Top 10 Accounts Payable Best Practices: A 2025 Guide for Finance Teams

Recently updated on July 21st, 2025 at 09:52 am

Automating accounts payable (AP) is expected to result in faster invoice approvals, fewer errors, better cash flow management, and improved vendor relationships.

According to a 2024 study by The Institute of Financial Operations and Leadership, 41.4% of the surveyed businesses plan to automate their accounts payable, and they expect strong ROI. 

However, despite the wholehearted efforts of AP leaders and managers, many fall short of their AP automation goals due to workflow gaps, poor user adoption, or fragmented automation.

To truly unlock the benefits of AP automation, you need the right practices more than the right tools.

Integrating the best practices into your processes will help you:

1. Utilize AP automation well and ensure teams leverage it efficiently
2. Streamline workflows and establish proper data validation rules
3. Build consistent processes that are aligned with regulations

In this blog post, we discuss the top 10 AP automation best practices for 2025 you can implement right now.

Let’s get started.

Top 10 Accounts Payable Automation Best Practices for 2025

1. Secure stakeholder buy-in

Gaining stakeholder buy-in is vital for successful AP automation. In its report titled Accounts Payable Metrics that Matter in 2023, Ardent Partners reports that 36% of AP leaders consider ‘enhanced collaboration with key stakeholders’ one of the top strategies to improve AP performance and effectiveness.

As such, engaging key departments, such as finance, IT, and procurement, early is vital to ensure alignment and smoother implementation.

Finance department

The financial team is the one that stands to gain the most from implementing AP automation. It helps them free up time, improve accuracy, and give real-time visibility into cash flow and spending pattern.

Engaging them helps you understand the exact challenges they face and pick the best AP automation that meets their needs.

IT department

For the AP automation software to function effectively, it must integrate with other business tools, such as ERP, CRM, analytics, and more. Incompatible AP automation tools lead to tech debt, security risks, or integration issues.

Working with IT helps you pick the right tool that is compatible with your IT infrastructure and build custom connectors if you need additional integrations. 

Procurement department

Procurement teams manage vendor onboarding, communication, and contract compliance. As an AP leader, you need these vendor details to build custom AP workflows and ensure smooth implementation.

Having these stakeholders early in the project helps communicate the return on investment (ROI) and ensure the successful implementation of AP automation.

2. Appoint an AP automation leader

A dedicated AP automation leader is crucial for its success since the leader is responsible for overseeing the implementation and ensuring accountability and coordination between departments.

The leader should have a deep understanding of AP processes and the ability to manage change.

• As the central point of contact responsible for driving AP performance, the leader ensures accountability for the success of AP automation
• The AP leader can bridge gaps between finance, procurement, and IT teams to ensure alignment between multiple teams
• You can take faster decisions about tools, process redesign, and exception handling with a leader in place
• Track KPIs like invoice cycle time, exception rates, and cost per invoice to help AP evolve into a strategic function
• Organize training sessions to upskill staff and ensure alignment with organizational objectives.

A strong leader ensures the automation initiative remains focused on the initial goals and delivers measurable results.

3. Define and standardize workflows

AP workflows are what makes AP automation a reality. Without building the right workflows and optimizing them, it would be impossible for an AP team to enjoy the benefits of automation.

Here is what you can do to standardize the AP workflow:

Step 1: Map the end-to-end invoice lifecycle

Discover and document the current steps that you follow from invoice receipt to payment:

1. How do you receive the invoice, such as email, paper, or client portal?
2. How is the invoice verified?
3. Who approves the invoice, and based on what conditions?
4. Where is the data entered, like the ERP or AP system?
5. How are payments processed, such as manual checks, ACH, or virtual cards?

Step 2: Define roles and responsibilities

Clearly define the role of everyone included in the workflow, from AP clerk to approvers, error handlers, and others.

Step 3: Standardize policies and rules

Build a set of policies, rules, and guidelines for everything that can happen within the purview of accounts payable.

