If you keep reading, you’ll see how AP automation actually works—from invoice capture through to posting in your ERP—and what happens at each step. If you stop here, you risk treating it as a black box and missing chances to improve control, speed, and visibility across your payables process.

At its core, AP automation replaces manual, email-driven workflows with a structured, rules-based system. It takes invoices in, reads them, validates them, routes them for approval, and then hands clean, approved data to your ERP. The goal is simple: less manual effort, fewer errors, and a process you can monitor and trust.

Step 1: Capturing and reading invoices

Everything starts when an invoice arrives. In a manual world, it lands in a mailbox, shared inbox, or on someone’s desk. With AP automation in place, those same invoices are captured centrally—via email ingestion, supplier portals, file uploads, EDI, or scanning for paper documents.

Once captured, the system uses data extraction tools (often with OCR and machine learning) to read key fields: vendor, invoice number, date, amounts, tax, PO numbers, and sometimes line items. Instead of a person typing data into a screen, the software pulls this information automatically and flags anything it doesn’t understand for review.

This is where early efficiency gains show up. Your team stops rekeying invoice data and starts checking quality and handling exceptions.

Step 2: Matching and validation

After reading the invoice, the next step is validation. The platform checks whether the invoice matches what your organisation expects to see. That usually means comparing it against purchase orders, receipts, contracts, or vendor records.

For PO-based invoices, AP automation attempts a match: does the vendor, amount, and quantity align with the PO and receipt? If yes, the system can move the invoice forward with little or no human touch. If not, it flags an exception for someone to investigate—wrong price, missing receipt, out-of-tolerance amounts, and so on.

For non-PO invoices, the software uses rules to validate coding and ensure required fields are present. This step reduces errors and prevents obviously incorrect or duplicate invoices from slipping further down the process.

Step 3: Routing invoices for approval

Once an invoice is validated, it has to be approved. Manually, that usually means emailing PDFs around and hoping people respond. In an automated environment, approvals follow predefined workflows driven by clear rules—amount thresholds, cost centers, departments, entities, or vendor type.

The system assigns each invoice to the right approver (or chain of approvers), sends notifications, and tracks who has acted and who has not. If someone doesn’t respond within a set time, the workflow can send reminders or escalate to another approver.

This is where AP automation starts to improve control. Approvals are no longer buried in inboxes. You can see exactly where each invoice sits, who is responsible, and how long it has been there—critical information for month-end, audits, and vendor management.

Step 4: Posting into the ERP and updating records

After approvals are complete, the invoice is ready to be recorded in your ERP. Rather than someone retyping all the details into SAP, Oracle, Infor, or another system, the automation platform pushes the data through a secure, configured integration.

The invoice posts to the correct vendor account, GL codes, entities, and cost centers. Any tax, currency, or project codes follow the rules you’ve defined. If there is an issue—such as missing master data—the system can flag it for correction instead of silently creating bad records.

At this point, AP automation has done more than speed things up. It has improved data quality, reduced duplicate entry, and created a consistent link between invoices and your financial reporting.

Step 5: Creating visibility, control, and audit trails

While all of this is happening, the system is also building a complete history for every transaction. It records who touched the invoice, what changes were made, when approvals occurred, and how exceptions were resolved.

This audit trail is one of the most valuable outcomes of AP automation. It gives finance leaders and auditors a clear line of sight from invoice receipt through to posting. It also powers dashboards that show cycle times, bottlenecks, exception rates, cash commitments, and approver performance.

Instead of guessing where invoices are stuck or manually counting how many are overdue, you see everything in one place—and you can act on that information quickly.

Bringing it all together

So, how does AP automation work? It captures invoices in one place, reads and validates the data, routes each document through a rules-based approval process, and then posts approved invoices into your ERP—while creating full visibility and auditability along the way.

If your organisation is still relying on shared inboxes, spreadsheets, and paper to run accounts payable, you’re doing more manual work than you need to and carrying more operational risk than you realise. Now is the moment to explore how automation can reshape your payables process—so your AP team spends less time chasing invoices and more time supporting strategic decisions and vendor relationships.