What Is Accounts Payable Automation? The Complete Guide for Finance Teams

Accounts payable automation is the use of software to handle the end-to-end invoice processing workflow — from the moment an invoice arrives through data extraction, coding, approval routing, and payment — without manual data entry. It replaces the repetitive work of opening invoices, keying in line items, matching purchase orders, and chasing approvals with technology that does it faster, more accurately, and at scale.

Lido is an AI-powered document extraction platform built for finance and operations teams. It handles the data capture layer of AP automation without templates, reading invoices in any format from any vendor and pulling structured data — headers, line items, tax amounts, PO numbers — into your existing workflows. Teams like TOK Commercial and Soldier Field use Lido to process thousands of invoices monthly while reclaiming 20+ hours per week of staff time.

How accounts payable automation works end to end

AP automation follows a five-stage pipeline that mirrors what your team already does manually — just without the manual part. Understanding each stage helps you identify where your current process breaks down and where automation delivers the biggest gains.

1. Invoice receipt and ingestion. Invoices arrive through email, supplier portals, scanned mail, or direct uploads. An AP automation system consolidates all of these into a single intake point. Instead of someone monitoring an inbox and downloading attachments, the system captures every invoice automatically and queues it for processing.
2. Data extraction. This is where most AP time is wasted. The system reads each invoice — regardless of format, layout, or vendor — and pulls out the relevant fields: vendor name, invoice number, date, line-item descriptions, quantities, unit prices, tax, and totals. Template-free AI extraction (the approach Lido and modern OCR tools use) handles new vendor formats without setup, unlike older OCR that requires a template for every layout.
3. GL coding and PO matching. Once data is extracted, the system assigns general ledger codes to each line item and matches invoices against purchase orders or contracts. AI-assisted coding learns from your historical patterns, so it gets more accurate over time. Exceptions — mismatches, missing POs, unusual amounts — get flagged for human review rather than slipping through.
4. Approval routing. Invoices route automatically to the right approver based on rules you set: dollar thresholds, department, vendor category, or cost center. Approvers review on their phone or laptop, approve or reject with a click, and the invoice moves forward. No more printing, signing, scanning, or emailing PDFs back and forth.
5. Payment and archiving. Approved invoices feed into your ERP or payment system for scheduling. Every step is logged with a complete audit trail — who touched it, when, what changed — so month-end close and audits are straightforward.
6. The term “AP automation” is an umbrella. Different tools handle different stages. Some platforms cover the full pipeline. Others, like Lido, specialize in the data extraction layer — the stage where manual effort is highest and where poor accuracy cascades into problems downstream.

Why AP teams are stuck in manual processes despite existing tools

Most AP teams aren’t starting from zero. They already have tools — an ERP with a built-in invoice module, a basic OCR scanner, maybe even a dedicated AP platform they bought two years ago. And yet the team is still manually keying data, cross-checking line items against PDFs, and fixing extraction errors daily.

The bottleneck isn’t a lack of software. It’s that existing software doesn’t actually work well enough to trust.

1. Template-dependent OCR breaks constantly. Traditional OCR tools require you to build a template for every vendor invoice layout. When a vendor updates their format, changes their logo placement, or sends a slightly different PDF, the template breaks. For teams with hundreds of vendors, maintaining templates is a job in itself.
2. Line-item extraction is unreliable. Header-level data (vendor name, total amount, date) is the easy part. The hard part is line items — descriptions, quantities, unit prices, tax per line — especially on invoices with complex tables, merged cells, or multi-page layouts. Many tools either skip line items entirely or extract them with error rates high enough that someone has to verify every invoice anyway.
3. New vendors mean new setup. Every time you onboard a new supplier, someone has to configure the system to read that vendor’s invoices. In a growing business, this creates a constant backlog of “unsupported” invoices that default back to manual entry.
4. The result is a trust gap. When extraction accuracy is 70-80%, the team can’t skip the manual review step. They end up doing the work twice — once by the software, once by a person checking the software’s work. That’s not automation. That’s extra steps.

This is why extraction accuracy and template-free processing matter more than feature lists. A tool that reliably extracts data from any invoice format — without templates, without vendor-specific setup — eliminates the trust gap and lets the team actually stop touching invoices.

Accounts payable automation vs. hiring more AP staff

When invoice volume grows, the default response is to hire another AP clerk. It’s a straightforward solution, and sometimes it’s the right one. But it’s worth understanding exactly what each option gives you.

1. The cost of hiring. A full-time AP clerk costs $45,000–$65,000 per year in salary alone, before benefits, workspace, equipment, and management overhead. Training takes 2–4 weeks before they’re productive, and AP roles have historically high turnover — meaning you may repeat that cycle every 12–18 months. Each hire scales your capacity linearly: one person, one person’s worth of throughput.
2. The cost of automation. AP automation tools range from a few hundred dollars per month for extraction-focused tools like Lido to $50,000+ per year for full-suite enterprise platforms. The cost is fixed or scales with volume, not headcount. A system that processes 500 invoices per month costs roughly the same to run at 2,000 invoices per month.
3. Where automation wins. Volume spikes (month-end, quarter-end, seasonal surges) don’t require overtime or temp hires. Accuracy is consistent — the system doesn’t get tired at 4 PM on a Friday. Processing happens around the clock. And every invoice gets the same level of attention, whether it’s the first of the day or the five-hundredth.
4. Where people still matter. Automation handles the data entry so your team handles the judgment calls. Vendor disputes, unusual invoices, policy exceptions, relationship management — these require human reasoning that no software replaces. The strongest AP departments use automation for the repetitive 80% and redeploy their experienced staff to the complex 20%.

