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What Is Accounts Payable (AP) Automation and How Can It Improve My Payable Process?

What is the Accounts Payable Process?

From a bird’s eye view, the accounts payable process is the system of tasks your business must complete to pay a vendor or supplier. This task workflow can range from simple to complex depending on the size and structure of your company, your line of business and more. Here’s a glimpse into what the payable process might look like for a small, medium or large business.

1. Receive vendor invoice
2. Confirm accuracy
3. Schedule payment
4. Pay invoice

Example of Accounts Payable Process

1. Receive vendor invoice
2. Confirm accuracy
3. Enter invoice into accounting software
4. Get payment approval
5. Schedule payment
6. Pay invoice
7. Reconcile accounting records to reflect payment

No matter what your AP process looks like, the manual paper-based approach can lead to human error, wasted resources, data inconsistencies and plenty of frustration.

The Downsides of a Manual Accounts Payable Process

Whether you’re a seasoned accounting professional or a business owner wearing too many hats, a manual payable process is enough to give anyone a headache. Can you relate to these pitfalls?

It’s slow and unsteady.

Why waste the talents of your employees on manual tasks like matching documents and routing invoices for approval? Especially if your payable process involves multiple levels of approval, manual hand-offs can take precious time and leave room for things to slip through the cracks. Not to mention, printing and mailing cheques can add weeks to your payable process, leading to late payments and vendor dissatisfaction.

It’s a magnet for mistakes.

With so many steps and moving parts, a manual AP process is a perfect storm for human error. Whether its manual data entry in multiple systems or lost documents in a pile of paperwork (or a post-vacation inbox), human error haunts every step of the process.

It’s costly—in more than one way.

The costs of a manual payable process can add up when you consider employee hours, potential mistakes, printing expenses, mailing paper cheques, and more. Bottlenecks in the manual AP process can also lead to late fees, upset your vendors and keep you and your employees from more important work (more on these bottlenecks below).

It doesn’t support payment flexibility.

If your vendor or landlord requires a certain payment form, such as a cheque or an ACH transfer, using a manual AP process can limit your funding flexibility. Without an AP automation tool like RBC PayEdge, you may not be able to use your business credit card to fund these payments. You might also have to manually transfer funds between your accounts. These limitations can lead to payment delays and underutilized credit card rewards and incentives.

Without AP automation, your business might also run into roadblocks when paying international vendors—potentially limiting what funding accounts you can use and requiring your team to spend time on manual currency conversions.

It requires tracking down paper trails.

Do you trust paper trails to give you the full, real-time picture of your company’s finances? With a manual payable process, it’s difficult to stay on top of cash flow management, conduct audits, know the status of every invoice and accurately analyze the company’s current financial state.

The Benefits of Accounts Payable Automation

There are so many benefits to automating your accounts payable workflow. While the full scope of benefits depends on your unique payable process, we’ve outlined some common ones below.

Fast

Pay your vendors faster and spend more time on other parts of your business.

Automate manual tasks to free up time and energy.

This one may seem obvious, but AP automation ignites a ripple effect of efficiency. Now that you, your AP employees and approvers don’t have to wade through the mundane steps of a manual payable process, you all have more time to focus on other higher-value things.

With faster, more accurate digital payments, your vendors won’t have to spend time hunting down payments or working through errors. They can focus on delivering goods and services to help your business thrive.

Digital

Say goodbye to paper trails, manual calculations, cheques and items slipping through the cracks.

Say goodbye to paper trails.

Don’t worry about losing invoices, approval documents or journal entries in piles. On top of reducing human error, an automated accounts payable platform can make your auditing process much easier by keeping all your digital files in one place and providing you with current, accurate information.

Central

With everyone and everything on one centralized platform, you can keep track of transactions, audits and more.

Streamline approvals and keep everyone on the same page.

With AP automation, it’s easy to keep everyone on the same page—even with multiple approval processes. With everything on one platform, you and your team members can create custom rules to route invoices to different approvers, view payment statuses, address bottlenecks and access the most up-to-date info, no matter how complex your payable process is.

Synced

Integrate it with your accounting software to automatically reconcile payments and get an accurate view of your cash flow.

Integrate your AP automation platform with your accounting software.

You can integrate your AP automation platform with your accounting software to make it a true end-to-end solution. RBC PayEdge integrates with QuickBooks Online, Xero and Sage to offer you a centralized digital platform to track invoices, automatically reconcile payments, improve cash flow accuracy and smooth out your auditing process.

Yes, you read that right! After a payment is issued, your AP automation tool will help with payment reconciliation—no more tediously matching hundreds of documents.

Flexible

Pull money from different accounts and pay with credit cards even if your vendor doesn’t accept them.

Pay your vendors the way they want without moving money around.

Do you feel like you’re wasting time waiting for funds and moving money around? With AP automation, you don’t have to. Specifically with RBC PayEdge, you can choose to pull funds from nearly any Canadian bank account, credit union and Mastercard or Visa credit card—and RBC PayEdge will combine them into a single payment. You don’t have to bank with RBC to enjoy this feature or any other feature of RBC PayEdge.

