Wondering how you can automate the accounts payable process using QuickBooks Online or QuickBooks Enterprise?

After helping 100’s of customers, I think we are qualified to answer this question.

In this article, we will cover the core capabilities of QuickBooks and to what extent you can use those capabilities to automate the accounts payable process. We will cover:

1. Key steps you need to automate accounts payable using QuickBooks.
2. Compare QuickBooks Online and QuickBooks Enterprise capabilities.
3. How to use a system like ProcureDesk to supercharge your Accounts Payable (AP) process and simplify the invoicing process. 

But before you get started: 

Download out Invoice Process Optimization Guide to see the proven strategies to reduce AP cycle time by 39.8%

Key Steps in Accounts Payable process

Before we talk about automating the accounts payable process using QuickBooks, Let’s first look at the key steps in the AP process. 

 

1. Receiving Invoice

The first step in the accounts payable process is receiving the invoice from the vendor. 

Here you are looking at increasing the efficiency by automatically capturing the invoices from vendors. 

The problem with many companies is that they don’t have a defined process for receiving invoices 

You might have paper invoices or invoices sent directly to stakeholders instead of the AP team. That results in extra effort in scanning the invoices and following up with different stakeholders to gather the supplier information.

In an ideal state, you want to reduce the effort spent on receiving invoices by using the following strategies:

1. Set up a dedicated AP email Inbox and have all supplier invoices routed to that. 
2. Have a process to automatically pull the invoice attachments from the supplier emails.
3. Enable supplier self-service so that suppliers can submit their invoices directly using a supplier portal.
4. Move to e-invoicing where possible so that invoices can be submitted through a system-to-system communication. 

2. Entering the invoice data or extracting the data from the invoice

Once you have received the invoice, the invoice needs to be entered into your accounting system.

This generally includes someone to manually enter the data into your accounting system.

That is a time-consuming process because not only do you have to enter the invoice, you also have to code the invoice to the right chart of accounts.

In an ideal state, you don’t need to enter the invoice data into the system. You can reduce the data entry time by:

1. Leveraging a tool that can extract the invoice data from the document. 
2. Assign the correct chart of accounts based on predefined rules. 
3. Pull relevant data from a purchase order or other related documents.

3. Matching the documents 

The next step is matching the invoice with the relevant documents like purchase order and receipt (a.k.a 3-way matching process).

If you want to read more, we have covered the 3-way match process in detail.

The challenge is that many companies don’t either have a purchase order process or the match process is highly manual.

In either case, you have to use emails for getting the invoices approved, and that not only takes time, but it also sucks the productivity of the entire company. 

You can reduce the time spent on matching invoices by:

1. Leveraging an integrated purchasing and invoicing system that does the document match for you. 
2. Inbuilt rules to automatically accept the invoices or route for approvals based on the predefined business rules. 

4.  Approvals for exceptions 

The next step is getting invoices approved for payment. 

If you are using a purchase order (PO) process, you can rely on the purchase order to match the invoice. 

If the invoice matches the PO and there is a receipt confirmation, you don’t need further approvals. 

However, if you do have to get the invoices approved then emails become a challenge.

You can reduce the time spent on approvals by:

1. Using an exception approval process that is driven by a system and not via emails 
2. Define tolerances so that you can automatically accept small deviations from the purchase order. For example, additional shipping and taxes.

5. Payment to the vendor

The final step is the payment to the vendor.

This can be managed directly in QuickBooks or you can use third-party systems like Bill.com to process payments.

Does QuickBooks have AP automation?

The short answer is that QuickBooks doesn’t have AP automation capabilities.

QuickBooks is designed with a use case where only a few people are entering the invoices and it is assumed that the invoice has already been approved. 

We will answer this question in the context of the capabilities we have defined above.

 

Quickbooks Bill Approval Workflow

A common challenge for many companies is that they need to get the Bill/Invoice approved before the vendor can be paid. 

As we mentioned above, if you use a 3-way match process then you don’t need to approve every invoice. An Integrated purchasing and invoicing solution can in fact provide you a view like this:

However, QuickBooks doesn’t have a native approval workflow capability.

So you are left with two choices:

Use good old email 

You of course can use emails for approvals. The challenge is that using emails is very cumbersome. 

Some of the challenges with an email-based approval process:

1. You have to constantly track what emails have been responded to or not. 
2. If there is an issue that needs to be resolved before the invoice is paid, then that becomes a separate workflow.
3. Constant reminders to people who forget to approve their invoices. 

All this causes delays and you have a longer month-end process. 

Use a third-party system like ProcureDesk

The other option is to use an Accounts Payable software like ProcureDesk to automate the bill or invoice approval process.

Here is how that invoice approval works:

1. You set up rules on how to route an invoice for invoice approval process based on your company’s approval matrix.
2. After the invoice is entered into the system, let the system automatically route the invoice for approval.
3. Instead of manual back and forth, you can now use the system to collaborate on the open items.
4. You don’t need to worry about reminding people about approving invoices, the system automatically does that for you. 

Payable Software Compatible with QuickBooks

Who wants to do double data entry?

I guess no one!

