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IDC MarketScape for AP Automation
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For a second time, Tipalti has been named a Leader in the IDC MarketScape: Worldwide Accounts Payable Automation Software for Midmarket 2024 Vendor Assessment. This recognition highlights our ability to automate, derisk, and scale payables workflows while keeping finance teams informed. Analysts noted PO matching capabilities and effective invoice collaboration as standout strengths at Tipalti.
IDC MarketScape vendor analysis model is designed to provide an overview of the competitive fitness of technology and suppliers in a given market. The research methodology utilizes a rigorous scoring methodology based on both qualitative and quantitative criteria that results in a single graphical illustration of each supplier’s position within a given market. The Capabilities score measures supplier product, go-to-market and business execution in the short-term. The Strategy score measures alignment of supplier strategies with customer requirements in a 3-5-year timeframe. Supplier market share is represented by the size of the icons.
IDC Copyright
IDC MarketScape: Worldwide Accounts Payable Automation Software for Midmarket 2024 Vendor Assessment (Doc # US52378624), July 2024, Kevin Permenter and Jordan Steele
Global businesses face a rising volume of supplier invoices, but many accounting departments still rely on inefficient, costly, and error-prone manual processes. This creates a strong push to digitize operations through accounts payable (AP) automation.
The AP automation market reflects this momentum—it is expected to more than double from $5.4 billion in 2025 to $11.8 billion by 2029, growing at a 21.4% CAGR, according to The Business Research Company’s Accounts Payable Automation Global Market Report 2025.
This guide defines “what is AP automation,” describes how AP automation works, and identifies its benefits and potential ROI (return on investment) for scaling global businesses and nonprofit organizations.
What is AP Automation?
AP automation uses software to automate supplier invoice processing tasks from invoice capture, verification, and coding to PO matching, approval routing, payments, and reconciliation. It replaces manual accounts payable department tasks and provides paperless document management for payables.
AP automation replaces the accounts payable team’s time-consuming, bottlenecked, and error-prone manual data entry and traditional manual workflows. A scalable and automated accounts payable system reduces hiring needs and provides better financial data and spending visibility. Instant payment reconciliation significantly accelerates the financial close.
Accounts payable software for automation is more straightforward and flexible, with greater affordability than accounts payable outsourcing.
Key Takeaways
- AP automation software enables efficient, paperless processing of accounts payable invoices, replacing error-prone manual accounts payable processes.
- Accounts payable automation improves tax compliance, global regulatory compliance, risk management, and internal controls.
- With real-time spend visibility provided by AP automation with embedded AI tools, businesses can more effectively analyze and reduce their business costs.
Key Challenges of Manual Accounts Payable
The key challenges of manual accounts payable include:
- Inefficiencies: Time-consuming manual data keying, recalculation, verification, matching, GL coding, reconciliation, global payments, tax compliance, and filing of invoices and supporting documents
- Process bottlenecks: Delays in invoice verification, matching, and approvals
- In-office presence: Remote work isn’t possible for many steps in a paper-based accounts payable system, including invoice data entry, verification, document matching, approvals, and check printing, signing, and mailing
- Human errors: Undetected human errors are more likely in manual AP systems
- Invoice processing delays: late fees, lost early payment discounts, and poor supplier relationships
- Paper documents: Missing or lost documents, and paper storage costs
- Overpayments: Higher risk of paying fraudulent and duplicate invoices
- Less spend visibility: A lack of real-time visibility for business spending
- Poor global regulatory compliance: A lack of international country knowledge may impair the company’s ability to comply with global regulations for payments
How Does Accounts Payable Automation Work?
Accounts payable (AP) automation works by onboarding suppliers, digitizing invoices, and streamlining routine AP tasks with AI and robotic process automation (RPA). The software automates invoice processing and recording—from verification and PO matching to approvals, payments, and reconciliation–while providing real-time visibility into business spend.
AP automation also enables fully paperless document management, reducing errors and costs while improving efficiency.
Supplier Onboarding
In accounts payable automation, a supplier portal can be used for supplier onboarding and automated payment status notifications. Self-service supplier onboarding collects W-9 and W-8 tax forms, as well as the supplier’s contact and payment information details.