This gives you more flexibility to manage your cash flow, stack up rewards and pay your vendors on time. You don’t have to wait for money in any single account (or resort to overdraft) during the payable process—avoiding overdraft fees, late payment fees and stalling. Fund payments the way you want, while paying suppliers the way they want.

Efficient

With faster payments and fewer errors, AP automation minimizes cleanups down the road.

Better manage your cash flow and working capital.

Think of cash flow, working capital and accounts payable as three threads woven into a financial tightrope—it takes careful planning to get the balance just right. To set the stage:

Cash flow is the money flowing in and out of your company daily.
Working capital refers to the funds available to cover your company’s short-term expenses.
Accounts payable are some of those short-term expenses.

Accounts payable may only be one piece of working capital management, but it’s a piece that places a lot of power in your hands. By fine-tuning your payable process, you gain more control over how you manage your company’s credit, payment schedules and cash flow.

The best part? AP automation can help you unlock new levels of flexibility and efficiency in your payable process—here’s how.

  • Free up your team from mundane admin tasks. Your accounts payable department will have the tools they need to work quickly and efficiently, allowing you to pay vendors on time—and potentially negotiate better payment terms or discounts.
  • Get real-time snapshots of your cash flow. Through your automated accounts payable platform, you can keep a close eye on all your past, current and upcoming cash outflows.
  • Cut down on costly mistakes. AP automation can help you avoid late and duplicate payments and, in turn, prevent cash tie-ups and late fees.
  • Enjoy flexibility with your funding sources. Avoid expensive wires and other costly payments (like paper cheques with postage) by pulling funds from multiple Canadian bank accounts (whether they’re RBC accounts or not) or using your business credit card—even if the vendor doesn’t accept cards.
  • Make payments closer to the due date. AP automation software can help you avoid longer processing times and make faster payments closer to the due date, which can mean more cash at hand leading up to payment.
  • Shield against fraud. Accounts payable automation allows for direct payments between existing bank infrastructure, maintaining the highest financial security standards. By digitizing your payable process, it also paves the way for you and your teams to conduct efficient audits, divide work, reduced duplicate payments, flag anomalies and more.

Over time, these perks can add up to significant savings that help to increase your company’s working capital.

Accelerate the AP Process by Syncing with Your Accounting Software

You might already use an accounting software (like QuickBooks, Xero or Sage) to create a half manual, half digital AP process. If so, the idea of introducing a new AP automation platform can feel daunting. But AP automation is designed to make your life easier every step of the way, which is why it integrates seamlessly with your accounting software.

With AP automation, you can effortlessly import vendors and outstanding payables, pay hundreds of invoices at once and automatically reconcile payments in your accounting software in just a few clicks. We’ll dive into what that looks like with RBC PayEdge below.

Improve Your Accounts Payable Process with RBC

From business credit cards to RBC PayEdge, there are many ways to streamline your accounts payable process at RBC.

What is RBC PayEdge?

RBC PayEdge is an innovative online payments platform that offers your business an automated, end-to-end solution for all your payable needs. It digitizes and streamlines your company’s accounts payable process, allowing you to pay your vendors and centralize your payables—no matter how complex.

Use RBC PayEdge Even if You Don’t Bank with RBC

You don’t have to be an existing RBC business client to use RBC PayEdge—it integrates with nearly all Canadian banks, credit unions and Mastercard or Visa credit cards. It also syncs with QuickBooks, Xero and Sage to keep the flow of your automated accounts payable process seamless and accurate.

The Benefits of RBC PayEdge

Now that we’re already hinting at its benefits, let’s dive deeper into some of the things you can do with RBC PayEdge.

  • Automate and accelerate manual tasks. Replace hours of filing papers, matching documents, hunting down approvals, updating records and reconciling payments with a fully automated system. With RBC PayEdge, in addition to automatic payment reconciliation, you can set up customizable rules that’ll digitally route your payment to the right approver. Just like that, you and your accounts payable team have more time to focus on higher-value tasks.
  • Feel confident in the financial picture you see. Not only is RBC PayEdge faster and more efficient than the manual AP process, it’s also completely digitized and centralized. You can easily check your outstanding payables, account balances and payment history and know that the data you’re seeing is accurate and up to date.
  • Pull funds from different pools. In your RBC PayEdge dashboard, you can add nearly any Canadian bank and credit union as well as Visa and Mastercard credit cards. When making a payment, easily pull funds from any of your accounts to pay exactly how you want and avoid overdraft fees in the process. Our competitive 2.3% processing fee on credit card payments also helps to extend your days payable and gain access to additional funding sources.
  • Pay your way. If your vendor only accepts cheques, RBC PayEdge can combine multiple funding sources to generate a cheque payment. You can even choose to pay your vendors with your business credit card—whether they accept cards or not.

