What CFOs Need to Know About Automating Accounts Payable in 2025

What CFOs Need to Know About Automating Accounts Payable in 2025

In recent years, the function of the Chief Financial Officer (CFO) has transformed from overseeing finance to becoming a key enabler of digital transformation. Accounts payable (AP) is one of the areas where automation is having a significant influence in the transformation process. Understandably, as businesses try to respond to a digital economy, CFOs need to understand the role of automation to drive efficiency in AP, reduce costs and improve financial accuracy.

In the coming future, manual AP processes in competitive businesses will not be possible. Organizations that use paper invoices, manual data entry and disconnected approval processes incur unnecessarily high operational costs, are prone to errors and slow processing. Automation of manual AP processes, which is delivered through AI driven accounts payable automation is the answer that some businesses are playing catch up, and are proactively seeking to implement and improve- and leadership should emerge through speed, accuracy and scale.

This blog looks at the tasks CFOs should prioritize with AP automation in 2025, including the newest technologies, benefits, challenges with implementation and the process to identify the best accounts payable automation companies for the desired integration.

The Growing Need for Accounts Payable Automation

Manual accounts payable (AP) processes are wrought with inefficiencies, errors, and expense. According to Ardent Partners, companies that process invoices manually pay an average of $10 – $15 per invoice while automation drops that cost to $2 – $5 per invoice. Manual workflows add risk to compliance, delays basis to schedule prompts; e.g. early payment discounts to vendors, and result in sluggish payment flows. 

The shift toward automation is accelerating. Gartner reports that more than 50% of mid-large enterprises will be using AI-driven approaches in AP automation by 2025. The move to automation is driven by real-time insight to respective financials, fraud prevention, and ease for onboarding and managing vendors.

A compelling accounts payable automation case study demonstrates how a global airline catering and provisioning services provider reduced invoice processing costs and increase overall efficiency by 30 % after implementing an automated AP system. Such examples highlight the tangible benefits of transitioning from manual to automated workflows.

Key Benefits of Automating Accounts Payable

1. Faster Processing & Efficiency

Traditional invoice processing could reach 10 to 15 days, often due to manual approvals and lots of keying in. With automation, processing time is reduced to less than 24 hours thanks to optical character recognition (OCR), robotic process automation (RPA), and AI data capture.

2. Substantial Cost Reduction

By eliminating paper-based processes, costs of printing, mailing, and storage are reduced, but even more so, automation reduces the cost of human error. This means fewer duplicate payments, over payments, fraud and, in turn, less write-offs. Companies using accounts payable automation solutions are reporting processing costs between 30-50% lower than they had in the past.

3. More Accuracy & Less Fraud

A manual AP process is riddled with human error, that is what accounts for an average error rate of 5-10%. Automation systems reduce the risk to under 1% error rate, and with fraud detection using AI, most suspect activities can be flagged as they occur.

4. Improved Cash Flow & Better Vendor Relationships

Automating AP allows organizations to pay invoices in the timeliest manner possible. Allowing organizations to capture early payment discounts, avoid late payment cost, and improve not only its cash flow, but also the trust it retains with vendors.

5. Better Compliance and Audit Preparedness

With automation solutions you will always have a digital trail to “follow the money” and remain compliant with accounting rules and regulations. Transactions are retained and the CFOs can see the positioning for approvals, payments, and/or exceptions in real-time (reducing risks to audit).

The Role of AI in Accounts Payable Automation

Artificial Intelligence is evolving AP automation beyond simple OCR and workflow automation. Today’s accounts payable automation case study companies utilize AI for, 

• Smart Data Capture – AI extracts data from invoices 99% + accurate from handwritten or unstructured documents. 
• Predictive Analytics – AI predicts a company’s cash flow needs based on historical data and payment patterns. 
• Anomaly Detection – Machine learning identifies duplicate invoices, overcharges, and fraudulent invoices.
• Autonomous Approvals – AI driven rules will auto-create standard approvals for invoices that match a purchase order, eliminating manual approval steps.