So that’s why you need to have Accounts payable software that is compatible with QuickBooks so that the data is automatically synced with QuickBooks.

In this section, we will cover key capabilities and how the AP automation solution integrates with QuickBooks Accounts payable process. 

AP software that integrates with QuickBooks

There is no benefit in automating your accounts payable process and then still entering the data manually in QuickBooks online or Enterprise. For example, entering invoices in QuickBooks and so on. 

If you have AP software like ProcureDesk that integrates with QuickBooks, then you don’t need to worry about entering the data into QuickBooks. Infact connecting with QuickBooks just take few clicks:

Through an automated workflow, you can set up the system to send the purchase orders and invoices to QuickBooks once they are approved in ProcureDesk. 

This can be done in real-time as is the case with QuickBooks online or close to real-time in the case of QuickBooks Enterprise. 

With an AP software that integrates with QuickBooks, you can implement a complete procure-to-pay process in the AP system and use the accounting system for bookkeeping and payments. 

Another benefit of integration is that you don’t have to give access to QuickBooks to anyone outside the finance team.

That not only saves cost but also gives you peace of mind that no one outside finance is looking into the financials and no one will mess up your books!

Import required master data

For creating an invoice in QuickBooks, you need the following 

1. Supplier information 
2. Chart of accounts
3. Class – optional 
4. Project/Job allocation
5. Department/Location

With an integrated system, you don’t have to worry about syncing the data manually. 

The data gets automatically synced based on a fixed schedule. 

For example, Suppliers and charts of accounts could be in real-time and the rest of the data can be synced every night. 

Setup 3-way/2-way match process

The biggest benefit of an AP system is that you don’t have to manually match the invoices with purchase orders.

For example, with ProcureDesk, you can have purchase orders and invoices in a single system so that when the invoice is uploaded, you don’t have to go looking for the purchase order. 

The invoice to PO match can be done in two different ways

3-way match process

With a 3-way match process, the invoice is matched to the PO and receipt to confirm that the invoice matches with what was being purchased and at the correct price.

2-way match process

With a 2-way match process, the invoice is matched with the purchase order and it is also sent for approvals so that the invoice can be verified for payment. 

For example, consulting services and so on. 

Setup rules for invoice approval

With the 3-way and 2-way match processes, you can significantly reduce the number of invoices that need approval. 

However, there are still going to be invoices that need approval. 

For example, An invoice shows up without an associated purchase order, then that invoice needs to be approved before the vendor can be paid. 

Or the invoice total amount exceeds what is on the purchase order. 

Or the invoice line amount is greater than the line amount on the purchase order.

The examples above are some of the day-to-day issues you see with invoices. 

So how should this be handled?

You need to set up a workflow so that invoices can be routed to the respective team members based on the scenario. You can define simple business rules as follows:

Here are a couple of sample workflows you can implement by leveraging the Automated Payables process for QuickBooks:

1. Route a non-PO invoice for approval based on the approval matrix set up by the finance department. 
2. Route the invoice to the order contact for review in case of the invoice line item unit price doesn’t match the unit price on the purchase order.
3. For invoices related to services rendered, route an invoice for approval to the order contact for review and approval.

 

Automated sync of Bills with QuickBooks 

Once the invoice is approved, the next step is to pay the vendor. 

If you are using QuickBooks or other solutions like Bill.com, then you need to enter the invoice data in QuickBooks first. 

Now since you have already created an invoice in a system like ProcureDesk, you don’t need to re-create the same document in another system.

By leveraging the integration with QuickBooks, the Bill can be automatically synced with QuickBooks from the AP automation system.  

The frequency of the sync could vary based on whether you use QuickBooks Online or QuickBooks Enterprise (a.k.a QuickBooks Desktop version).

For example: With QuickBooks online, the Bill is synced in real-time and the invoice is instantly available in QuickBooks after it is approved in ProcureDesk.

However, the process with QuickBooks Enterprise is different because QuickBooks doesn’t offer a real-time integration for the enterprise version.

In that case, you can set up how frequently you want the Bill to be synced and by adjusting the time interval, you can achieve a near real-time integration with QuickBooks Enterprise.

Update payment status with remittance details 

You could pay the invoice using your Bank or you could use online payment systems like Bill.com.

However, once the payment is paid, the invoice remittance details need to be sent back to the AP system so that the other users can see that the invoice has been paid.

There are two main advantages of syncing the payment status:

1. Employees can check the invoice status on their own and that reduces the number of inquiries to the AP department regarding the payment status.
2. It keeps the AP queue clear so that you can focus on what needs to be worked on.

ProcureDesk automatically syncs the payment information back from QuickBooks so that you don’t have to keep track of what is paid and what is not. 

Now your turn

Even though QuickBooks doesn’t automate your accounts payable process, you have options to use third-party tools like ProcureDesk to fully automate the Accounts payable process. 

Our customers who have implemented ProcureDesk with QuickBooks has seen at least a 30-40% reduction in the AP cycle (From Invoice entry to Invoice Paid) 

And they love that they don’t have to do redundant data entry in multiple systems.

Ready to start your AP automation journey? 

Schedule a demo with one of our product specialists and see how you can reduce the AP cycle time by 30-40%