It can include a variety of elements, such as:

• How to handle exceptions
• Invoice formats and required fields
• How to hand invoices with and without a PO
• Payment terms and schedules
• Approval thresholds

Step 5: Design the workflows and optimize them

Built workflow templates in your AP system as per your invoice processing and approval requirements and establish:

• Default routing for invoices
• 2-way or 3-way matching rules
• Notification triggers for delays or errors
• Approver sequences by department or cost center

Once you have developed the workflow, test it in a small pilot group and cover all possible scenarios. It will help you further identify areas that need improvement and optimize workflows. 

This clarity enables automation tools to function effectively, ensuring seamless execution across the AP cycle.

4. Choose the right AP automation software

Selecting the right AP automation software is pivotal for long-term success. Look at what you need from an AP automation solution and prioritize solutions that meet these goals.

There are several elements you need to consider when picking an AP automation tool:

1. Establish the core goals you want to achieve with the AP automation software, like reducing manual efforts, capturing invoices, and better reporting
2. Create a checklist of the essential features you want in the order of their importance, and use the list to weigh options
3. Assess the integration capabilities of the tools based on your current IT and business management tools
4. Compare the user experience, reviews, and support of different tools to find one that matches your needs the most
5. Check the tools by requesting a demo or signing up for a free trial to understand the tool in reality

Choosing the most suitable AP software that meets your needs is vital to meeting your accounts payable automation goals.

There are many AP automation tools out there that can meet your needs. PathQuest AP offers a scalable, AI-driven AP automation platform with seamless ERP integrations, real-time reporting, and robust security features while simplifying workflows and boosting efficiency.

5. Implement advanced invoice capture and processing

Leveraging advanced technologies like optical character recognition (OCR), artificial intelligence (AI), and machine learning (ML) transforms invoice processing.

• OCR: This technology helps extract data from invoices with high accuracy and reduces manual entry errors
• AI: AI helps with intelligent categorization, automated approval workflows, and automated three-way matching
• ML: This technology helps the system learn from your processes and practices to adapt to your business needs over time

These tools streamline approvals by flagging discrepancies in real-time. For example, AI can detect duplicate invoices or incorrect amounts, saving time and ensuring accuracy.

Automated invoice processing technologies in your AP automation processes help with the following:

1. Allowing staff to focus on high-value tasks and improve efficiency
2. Accurate invoice processing via AI-driven error detection
3. Faster invoice processing with automated data extraction
4. Reduce manual data entry and avoid errors

6. Enhance vendor communication and relationships

Building strong vendor relationships is essential for efficient AP operations. It helps you negotiate better prices and payment terms for your business. You can also enjoy better credit terms when you have a strong relationship with your vendors.

Automation tools like vendor portals enable vendors to submit invoices, track payment status, and access key information in real-time.

AP automation lets your vendors submit invoices directly on the portal of your AP software to help reduce inquiries and keep them informed.

Automated notifications further improve communication and build trust, leading to fewer disputes and stronger partnerships.

7. Ensure data security and compliance

AP automation involves sensitive financial data, which makes protecting vital business information vital. Hence, the chances of financial fraud via AP automation can be high.

In its report titled Finance Leaders Fraud Report 2025, the IOFL reports that 77% of their respondents said they know someone who has been a victim of AP fraud in the last five years.

In order to avoid these challenges, as a business, you can ensure data security with role-based access, multi-factor authentication, and encryption to protect data.

Many top AP automation software offers these capabilities to ensure security and compliance in diverse ways:

• Encrypting data during transmission and storage
• Using audit trails for transparent transaction tracking
• Enabling regular compliance checks to meet industry standards

While looking for an AP automation solution, pick one that helps you comply with data security and industry regulations, such as SOX and tax requirements. Regular security audits and staff training can also minimize risks of breaches or fraud. 

8. Monitor key performance indicators (KPIs)

Tracking AP KPIs like cost per invoice, cycle time, and error rate is essential for optimizing AP automation. You can use dashboards to visualize metrics and gain actionable insights.