Invoice Digitization and Data Capture with OCR and AI
For automation of accounts payable processes, accounts payable automation software converts paper invoices into a standard digital format, then pushes the invoices through a virtual workflow with minimal human intervention, culminating in supplier payments. Some AP automation systems accept electronic invoices from e-invoicing systems.
At the beginning of the invoice management process, AP automation software uses optical character recognition (OCR) to extract information from invoices digitally. Some AP automation systems utilize machine learning (ML), a subset of artificial intelligence (AI), to enhance accuracy and recognize patterns over time.
Application of Business Rules
In most cases, AP teams eliminate the need for manual business processes through custom rules. The elimination includes everything from approval hierarchies to PO matching and acceptable data variances. Business rules for payments will flag exceptions that indicate potential errors requiring follow-up.
Automated GL Coding and Invoice Routing
The accounting system manages all invoice coding and routing through a digital workflow. Artificial intelligence leverages experience to suggest specific ledger codes or approval routing.
3-Way or 2-Way Matching
The AP automation system digitally matches Invoices with POs and receives reports in 3-way matching or only with POs in 2-way matching when a goods received note (GRN) isn’t required for that type of purchase.
Approval Routing
An AP automation system includes automated rules for routing invoices for payment approval.
Invoice Payment and Scheduling
As part of the AP automation process flow, the system schedules global invoices for batch payments using due dates, preferred EFT payment methods for payment processing, and best practices. It displays batch cash requirements. Invoice payment dates can be modified by authorized members of the finance team before the CFO or Controller approves a payment batch.
Payment Reconciliation
The best AP automation systems provide instant payment reconciliation after syncing with the integrated ERP system or accounting software.
Real-time Spend Visibility and Analytics
AP automation provides real-time, multi-entity spend visibility when the integrated ERP or accounting software provides those capabilities. AI can be used to provide business intelligence for reducing business spend.
Why Automate Accounts Payable?
An AP automation solution streamlines payables processes and accounting operations, saves money and reduces costs, improves efficiency and internal controls, and grants your business a sharp competitive edge.
AP automation technology replaces manual workflows with touchless automation, playing a crucial role in optimizing financial systems and controls, reducing fraud and errors, improving global compliance, and facilitating collaboration across teams.
Accounts payable automation enables an organization to onboard suppliers through a vendor portal, process invoices digitally, gather business intelligence, and enhance vendor relationships.
Top Accounts Payable Tasks to Automate
Automation helps teams increase accuracy or cut processing times, leading to cost savings.
Compared to manual data entry, accounts payable automation software significantly improves payables-related tasks like:
Invoice matching
This method, known as three-way PO matching, allows you to match invoices and supporting documents, such as purchase orders and shipping receipts.
Data entry
Manual data entry is a primary time-consuming task in invoice payment processes performed by the AP department. Automating the data capture of all source documents is a key benefit for businesses. This paperless process is quicker and less prone to error.
Coding invoices
AP automation increases the efficiency and functionality of approval workflows. It enables a business to establish rules and AI-generated GL coding that sets the correct general ledger code for each invoice.
Approval routing
When a business automates accounts payable, it streamlines the approval process. AP automation enables electronic routing to all necessary approvers in the invoice processing cycle.
Global payments and reconciliation
Global payments can be automated in large batches of hundreds or thousands of invoices using AP automation. Batch payments with multiple payment methods and currencies can be instantly and automatically reconciled with ERP syncing and accounts payable automation.
How to Automate Accounts Payable
To automate accounts payable, start by integrating AP automation software with your ERP or accounting system. This replaces manual AP tasks with a streamlined, digital process, saving time, reducing errors, and strengthening financial controls.
Steps to implement AP automation:
- Form an implementation team. Assign roles and responsibilities to manage the rollout.
- Define workflows and business rules. Bring in consulting help if needed to align automation with your processes.
- Integrate and customize. Configure the system for your ERP/accounting setup.
- Train employees and suppliers. Provide access, training, and support so adoption runs smoothly.
With the right AP automation solution, you can eliminate manual busywork, accelerate payments, and gain real-time visibility into every dollar spent.
Modernize AP. Cut Costs. Gain Control.
Eliminate manual tasks, speed up approvals and payments, and gain real-time visibility into every dollar spent.
