Transform your Accounts Payable (AP) Solution with Accounting Integrations

In today's fast-paced business environment, effective financial management is a cornerstone of success. This is particularly true in the realm of Accounts Payable (AP), where the efficiency of processing invoices and managing vendor payments can significantly impact a company’s cash flow and financial health. An Accounts Payable (AP) solution is no longer a luxury but a necessity for businesses striving for operational efficiency and financial stability.

Software providers looking to offer the best-in-class AP solutions know automation means convenience which leads to happier business customers. In this blog, we explore the key components needed to build and provide a world-class AP solution, and why AP solution providers need to leverage accounting integrations.

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Related: 5 Accounting Automation Solutions You Can Build Using RootFi’s Unified API

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What is an Automated Accounts Payable (AP) Solution?

Automated Accounts Payable (AP) solutions transform the traditional, labor-intensive process of handling vendor invoices and payments into a streamlined, digital workflow. This involves the use of technology to automate invoice capture, data entry, invoice matching, approval workflows, payment execution, and financial reconciliation.

Unlike manual processes that are prone to errors and delays, automated AP systems ensure accuracy, speed, and compliance in financial transactions. The role of these solutions becomes even more critical for growing businesses that handle a high volume of transactions, where the potential for errors and inefficiencies is magnified.

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Benefits of an Automated Accounts Payable (AP) Solution

The adoption of an automated AP solution brings myriad benefits to both employees and the business at large:
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Employee Benefits of AP Automation:

• Efficiency and Time Savings: Automating data entry and invoice processing reduces the time spent on manual tasks, allowing employees to focus on more strategic activities.

• Error Reduction: Automated systems minimize the risk of human error in invoice processing, leading to more accurate financial records.
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• Job Satisfaction: Employees benefit from a reduction in mundane tasks and an increase in engaging, value-added work.

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Business Benefits of AP Automation:

• Cash Flow Management: Timely payment processing and the ability to capitalize on early payment discounts improve overall cash flow.
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• Fraud Reduction: Automated systems minimize the risk of fraud in invoice processing, especially for businesses with high invoice volumes.
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• Vendor Relationship Management: Automated AP helps maintain good vendor relationships through consistent and timely payments.
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• Compliance and Reporting: Automation ensures adherence to regulatory standards and simplifies financial reporting.

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The Automated Accounts Payable (AP) Workflow

In an effective AP automation system, the workflow typically involves:
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1. Invoice Processing: The system automatically captures and categorizes invoices, using technologies like OCR (Optical Character Recognition) to extract data.
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2. Approval Workflows: Invoices are routed through predefined workflows for approval, ensuring that all expenditures are authorized.
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3. Payment Execution: The system schedules and executes payments, adhering to vendor terms and optimizing for early payment discounts where possible.
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4. Financial Reconciliation: The final, and often most crucial step, involves integrating the payment data with the company’s accounting systems, ensuring that the financial records accurately reflect all transactions.
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Despite the advancements in AP automation, many AP solutions fall short of the final and often most cumbersome step- reconciliation in the customer’s books.

The AP process is incomplete without reconciliation which is impossible without robust accounting integrations. These integrations play a pivotal role in ensuring that the data flowing from the AP system is accurately reflected in the company’s financial records. Accounting integrations eliminate the need for manual data entry into accounting systems, reduce the risk of discrepancies, and ensure your customers have a real-time view of their financial obligations and liabilities.

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Why Accounts Payable Solutions Need Accounting Integrations

As businesses of all sizes are becoming increasingly digital, the demand for automated solutions grows. The global Accounts Payable Automation market size was valued at USD $2.6 billion (2022) and is estimated to grow to USD $6.7 billion by 2032. Despite the advancements, many AP departments are still largely manual.

The need for AP automation is evident, as 22% of financial professionals stated delays caused by time spent processing invoice exceptions as their top AP processing challenge, and 21% of employees are stuck in cumbersome manual data entry. Mid-size companies say their AP departments spend over 50% of their time collecting and processing invoices manually. Today, only 9% of AP departments are fully automated, but this is expected to change rapidly, as two-thirds of finance professionals expect full automation by 2025.

The projected growth in the market, combined with the evidence of the inefficiencies in manual processes makes the need for an automated AP solution evident. In the competitive SaaS landscape, providers like Bill.com, Airbase, and Stampli are continually enhancing their offerings, and already offer accounting integrations. In order to compete and gain market share in the growing AP automation space, providing an end-to-end solution that includes reconciliation via accounting integrations becomes critical.

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The Role of Unified APIs in Accounting Automation and AP Management

In the context of AP automation, the integration of accounting systems can be a complex task, particularly when dealing with multiple platforms and legacy systems.

While a variety of integration solutions exist, like using an embedded iPaaS or building integrations in-house, they fall short of the specific use case automated AP systems need. Embedded iPaaS solutions for one-to-one integrations as connections need to be built one at a time, and they still leave the burden of normalizing data and schema on you.

Building multiple integrations in-house as a strategy is more challenging than it first appears. It requires dedicated and experienced developer resources, months to learn the nuances of each platform’s API documentation and schema, custom solutions for on-premise accounting systems like Tally and Busy, and significant effort to maintain integration health due to errors, bugs and underlying API changes.

This is where Unified APIs, like RootFi, become invaluable. A Unified API provides a single point of integration with multiple accounting systems, simplifying the development process and reducing the time and resources required for integration. A Unified API not only normalizes data across all accounting systems but also normalizes the API calls needed to push and pull data across platforms. This has significant benefits for you, the AP provider.

For example, when your team connects your AP product to 10 different accounting systems using RootFi, you need only learn one set of API calls, not 10 for each platform. Your AP product will receive and send back data in the same format, not matter which accounting system a particular customer uses, as RootFi’s Unified API ensures the data is transferred securely and in the format needed by the underlying accounting system.
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By leveraging RootFi’s Unified API, you can:
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• Reduce Development Costs: The need for individual integrations with each accounting platform is eliminated, significantly cutting down on development expenses.
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• Accelerate your Time-to-Market: Integration can be achieved much faster, accelerating the launch of the enhanced AP solution.
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• Focus on Core Product Innovation: By offloading the integration task, businesses can concentrate on improving their core offerings.
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• Leverage Data Normalization and Scalability: Unified APIs provide normalized data across different accounting platforms, making it easier to handle and scale up as new integrations are needed.
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Related:

Build vs Buy: The Ultimate Guide to B2B API Integrations

Five Challenges with Unified APIs and How RootFi Solves Them
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How to Build an Automated Accounts Payable (AP) Solution with RootFi’s Unified Accounting API:

Building an automated AP solution with accounting integrations is straightforward with RootFi. Here’s how:

• Sign up for RootFi.
• Connect up to five customer’s accounting platforms for free to test our platform.
• Integrate your user interface with RootFi’s API endpoints using our Docs.
• Onboard all your business customers via our Connect Link for a seamless experience.

By leveraging RootFi’s Unified Accounting API, your AP solution can offer features like automated invoice processing, streamlined approval workflows, real-time payment execution, and most importantly, automated reconciliation.

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Elevate Your Accounts Payable Solution with Accounting Integrations using RootFi’s Unified API

In today's competitive business landscape, the integration of accounting systems into your AP solution is not just a value-add; it's a strategic necessity. RootFi’s Unified API presents an elegant solution to the complex challenge of accounting integrations, empowering you to enhance your AP automation product with ease, accuracy, and scalability. See how easy it is to leverage 15+ accounting integrations yourself by starting with RootFi for free. For more information on how RootFi can revolutionize your AP solution, book a personalized demo with our team.

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