanced AP Automation? A Best Practice Guide

What is Advanced AP Automation? A Best Practice Guide



Taking Accounts Payable Automation to new levels of performance

Unlock the power of AP automation and hit new heights in straight-through-processing by utilizing smart matching within one-click workflows that manage line level allocations and tax treatment automatically.

‘70% increase in invoice processing efficiency’ – Credit Agricole

  • Remove of overhead of payment queries with real-time Supplier updates
  • Embedded smart matching that supports ALL invoice your matching needs
  • One-click approval for invoices, receipts and exceptions to streamline the journey
  • Line level multi-tax treatment and budget allocation templates that reduce effort

At the heart of every procurement process is the Accounts Payable team and our AP Automation module has been built to support these skilled workers. With the Invoice Hub filtering out the unwanted transactions, and our intelligent smart matching workflow handling the bulk of the work, the AP team can focus on continuous improvement and removing unwanted exceptions. With an AP centric dashboard and powerful analytics, the team can monitor the business heartbeat within our AP Automation workflow. 

What is Advanced AP Automation? 

The AP journey starts even before the Supplier Invoice is received, and before the Supplier’s billing team generates the invoice, it begins with the Buyer’s Order. This could be a verbal confirmation, an email, a signed Contract, or a formal Purchase Order. Regardless of the order format both the Supplier and Accounts Payable team need to cater for all three scenarios. Luckily, and possibly uniquely, this is where Invoice compliance comes to the rescue, as both ends of the AP process need to demonstrate that the Invoice was paid against the delivery of real goods or services. This could be a delivery note, timesheet, receipt or an acknowledgement from the Buyer. With both the supplier and the AP needing to match the same information, it’s in everyone’s interest to automate the payment process through the introduction of collaboration and agility within the payables journey.

Therefore, a key part of the Advanced AP automation journey is access to every data reference point to be used in the Invoice matching process. This allows any content from the invoice, the supplier, order, receipt or the contract to guide the matching engine and improve straight-through process rates. Unlike traditional Invoice Processing, Invoice to Pay has the data needed within the platform, either as part of a complete Source to Pay service or through plug & play connectors linked to the ERP or Finance application.  There are three key things that transform old-school Invoice Processing to Advanced AP Automation: Smart Matching, One Click Approvals and dynamic tax treatment.

Benefits of AP Automation

The AP Automation module improves straight-through process rates by utilizing smart matching with intelligent workflows based on data from multiple reference points from across the procurement journey. Ivalua has embedded smart matching into the AP automation journey allowing every data reference point to be used in the Invoice matching process. Now any content from the invoice from the supplier master data, order, receipt or the contract to guide the matching engine and improve straight-through process rates. Unlike traditional Invoice Processing software, Ivalua has this data within the platform, either as part of a complete Source-to-Pay service or through plug & play connectors linked to any number of ERPs or Finance applications. Whilst our one-click Approval allows the requisitioner to accept/reject an invoice or receipt for goods from within an email. With the solution validating Tax and Budget allocations everything is kept quick, simple and touchless.

AP Automation offers unparalleled smart matching of invoices

  • Touchlessly matches Invoices to suppliers to master data
  • Automatically validates Orders lines to the Invoice
  • Enables non-PO Invoices be matched to Contracts
  • Drives Invoice compliance with auto receipting on approval
  • Improves efficiency by allowing the PO number to be added

AP Automation reduces the effort to handle exceptions 

  • Saves approve with one-click approvals within emails
  • Improves efficiency by allowing the Supplier to flag the buyer
  • Allows buyer receipting to trigger auto Invoice approval
  • Creates a touchless journey as soon as an order is identified
  • Smooths out compliance with a full audit trail of activity 

AP Automation offers streamlined Budget & Tax Treatment

  • Automatically allocates multiple Tax rates at the Line Level
  • Enables multiple budget allocations at the Line Level
  • Reduces allocation effort with user managed templates
  • Handles allocation of non-PO Invoices at the Line Level
  • Seamlessly interacts with 3rd Party Tax engines or ERP content

AP Automation has unlimited Invoice processing possabilities

  • Reduces Supplier queries with real-time workflow collaboration
  • Interacts seamlessly with Invoice Hub and other Invoicing solutions
  • Understands that there are spend or no volume limits in Invoicing
  • Connects to any number of ERPs or back-office systems
  • Continuously improve your user experience to increase touchless performance  

What is Smart Matching?

By taking a clean stream of Invoices content from a Hub, AP Automation can rapidly match and allocate Invoices, to create an ok to pay file. The Smart Matching is the step that matches invoice content against Purchase Orders, Contracts, Blank Orders, and/or Goods Receipts before confirming tax treatment and allocating the invoice item to a budget or cost center. This level of Smart Matching uses intelligent workflow to enable high-levels of straight-through-processing. Smart Matching allows an organisation to move away from a physical PO on an Invoice to achieve high levels of automation. The objective is to turn No PO, into No Problem rather than a costly dispute with a supplier.

What is One-Click Approval?

During the smart matching process, exceptions such as cost or volume tolerance, additional items, or missing receipts. These need to be quickly resolved but typically the approver is busy or out of the office. One-click approval allows simple email approval from anywhere, reducing bandwidth and allowing off-line approval. With exceptions, or receipts handled with one-click approvals the Invoice flow can be dramatically improved. The result is an invoice to pay journey that is quick and user friendly.

What is Dynamic Tax Allocation?

When an invoice has been received, before a payment can be made, firstly it must be validated against the delivery of real goods or services via Smart Matching, then it must be allocated to a budget, and the Tax Treatment validated. Within a Procure to Pay solution this is done at the Order requisition stage, however there are always exceptions or changes of use. When this happens the tax on the invoice must be checked against the correct tax allocations in the processing country. An Advanced AP Automation solution can check this tax against either 3rd Party data sources or internal values to ensure compliance.   

What about supplier collaboration?

The supplier portal is a core part of the Ivalua platform and this enables collaboration across the end-to-end procurement journey. This allows the Accounts Payable team to collaborate with suppliers from within the Invoice to Pay journey, or for the supplier to see the status of their invoice without calling the AP team. If the Ivalua Invoice Hub is used alongside the AP automation additional collaboration features become possible such as non-PO Invoice creation, PDF emailing or self-service eInvoicing.  

The benefits of Supplier collaboration from within the AP Automation journey are:

  • Reduce Disputes Agree Delivery Dates, Add Goods Receipts, Send Advance Shipping Notices 
  • Reduce Risks Update Master Data, Check Risks, Management Hierarchy
  • Reduce Queries See Invoice Status, Check Payment Dates, Correct Matching Errors
  • Improve Performance PO-Flip, Receipt-Flip, Manual Upload, Self-service Integration

Embedded Analytics, Enabling Continuous Improvement

‘We have a strong partnership with Ivalua and continue to generate value. With Ivalua we have achieved 100% digitization across all procurement processes and have been able capture a tremendous amount of savings’ – Crédit Agricole

Having the ability to continuously improve a process is critical to achieving a return on investment and at the heart of cloud technology. Without this, organisations can’t be agile, but without analytical data, continuous change is impossible. The Ivalua platform provides the dashboard and performance intelligence necessary to evolve, adapt and improve the Invoice to Pay journey.


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