What are the Benefits of AP Automation?
AP automation provides efficiency and improves controls. It also enables businesses to gain real-time visibility into their spending, allowing them to reduce costs and improve profitability.
Additionally, the trend toward increased globalization of suppliers across different countries necessitates timely payments in local currencies while adhering to global regulatory compliance, further contributing to the rationale for digital transformation.
10 benefits of AP automation are:
- Increasing accounts payable efficiency for lower invoice processing costs
- Eliminating paper-based, manual processes
- Implementing segregation of duties (SoD) for better internal control
- Reducing fraud and errors
- Providing more functionality to ERP or accounting systems
- Increasing oversight and transparency
- Simplifying tax compliance and global regulatory compliance
- Reducing invoice processing delays
- Making global payments more efficient and cost-effective
- Freeing finance team time for more value-added projects to improve business results
1) Increasing Accounts Payable Efficiency
End-to-end payables process streamlining and automation remove process bottlenecks and increase efficiency.
2) Eliminating Paper-Based, Manual Processes
Paper-based systems for invoice processing are inefficient because they require manual data entry, verification, and matching steps, and introduce human errors. Paper systems for accounts payable also require filing time and storage costs for archived records. Documents may be missing, misfiled, or lost.
3) Implementing Segregation of Duties for Better Internal Controls
AP automation software is designed to strengthen the segregation of duties and provide role-based access for stronger internal control. AP automation also provides an automated audit trail.
4) Reducing Fraud and Errors
AP automation lowers the risk of invoice fraud and payment errors, such as duplicates, by enforcing stronger controls and preventing overpayments.
Built-in business rules flag exceptions before payments are made, while automation ensures critical checks, like invoice total verification, aren’t skipped under time pressure. For fraud prevention, suppliers can be validated through automated taxpayer ID matching (TIN matching) and detection tools that flag suspicious payee behavior.
5) Providing Additional ERP Functionality
AP automation software that works as an integrated add-on to your company’s ERP system or accounting software fills the gap in needed functionality that a traditional accounts payable system lacks.
6) Increasing Oversight and Transparency
AP automation enhances visibility by entity and, combined with multi-entity ERP functionality, and provides stakeholders with greater transparency into invoices, payments, and business spending. Business intelligence, powered by AI queries, enables businesses to make informed decisions about achieving cost reductions.
7) Simplifying Tax Compliance and Global Regulatory Compliance
AP automation collects W-9 and W-8 forms upfront and generates 1099/1042-S reports. Some solutions also integrate with tax software to e-file and distribute forms automatically, ensuring compliance with minimal effort.
8) Reducing Invoice Processing Delays
AP automation provides the necessary functionality for businesses to expedite their invoice processing, ensuring the timely recording of supplier invoices, taking advantage of early payment discounts, and avoiding late fees.
9) Making Global Payments More Efficient and Cost-Effective
For businesses paying suppliers worldwide, using local payment methods is far more efficient and affordable than relying on costly international wire transfers. Strong AP automation platforms include built-in foreign exchange (FX) tools, and some also offer hedging options to protect against currency fluctuations between invoice and payment dates.
10) Freeing Finance Team Time for Value-Added Projects
By automating manual tasks like payment reconciliations, AP automation frees finance teams and controllers from repetitive work. This allows them to focus on strategic analysis and decision support that help reduce costs, drive revenue, and advance their careers.
Key AP Automation KPIs and ROI Metrics
Setting and revisiting key performance indicators (KPIs) is easier with AP automation. Tracking KPIs and cash flow through a manual system is nearly impossible.
AP automation built into your ERP helps boost KPIs and ROI by taking manual work out of the accounts payable process. You’ll see fewer bottlenecks, faster invoice turnaround, and less time your team spends chasing down approvals, which can also cut down on overtime costs.
Plus, as your company grows, AP automation scales with you, handling more invoices across multiple entities without needing to bring on extra headcount—helping you keep future costs down.”