The question isn’t automation or people. It’s whether you want your people doing data entry or doing the work that actually requires their expertise.

The ROI of accounts payable automation

AP automation pays for itself quickly, and the math is straightforward once you know where to look. The return comes from four areas, and most teams see positive ROI within the first quarter.

1. Time savings. Mid-size AP teams (processing 500–2,000 invoices per month) typically save 20–30 hours per week by automating data extraction and routing. That’s the equivalent of a half to full FTE — time that gets redirected to exception handling, vendor management, and process improvement rather than typing numbers into spreadsheets.
2. Error reduction. Manual data entry has a typical error rate of 1–4% per field. On an invoice with 15+ fields and multiple line items, that adds up. Each error triggers a correction cycle — someone catches it, investigates, fixes it, re-approves. AI-powered extraction reduces field-level errors significantly, which means fewer correction cycles, fewer payment errors, and fewer vendor disputes.
3. Faster approvals and early payment discounts. When invoices sit in someone’s inbox waiting for manual entry, approval cycles stretch to 10–15 days. Automation cuts that to 1–3 days. Faster approvals mean you can capture early payment discounts (typically 1–2% for paying within 10 days) and avoid late payment penalties. On $5 million in annual payables, a 1.5% early payment discount is $75,000.
4. Avoided hires and audit readiness. Every AP clerk you don’t need to hire as volume grows is $45,000–$65,000 in annual savings. And the automatic audit trail that AP automation creates — every invoice tracked from receipt to payment with timestamps and approval records — eliminates the scramble before audits. Teams report cutting audit prep time by 50% or more.

When you stack these together, a team processing 1,000 invoices per month can realistically save $100,000–$200,000 annually through a combination of time recovery, error reduction, discount capture, and avoided hires.

What to look for in an AP automation solution

Not every AP automation tool delivers the same results. The features that matter most depend on where your current process breaks down, but these capabilities separate tools that actually reduce work from tools that just move the manual effort to a different screen.

1. Template-free extraction. The system should read any invoice format without requiring you to build or maintain templates for each vendor. If you have to configure a new template every time you onboard a supplier, you’re trading one manual task for another.
2. Line-item capture. Header data (vendor, date, total) is table stakes. The real test is whether the tool accurately extracts individual line items — descriptions, quantities, unit prices, and per-line tax — from complex, multi-page invoices with varied table structures.
3. Multi-format support. Your invoices arrive as PDFs, scanned images, email attachments, and occasionally Word or Excel files. The tool should handle all of them without separate workflows or manual conversion steps.
4. GL coding assistance. Look for AI-assisted general ledger coding that learns from your historical categorization patterns. The best tools suggest GL codes with high confidence and only flag uncertain items for review, rather than requiring manual coding on every invoice.
5. ERP and accounting integration. Extracted data needs to flow into your existing systems — QuickBooks, NetSuite, SAP, Sage, or whatever you use. Native integrations or flexible export formats (CSV, API) prevent extracted data from getting stuck in yet another silo.
6. Setup time. If implementation takes 6 months and a dedicated IT project, the tool is solving yesterday’s problem. Modern solutions like Lido are processing invoices within hours of setup, not months.
7. Total cost of ownership. Compare the all-in cost: subscription fees, per-invoice charges, implementation costs, ongoing template maintenance, and the internal staff time required to manage the system. A cheaper tool that requires 10 hours per week of babysitting costs more than a pricier tool that runs independently.

How Lido automates accounts payable data extraction

Lido focuses on the extraction layer of AP automation — the step where invoices become structured data. It uses AI-powered document reading (not template-based OCR) to process invoices from any vendor in any format, pulling headers, line items, tax details, and PO numbers into structured output ready for your ERP or accounting system.

Here’s what that looks like in practice, based on teams already using Lido for AP processing:

1. TOK Commercial reclaimed 85% of AP capacity. Before Lido, TOK’s AP team was buried in manual invoice entry across multiple entities. After implementing Lido’s AI extraction, they reclaimed 85% of their AP capacity, avoided hiring an additional full-time employee, and now use AI-assisted GL coding to auto-categorize line items — reducing their coding time from minutes per invoice to seconds.
2. Soldier Field saves 20 hours per week. Processing roughly 1,000 invoices per month for stadium operations, Soldier Field’s finance team was spending full days on manual data entry. Lido now extracts invoice data automatically, saving the team 20 hours per week and letting them focus on vendor management and budget oversight instead of keying line items.
3. Hocutt cut processing time by 75%. Hocutt’s AP workflow involved multiple people handling different parts of each invoice. With Lido extracting the data automatically, they reduced processing time by 75% and freed 80% of AP staff capacity for higher-value work — exception handling, payment optimization, and vendor negotiations.
4. ACS Industries recovered 30 hours per week. ACS Industries was spending significant staff time on repetitive invoice data entry across a high volume of vendor formats. Lido’s template-free extraction handled the variety without configuration, giving the team back 30 hours weekly — time that now goes toward process improvement and financial analysis.

The common thread across these teams: the extraction layer was the bottleneck. Once invoices convert to structured data accurately and automatically, everything downstream — coding, approval, payment — moves faster.