The top 5 capabilities of AP Automation/Invoice-to-Pay solutions

The vendors considered

Exploring the actual market state of the top 5 capabilities

1. Supplier collaboration workspace

The ability of a supplier collaboration workspace or portal to enable suppliers to engage within a buyer’s process (e.g., visibility, self-service, document exchange, etc.) with its corresponding access security.

You can expect basic supplier portal capabilities and collaboration elements such as email and document upload from the average vendor. Vendors typically have basic, limited user account management, role-based security, portal configuration and profile maintenance. Top vendors stand out with real-time collaboration and dispute resolution, extensive full access to workflow and business-rule support, and fine-grained workflow permissioning.

Top performing vendors have achieved a “Network Effect” type of collaboration where suppliers can manage all their buyers in the same portal and even behave as buyers themselves receiving invoices from their suppliers.

2. Invoice processing

The ability to maximize the accuracy, efficiency and timeliness of invoice processing and to resolve any issues/disputes with suppliers and internal stakeholders.

The average AP/I2P vendor has core support for standard invoice requirements. Core support includes the ability to automate invoice capturing, matching, validation and approvals based on business rules, the ability to support dispute resolutions through portal capabilities, the ability to create credit notes, and full invoicing functionality within a mobile device. Top performers go above and beyond by processing invoices through multiple approval chains, automatic approvals using AI/ML capabilities, and the ability to create recurring invoices from multiple methods.

The vendors that differentiate themselves as top performers in our SolutionMap data set to focus on processing no-touch, completely automated invoices, with the option to configure the extent of exceptions and human interventions. Top vendors also use AI capabilities for approvals, coding (including non-PO invoices) and fraud detection, which streamlines the validation and approvals process.

3. Early payment

The capacity to intelligently identify and capture early payment discounts for both buyers and suppliers in order to earn higher cash returns.

Average performing vendors have basic early payment capabilities and typically support only one or a limited number of currencies. In terms of generating an early payment working capital plan for buyers, the average vendor has partial support and the ability to generate reports. Top performing vendors have more in-depth global capabilities and can support multiple countries, as well as possess the ability to configure dynamic discount schemes at various levels.

In our experience, what differentiates advanced working capital and early payment vendors is the ability to provide a cash planner tool to improve cash and capital planning for buyers and suppliers, a partner ecosystem to support supply chain financing and AI capabilities to improve supplier adoption of the programs. However, even many of the top performers do not currently offer these capabilities and lean more towards core support for standard requirements rather than capabilities that go above and beyond.

4. Payment processing

The ability to schedule and execute all supplier payments in a cost-effective, efficient and secure way, regardless of the payment method (check, electronic check, ACH, wire).

Average performing vendors should have basic support for handling payments in multiple methods, such as the ability to capture the supplier’s payment method and transfer it to the payment system with the invoice. The average vendor also has the ability to support cross-border payment scenarios, however, support is limited to certain countries. On the other hand, top performers support global cross-border payments and the ability to create payment plans based on multiple criteria, as well as AI/ML analysis for fraud prevention. Top performers also have a workspace (UI/UX) to view, select and approve payment files to be processed.

Some top vendors have AI/ML analysis and AI-led identification of discrepancies. They also have advanced capabilities such as an automated payment scheduler and worldwide presence to support cross-border payments without the hassle of banks, some are even licensed to transmit funds.

5. AP Automation analytics

The capacity to meet Finance/AP business goals through strategic, actionable insight from all relevant applications.

An average vendor should include out-of-the-box report builders (drag-and-drop models), reporting dashboards and descriptive reports for payment, invoicing and finance analysis via AP metrics. Top performers have deeper analytics capabilities, such as market intelligence through community data, AI/ML-enabled finance actionable analytics.

Some top performers include actionable analytics for benchmarks, process KPIs and user KPIs, as well as payment predictive and prescriptive analysis for fraud detection. Some support early payment adoption, cash management and working capital optimization to assist finance operations.

What does an AP Automation/Invoice-to-Pay solution do?

AP Automation/Invoice-to-Pay (AP/I2P) platforms are integrated solutions that automate and streamline the process of invoice capturing, matching, validation and approval and payments processing — sometimes known as buy-side electronic invoice presentment and payment (EIPP) processing.

Why buy AP Automation/Invoice-to-Pay solutions

The process of capturing and validating supplier invoices carries a high burden of manual work, which can introduce errors and cause delays. Converting invoices to an electronic format allows automation and streamlining of the process (including approvals), therefore decreasing the need for manual intervention and eliminating errors. AP/I2P automation also enables connection to other solutions, which adds value to the process, for example, ensuring that invoices are valid and in compliance with regulations.

How ‘Market State’ is derived from the SolutionMap dataset

These ‘Top 5’ (of 17) critical digital capabilities stem from the Spend Matters TechMatch workbench — derived from 121 requirements scored in the AP Automation/Invoice-to-Pay (I2P) Spring 2024 SolutionMap solution benchmark.

The Top 5 capabilities are the highest-weighted critical capabilities that are central to the displayed solution market benchmark. They have been developed by Spend Matters team of analysts and refined by procurement users in tech-selection projects using our market-proven SolutionMap benchmarking dataset and associated TechMatch decision-making tool.

Spend Matters® SolutionMap Procurement Technology Intelligence

Spend Matters built a better way to help companies, and their consultants, advance procurement practices via technology. SolutionMap compares technologies on two main factors: technical capability (gathered via a rigorous RFI process) and validated customer ratings. Data is refreshed every six months. Participation for vendors is completely non-commercial.

Spend Matters® SolutionMap Intelligence Process Overview

Spend Matters SolMap Process

Featured vendors undergo a rigorous, RFI-based assessment process including functionality counter-scoring, supporting materials review, tech demos and submission of independent customer references. Expert analysts deeply vet solution capabilities prior to ranking inclusion. Only relevant industry players that meet the criteria determined by Spend Matters are invited in order to create a complete view and optimal intelligence for its members.