Types of Accounts Payable KPIs
KPIs to track for accounts payable include:
- Invoice cycle time
- % touchless invoices
- Cost per invoice
- Error rates
- Early payment discounts captured
KPI Performance Benchmarks Table
| Accounts Payable KPI | Definition |
|---|---|
| Invoice Cycle Time | The duration of invoice processing time is measured from invoice receipt through invoice payment. |
| % Touchless Invoices | The percentage of invoices for which processing is automated without requiring human involvement or manual processes is referred to as touchless. |
| Cost per invoice | The cost per invoice is the sum of invoice processing and payment costs, calculated as AP-related costs divided by invoice volume for a specified period. |
| Error rates | This KPI is measured as the percentage of invoices that require error correction before further processing. |
| Early payment discounts captured | This KPI measures the percentage of early payment discounts taken by the company versus those offered by suppliers. |
The cost per invoice is calculated by including total accounts payable-related salary and benefit costs for AP staff and accountants, as well as other expenses required in the end-to-end accounts payable process, and then dividing this total by the invoice volume.
An accounts payable department and finance team can contribute to business results through timely invoice processing, utilizing AP automation to reduce the cost of purchases and enhance gross margins. The Controller or CFO will contribute to business results and cost control by adopting AP automation.
Industries Using AP Automation
Accounts payable back-office operations are similar across various industries. Any business, regardless of industry, benefits from AP automation, which has undergone significant evolution since its inception. The top industries that have scaled with artificial intelligence in finance include:
- Software and technology
- Manufacturing
- E-commerce and retail
- Marketplaces
- Financial services
- Business services
- Fashion
- Healthcare
- AdTech
- Music Royalties
- Non-profit organizations
How to Select AP Software
Select accounts payable (AP) automation software by determining specific features your business needs and a budget, then comparing those parameters to at least three different software products through a formal software evaluation.
AP Automation Software Selection Steps
Key steps for selecting accounts payable automation software are:
- Plan the software selection process
- Determine your company’s software requirements
- Research and evaluate available software products and vendors
- Select the best AP automation solution for your company’s budget
Best practice for software selection is to assemble a multi-functional team to plan, collaborate, and determine the necessary and desired features of AP automation software for your business.
After your team’s planning and research during its software evaluation, submit a request for proposal (RFP) to the various vendors to obtain customized quotes. Compare the quotes to your company’s AP automation budget, which includes SaaS software, add-on options, implementation, training, other costs, and transaction costs.
As part of your software evaluation and selection process, consider items included in the following AP automation software requirements checklist for each accounts payable automation software product being considered.
AP Automation Software Requirements Checklist
| Feature | Why It Matters | Check if Yes |
|---|---|---|
| ERP integration | Works seamlessly with your current ERP or accounting system. | □ |
| Self-service supplier portal | Reduces AP workload, improves data accuracy, and provides suppliers with automatic updates on payment status. | □ |
| Invoice data capture | Uses OCR, AI/ML, or e-invoicing to capture invoice details accurately and reduce manual entry. | □ |
| Scalability | Adapts as your business grows, handling higher invoice volumes and complex structures without added overhead. | □ |
| Real-time visibility | Delivers instant insights into payables and cash flow when connected with your ERP/accounting system. | □ |
| Multi-entity support | Consolidates AP across multiple entities, offering both combined and separate reporting views. | □ |
| Automated 3-way matching | Matches invoices with POs and receipts to prevent duplicate payments and errors. | □ |
| Security features | Enterprise-grade security, role-based access, and audit trails protect financial data. | □ |
| Risk management & controls | Flags potential errors or fraud, enforces segregation of duties, and supports compliance. | □ |
| Global payment capabilities | Enables cross-border payments in multiple currencies and methods, with built-in FX management tools. | □ |
| Regulatory licensing | Providers regulated as financial services businesses (e.g., MSB, EMI, or equivalent) add oversight and trust. | □ |
| Tax compliance | Collects supplier tax forms, validates taxpayer IDs, and supports statutory reporting (e.g., 1099s, 1042-S). | □ |
| Regulatory compliance | Automates KYC checks and sanctions list screening to reduce risk exposure. | □ |
| Customer retention rate | High retention indicates customer satisfaction and proven product reliability. | □ |
| Customer support | Reliable, responsive support reduces downtime and helps resolve issues quickly. | □ |
| Customer references/testimonials | Positive case studies and peer reviews provide confidence in real-world performance. | □ |
Accounts Payable Automation With Tipalti
Overview
Tipalti AP automation is secure, real-time, and scalable cloud SaaS software. It provides end-to-end payables automation capabilities and integrates with your ERP or accounting software. It meets all of the criteria listed in the AP Automation Software Requirements Checklist.
