Accounts payable in 2026: Why it matters and how automation helps

In today’s world, the pace of business is only getting faster. Without a strong accounts payable (AP) process, it can be difficult, even impossible, for your company to keep up. Losing track of what is owed can lead to devastating debts and eventual losses. Keeping a close hold of your company’s AP is how you ensure its success today and well into the future.

What is accounts payable?

Accounts payable, or AP, refers to the money a company owes to its suppliers for goods and services received. For example, if your company employs an agency for consulting work or uses a vendor for administrative tools, you will receive an invoice reflecting the cost of the services and the amount owed. These invoices are sent by the vendors to your AP department, which then processes them by reviewing the details and delivering the payment.

Why is accounts payable important?

Accounts payable is important because it ensures your company is both tracking and paying what it owes. Doing so keeps your business out of the red, allowing you to evaluate how your organization is spending money and make changes to reflect a healthier balance sheet.

What are the biggest challenges?

No matter the size of your business, invoicing is a challenge if not managed properly. Invoices that come in with missing purchase order (PO) numbers, incorrect amounts, or as duplicates can cause delay processing and approval and lead to late payments. These late payments can subject your company to fees and even damage its relationship with the vendor. Plus, a lack of visibility means these outstanding liabilities go unaddressed for longer, creating bottlenecks and impacting cash flow.

All of these issues are a result of a central problem: a manual process. Paper invoices, spreadsheets, and email approvals don’t just slow everything down; they create a breeding ground for mistakes and confusion. They also limit how much insight a company has into its balance sheet, making fiscal planning that much harder.

What an accounts payable workflow should look like

An accounts payable workflow should be simple and controlled, allowing for quick approval and maximum visibility. Here’s a look at how it should operate from end to end:

• Invoice intake: All invoices should flow into one centralized location, ideally into AP automation software, where each document is digital and easily accessible.
• Invoice capture: Once an invoice is received, it should be reviewed for the information needed to process the invoice, such as the vendor name, the PO and invoice numbers, and the amount owed.
• Data validation: Once the data is extracted, it should be validated using three-way matching, comparing the invoice with the original purchase order and receipt. Any price or quantity mismatches, missing PO numbers, or unauthorized vendors should be flagged automatically.
• Approval routing: Approvals should be quick and seamless, with established amount- and role-based rules and automatic routing, as well as reminders for easy completion and compliance.
• Payment: Once the invoice is approved, payment should be issued as soon as possible to avoid late fees. It should be scheduled and executed within AP software, which can validate the vendor and bank details and provide reconciliation information for your vendors.
• Audit trail: Every invoice should have accompanying documentation for auditing purposes. These are things like payment records, matching evidence, approval history, and change logs.

How automation and AI can help

Manual processes aren’t just slow, they put your business at risk. Because accounts payable is listed as a liability on a balance sheet, it’s important to have an automated AP management system that can:

• Streamline the AP process
• Improve cash flow
• Prevent errors and late fees
• Identify fraud
• Allow you to maintain strong vendor relationships

With AP automation and AI, you can process more invoices more accurately and in less time. In fact, research shows automated, AI-powered software enables teams to process over 60% more invoices in a month. With AI, you can:

• Improve AP accuracy: AI technology like machine learning and optical character recognition (OCR) can quickly capture and interpret invoice data, significantly reducing the need for manual data entry and reducing errors.
• Optimize cashflow management: AI can automate entries, flag suspicious transactions, and provide more accurate accrual and forecasting based on current and historical data, ensuring timely payments and reducing the risk of missed discounts.
• Enhance fraud detection: AI can analyze transaction patterns and anomalies, detecting potentially fraudulent activities across all financial transactions. It can also perform pattern-based analyses in seconds, helping prevent financial losses.
• Automate tax calculations: AI can help ensure compliance with complex tax regulations, reduce the risk of errors or miscalculations, and mitigate the risk of penalties and audits, keeping your company compliant.

Which accounts payable metrics matter most in 2026?

AP is essential for effectively managing cash flow and maintaining strong supplier relationships, especially in an ever-changing market. Here are the top AP metrics your organization should focus on:

• Invoice processing time: Processing invoices quickly gives accounting more time to determine how and when to pay it. The lower this metric the better.
• Exception rate percentage: Any time an invoice is flagged with an exception, such as a wrong date or missing PO number, it slows down the entire process. Aim to minimize these exceptions.
• Invoice processing costs: The average cost to process an invoice includes staff and operating costs like salary and technology overhead, and multiplies every time someone else is involved. A simple process can save on costs.
• Touchless processing percentage: A truly automated AP process requires little human intervention. The higher this metric the better.
• Time-managing inquiries: Employees should be spending their time on strategic tasks, not fielding supplier invoice inquiries. Ideally, this metric should be as low as possible.

At the end of the day, the difference between good AP and great AP in 2026 depends on the process you use. An AI-powered, automated system like SAP Concur will take your invoice management much further than any manual process. Talk to an SAP Concur solutions expert today to learn more about our products and get a quote tailored to your business.