Regardless of the industry you belong to, monitoring the KPIs of your accounts payable can benefit your business immensely with:

1. Improving cash flow management by tracking invoice status, payment terms, and early payment discounts
2. Processing payments fastening by identifying process bottlenecks and solving them
3. Bringing your operational costs by reducing manual tasks, errors caused by manual data entry, and reducing instances of exception handling with automation
4. Building better supplier relationships with timely and predictable payments and fewer disputes
5. Ensuring greater financial visibility with the help of AP data to inform strategic decisions and compliance efforts

Regularly reviewing KPIs ensures the system delivers the expected AP automation ROI and supports continuous improvement.

9. Integrate AP automation with ERP systems

Integrating your AP software with ERP systems ensures data consistency and eliminates manual data entry.

Automated data flow between AP software and ERP platforms like SAP or NetSuite reduces errors and saves time. Syncing invoice data with general ledger entries in real-time streamlines reconciliation. This connectivity enhances visibility across financial operations and supports strategic decision-making.

A key element to keep in mind is to choose an AP automation solution that offers adequate integration options.

For instance, PathQuest AP offers integrations with leading tools like Sage Intacct, QuickBooks, Xero, and more. 

10. Plan for continuous improvement

AP automation is not a one-time project but an ongoing process. As such, you need to plan for continuous AP process improvement.

There are several ways to do this:

• Regularly review AP automation workflows
• Gather team feedback
• Update features to align with evolving needs
• Stay informed about advances like AI-driven analytics or blockchain

You can also conduct deep reviews in regular intervals, like three months or six months, to identify inefficiencies and improve your AP processes.

Through this proactive approach, you can ensure your AP system remains effective and future-proof.

Ready to Automate Your AP Process with PathQuest?

While these best practices are vital to improving your AP performance, the right AP automation software is the backbone of your accounts payable process. Hence, it is vital to pick the best accounts payable automation solution in the market.

PathQuest AP can help you reduce costs, improve accuracy, and enhance vendor relations with:

1. Custom AP automation workflows with robust security, multi-layer approval routing, and exception-handling capabilities
2. Real-time and detailed dashboards to help you understand invoice and payment status and make informed decisions
3. Accurately capturing invoice details from emails, Google Drive, Dropbox, and more using AI-enabled OCR technology
4. Managing vendors better with a vendor management system offering end-to-end access to invoice history and comments

Book a free demo today to see how AP automation can drive your business forward and save 50% of your AP team’s time.

Frequently Asked Questions

1. How does AP automation integrate with existing ERP systems?

Most AP automation tools offer native integrations, APIs, or pre-built connectors that sync invoice data, payment status, and vendor records directly with your ERP. For example, PathQuest AP offers native integrations with Xero, QuickBooks, and Sage Intacct. If your AP automation software does not offer native integration, you can build one with the API provided by the software.

2. How to make AP more efficient?

You can make your AP more efficient by starting to eliminate manual tasks through automation, digitizing invoices, and streamlining approval workflows. You can also standardize processes, reduce exceptions, and use real-time dashboards to monitor AP KPIs and make improvements based on your insights. Using an AI-powered and feature-rich AP automation software solution like PathQuest AP can also help you.

3. What are the top best practices for automating accounts payable?

If we are talking about the top three, then defining and standardizing workflows, choosing the right AP automation software, and monitoring the key performance indicators for continuous improvement are the top best practices.

4. How can companies measure the ROI of AP automation?

Measuring the AP automation ROI can be tricky. However, the best way is to start with tracking reductions in invoice processing costs, cycle times, and late payments. At the same time, track increases in early payment discounts, touchless processing rates, and team productivity. Now, you can compare the data from pre- and post-automation metrics to calculate cost savings and efficiency gains.

5. What security measures are essential in AP automation?

Since security is a crucial part of AP automation, look for the features you want the most. If you want more access control, they look for features like role-based access controls or multi-factor authentication. For businesses that want to ensure better audit readiness, look for features like automated invoice validation rules and audit trails.