Supplier Onboarding
Tipalti AP automation functionality starts with (white-branded) self-service supplier onboarding through a Supplier Hub (portal). The supplier portal provides automated payment status and invoice history, saving the AP staff a substantial amount of time spent on data entry and follow-up on supplier inquiries.
Smart Invoice Data Capture
Tipalti excels at invoice data capture, utilizing its AI-driven SmartScan technology. Tipalti AP automation can handle touchless invoice processing steps, including supplier validation, invoice verification, AI-powered automatic GL coding, fraud and error avoidance, approvals routing, global payments, and instant payment reconciliation. Tipalti AP automation also accepts electronic invoices from e-invoicing software.
Tax Compliance
Tipalti provides advanced tax compliance features and simple tax preparation reports for your company’s 1099s and 1042-S filings. With an optional subscription to partnered ZenWork Tax1099 software, your business can automatically e-file and distribute 1099-MISC and 1099-NEC forms with integrated Tipalti payments data for 12 calendar months.
Automated Global Regulatory Compliance
Tipalti’s automated global regulatory compliance includes sanctions list checking, AML, and KYC compliance.
Licensed Money Services Business
Tipalti is a licensed money services business (MSB), which adds external oversight and enhances reputational trust.
Advanced Global Payments
Tipalti AP automation makes payments to 200+ countries in 120 currencies, using the supplier’s preferred payment method from 50+ options. Tipalti’s optional FX software products work with AP automation to efficiently handle your company’s complex global payment issues. Global payments are scheduled in large batches for efficiency.
Real-Time Spend Management and AI-Powered Analytics
Tipalti provides real-time spend management and AI queries for business intelligence into spending. This functionality informs companies about opportunities for making cost-reduction decisions.
Beyond AP Automation
Tipalti’s platform extends beyond AP with add-ons for procurement, employee expenses, and advanced FX products like Multi-FX and FX Hedging.
Tipalti’s Key Differentiators
- AI SmartScan for invoice data extraction: Automates data capture with AI-driven accuracy, reducing manual entry errors and speeding up invoice processing.
- KPMG-approved global tax compliance: Ensures supplier validation, withholding, and reporting are accurate and compliant across jurisdictions, minimizing audit risk.
- Robust ERP integrations: Syncs seamlessly with your financial systems, keeping data consistent and eliminating the need for duplicate work. Integrations include NetSuite, Microsoft Dynamics, Sage Intacct, QuickBooks, Xero, and more.
- Multi-entity support for complex structures and global expansion: Provides a consolidated or entity-level view of payables, helping growing companies manage subsidiaries and international operations with ease.
Explore our customer success stories
Accounts Payable 
Mass Payments 
United States, Global 
Music royalties
100 – 1000
Software and technology
Procurement 
AdTech
Business services
Marketplaces
Non-profitNext Step
This guide covers much of the knowledge that your business needs to begin its digital transformation journey by selecting the best AP automation system. Learn more about how Tipalti’s AP automation can seamlessly integrate into your existing workflows today.
Accounts Payable Automation FAQs
What are the most common AP automation features?
The most common AP automation features are:
- Supplier portal
- OCR invoice capture by headings and line items
- 3-way matching
- Invoice verification rules
- Fraud detection
- Automated invoice approval process routings
- Global batch payments
- Instant reconciliation
- Automated global regulatory compliance
- Tax compliance simplification
- Real-time spend visibility and analytics
Does AP automation reduce headcount?
AP automation is scalable for growth and can reduce hiring needs. Therefore, companies with AP automation can reduce future headcounts compared to manual systems.
How does AP automation integrate with ERPs?
AP automation integrates with ERPs either through API integration or flat-file integration, such as CSV integration.
Is AP automation secure and compliant?
The best AP automation software is secure and compliant, featuring data encryption, role-based access controls, fraud detection mechanisms, audit trails, and enterprise-grade security that meets industry standards.