A Deloitte study found that businesses using AI in accounts payable automation experience:

• 30% faster processing speeds
• 25% fewer exceptions
• 20% reduction in fraud-related losses

Choosing the Right Accounts Payable Automation Solutions

Evaluating the best accounts payable automation solution involves key decisions. The first to consider is integration, as the system we are going to choose must easily connect with current ERP systems and accounting software. With no integration, the business may inadvertently place data into silos which will negate any potential efficiencies. 

The second consideration is the amount of AI and machine learning capabilities available in a platform. Some of the more advanced systems now offer self-learning algorithms, which improve data extraction accuracy and minimize manual intervention. 

The deployment model of the solutions available is important as well; and cloud-based solutions rapidly became first choice due to their scalability, remote access, and reduced need to manage updates which will pose challenges to keeping up with new technology. 

Data security is uncompromisingly important for the CFO and therefore, potential solutions need to be complied with stringent standards such as GDPR, SOC 2, and ISO 27001 which all present with controls that are off the shelf to meet the rigorous requirements. In addition to strong data protections (such as blockchain based audit trails or multi-factor authentications), indirect protections should be considered as well. 

The incumbent vendor should have a positive reputational history; and customers should feel secure that they will receive quality support when needed, as evidenced by thorough review of customer references, case studies, testimonials, and industry rankings before making a commitment.

Here’s a comparison of traditional vs. automated vs. AI-powered AP:

Overcoming Challenges in AP Automation Implementation

Although the reasons for automating Accounts Payable often made during the due diligence stage are compelling, it is not uncommon for organizations to face multiple implementation challenges that must be navigated strategically. Change management issues relating to employees’ resistance to change from manual to automatic processes represent the most common dilemma in implementations. Organizations can often deal with this with robust training programs showing how automation can reduce tedious work, but will not really eliminate jobs.

Next, dealing with complications surrounding data migration and connecting with legacy systems is common as well. You will want to only engage vendors that have prebuilt ERP connectors and API options that demonstrate compliance and interoperability. Data security is a naturally occurring concern when moving financial processes from manual to digital processes. It is vital to find solutions with enterprise level encryption, role-based access, and immutable audit trails for sensitive information. 

Measuring return on investment is the next implementation challenge, as it is often not easy for CFOs to know what to measure to realize the impact of automation and justify the investment back to stakeholders. The CFOs should discuss outcomes to determine value based KPI’s like processing time savings, cost per invoice savings and exception rate improvement. 

A final challenge to an implementation is determining how and when to implement the automation. A phased implementation is often viewed as best practice as it allows organizations time to overcome challenges while achieving wins to support a transition to automation.

The Future of Accounts Payable Automation

The accounts payable automation space is changing rapidly with many transformational trends and influences in play. As we already mentioned, hyperautomation is a major trend. Hyperautomation takes robotic process automation, artificial intelligence, and process mining technologies to offer AP purchasers complete end-to-end optimization of the accounts payable function past just workflow automation.Blockchain is gaining somewhat of a foothold as well, able to create a secure and tamper-proof invoice and payment tracking option. Utilizing blockchain technology, total tamper-proofing is impossible, which prevents almost all fraud while increasing transparency in auditability. 

Predictive analytics is becoming more powerful as AI can now predict cash flow needs based on your complete set of historical payment data to optimize working capital, and in some instances, can even suggest the best time to pay a vendor based on historic timing and relationships.The incorporation of natural language processing is changing the user interface and user experience to include possible voice activated approvals and intelligent query resolution, improving how users interact with the AP process. 

Overall, as these new technologies develop, eventually leading to a new level of autonomous accounts payable process solution, we can expect to see different levels of systems capable of self-correcting, learning over time, and being able to offer suggestions to further support strategic decision making. These advancements promise to elevate AP from a back-office function to a strategic component of financial operations, providing CFOs with unprecedented visibility, control, and predictive insights that drive better business outcomes.