    RBC PayEdge also makes it easy to pay your international vendors by displaying exchange rates for over 30 currencies and doing the currency conversions for you. This way, you can easily use your preferred domestic funding source(s) to pay vendors around the world.
  • Sync with your accounting software. RBC PayEdge integrates with QuickBooks, Xero and Sage to automate your AP process from end-to-end. To start your payable process, you can automatically import countless vendors and outstanding payments. All you have to do is enter your accounting software credentials and authorize the connection. To close out the payable process, you can sit back while RBC PayEdge automatically reconciles payments by updating your records in QuickBooks, Xero or Sage.

    Note: If you don’t use QuickBooks, Xero or Sage, you can still use RBC PayEdge by uploading vendors and payments via CSV file template or by hand.
  • Pay multiple invoices and vendors in a single order. Do you have several payments you want to make at once? Say goodbye to tedious single payments—simply click the checkbox next to the payments you want to complete. You can even schedule these payments to go out on a future date. When you issue a payment, RBC PayEdge will send confirmation to you and the payee for added visibility.
  • Pay globally and navigate exchange rates with ease. Are you working with vendors in the U.S. or other countries? You can pay them from your Canadian bank account without having to do the currency conversions yourself. Let RBC PayEdge calculate and display the exchange rate for you, while pulling funds from the account(s) you select.

Want to chat about how RBC PayEdge can streamline your unique accounts payable workflow?

Request a Call

Other Helpful Accounts Payable Tools Available at RBC

Keep your payable process running smoothly with a variety of digital solutions to pay your vendors—whether they’re located in Canada, the U.S. or across the world.

  • Interac e-Transfer‡: Pay invoices easily, quickly and securely using Interac e-Transfer‡ transactions for businesses. Eliminate the manual cheque process, efficiently manage liquidity and improve your payment tracking.
  • Business credit card: Explore our wide range of business credit cards or use our compare tool to find the best one for your business.
  • Direct deposits: Set up quick and secure payments with Electronic Funds Transfer (EFT) direct deposits into your payee’s account. You only need to set up direct deposits once for recurring payments.
  • Wire payments: Pay your vendors in over 30 countries (and over 30 currencies) with wires through RBC Online Banking for Business and RBC Express.
  • System-wide electronic bill payments: Send electronic bill payments (up to 100 payments at a time) to any of the thousands of payees in our system.

Frequently Asked Questions About the Accounts Payable Process

Accounts payable refers to the short-term expenses your company owes to vendors and creditors. Otherwise known as payables, they typically come in the form of invoices issued for a specific product or service. These invoices must then pass through your company’s accounts payable process.
The accounts payable process is a set of actions taken by your company to pay a vendor for a good or service. From a simple invoice payment to a complex payable workflow, the AP process can look different for companies of various sizes and industries. Here’s a quick look at the AP process for a small business compared to a large corporation.
Small Business Large Corporation
  • Receive vendor invoice.
  • Confirm invoice accuracy.
  • Schedule the payment.
  • Pay the invoice.
  • Receive vendor invoice.
  • Confirm invoice accuracy.
  • Enter invoice into accounting software.
  • Get payment approval(s).
  • Schedule the payment.
  • Pay the invoice.
  • Update accounting records to reflect payment.

Accounts payable automation is a type of payment solution used to digitize, modernize and streamline your company’s payable process. RBC PayEdge is an innovative AP automation platform designed to integrate with your existing accounting software (QuickBooks, Xero or Sage) to automate your AP process from beginning to end.

AP automation through RBC PayEdge allows you to speed up the payable process, reduce errors, avoid paper, stay flexible in your funding, simplify the approvals workflow, automatically reconcile payments and so much more. All in all, AP automation frees up significant chunks of time, so you and your AP team can focus on other parts of the business.

Accounts receivable refers to the money owed to your company for goods or services it provided. In your accounting books, receivables haven’t yet been paid, but they’re assets that represent capital your company will eventually get.

Accounts payable represent the money your company owes to a vendor for a good or service, while accounts receivable represent the money your company is owed for a good or service it provided to a third party.

Working capital is the money available to cover your company’s short-term expenses. These are your company’s “on-hand” funds to pay for goods and services that keep your business running. Some example expenses include vendor payments, payroll, utilities and marketing services.

Working capital management is a financial strategy designed to ensure your company operates efficiently and profitably. Effective working capital management involves balancing assets and liabilities (accounts receivable and accounts payable fall into these categories, respectively) and keeping more than enough cash on hand to cover short-term expenses.

The star of this article—accounts payable—represents just one piece of the working capital management puzzle.

RBC PayEdge is our unique online payments platform that automates your accounts payable process from beginning to end. By syncing with your accounting software (QuickBooks, Xero or Sage), RBC PayEdge digitizes and streamlines every step of your payable workflow—no matter how complex it may be.

Apart from these prohibited businesses, Canadian business of any size can use RBC PayEdge, and you don’t have to be an RBC business banking client to use it.

Request a Call About RBC PayEdge