NetSuite AP Automation Made Easy (2023)

November 3, 2023

A Group of Consultants Discussing NetSuite AP Automation

Gone are the days when we had to manually enter and pay vendor bills. Besides the demand for manual labor, this process is time-consuming and prone to errors prompting issues later in the process.

Thanks to NetSuite’s Accounts Payable (AP) Automation, we now have access to a faster and more secure way of making vendor payments. NetSuite’s AP automation module aims to automate the invoicing process all the way to reconciliation. By getting rid of the manual process, not only do we make our process more efficient but also improve our vendor relationships.

In this article, we will go into the power of NetSuite’s AP Automation from its features, benefits, and the challenges it addresses.

What is the NetSuite AP Automation Module?

NetSuite’s AP automation module automates your AP process from invoicing, data matching, approval routing, payment processing, reconciliations, and reporting. This AP automation for NetSuite also comes with a dashboard and analytic tools that allow you to easily oversee the entire AP process. And because all data is stored within a unified cloud software, NetSuite makes it easier to search, audit, and integrate information between other processes.

Core Features and Capabilities

Take a look at the core NetSuite features and capabilities for AP Automation:

  • Invoice Capture: Automatically capture invoices received through various channels via Optical Character Recognition (OCR) technology.
  • Invoice Matching and Approvals: Match invoices against purchase orders and automate approval processes routing invoices to the designated approvers for review and approval.
  • Payment Automation: Execute vendor payments based on your payment terms and integrate with payment processors to facilitate electronic payments, ACH transfers, and wire transfers.
  • Payment Reconciliation: Match payment transactions with bank statements to verify that amounts are aligned.

The Challenges of The Manual Accounts Payable Process

It is given that AP is a critical aspect within any organization. Oftentimes, we encounter backlogs from manual data entry, delayed invoice processing, and errors in vendor payments, especially upon relying on traditional methods. While it has an advantage, the cons still outweigh the pros. Some of these manual AP challenges are:

Errors in data entry

Manual processes are prone to human error. Resolving these errors not only requires additional labor, it also consumes more time and may risk confidence among your vendors.

Delayed AP processing

It can be difficult to dodge delays when manually processing and routing invoices through a paper-based or email-based system. Overlooking emails, requiring physical handling of bills, and manual approval signatures, can easily lead to bottlenecks.

Complex approval workflow

Manually managing approval workflows, especially those that are complex, can be a headache. It may result in delayed approvals and breaches of company policies.

Lack of visibility

It can be challenging to maintain real-time visibility into the status of invoices and payments. This lack of visibility makes it difficult to track the progress of invoices and identify overdue payments.

The Benefits of NetSuite Accounts Payable Automation

Now that we have laid out the cons, let us evaluate how NetSuite’s AP automation benefits organizations looking to streamline this aspect of the business:

Reduced errors and improved efficiency

With electronic invoicing and automated approvals, we skip tedious and repetitive tasks such as coding invoices, printing checks, emailing, and chasing approvals.

Streamlined approval workflows

Custom approval workflows ensure that invoices are routed according to your specific requirements. Multi-level approvals and approval limits are easily managed, ensuring compliance with company policies.

Enhanced visibility

Being able to track the status of each invoice and payment allows for better cash flow management. Having comprehensive reporting and dashboards also provides insights into AP performance enabling businesses to make informed decisions.

Better Vendor Relationships

Timely and accurate payments are great ways to take care of vendor relationships which can lead to better negotiation terms.

How Does Accounts Payable Automation Work?

The AP automation starts by utilizing an OCR tool to digitally extract information from invoices which is then matched to corresponding purchase orders. Invoices are automatically routed to the designated approvers and scheduled payment processing is triggered. Here are the steps in more detail:

  1. Invoice Capture via OCR or E-invoicing: OCR scans, reads, and converts paper-based invoices into digital information. On the other hand, vendors can directly submit their invoices electronically via electronic invoicing systems.
  2. Matching and Validation: After capturing invoice data, it is matched against purchase orders and validated to ensure accuracy and consistency. Data validation checks may include verifying the accuracy of numerical values and ensuring that the vendor details match existing records.
  3. Invoice Routing and Approval Workflow: Invoices are automatically routed to the designated approvers based on configured approval workflows. Customizable approval hierarchies allow for multi-level approvals, invoice amount limits, or other criteria. Alerts and reminders can also be set up to expedite the approval.
  4. Payment Processing: Once the invoice is approved, NetSuite supports various payment methods, including electronic payments, ACH transfers, and wire transfers. Payments can also be scheduled and executed automatically based on predefined payment terms and approval statuses.
  5. Reconciliation and Reporting: Finally, an automated reconciliation process is carried out to match payment transactions against bank statements. NetSuite also provides real-time visibility into the status of transactions through custom accounts payable reports and dashboards.

Should You Invest in NetSuite’s Accounts Payable Automation?

Deciding on whether you should invest in NetSuite’s AP automation depends on various business circumstances. However, if data entry errors, inefficiencies, or delayed payments are weighing your productivity down, the NetSuite AP automation cost should be worth the investment.

By eliminating these business nuances, you not only save time and resources but also strengthen relationships with your suppliers increasing your ability to capture supplier discounts.

Make payment processing easier for you today.

Tasks You Can Automate with AP Automation

The AP automation module allows you to automate various tasks and processes. Here are some of the key AP function tasks we can automate:

Invoice data entry

Automatically capture data from invoices, such as vendor names, invoice numbers, due dates, and line item details, reducing the need for manual data entry.

Invoice matching

Easily validate extracted data against predefined rules to ensure accuracy and consistency, such as checking for discrepancies and verifying vendor details.

Approval routing

Ensure invoices are reviewed and approved in compliance with your policies and ensure that approvers are aware of pending invoices so they can take action promptly.

Payment scheduling and execution

You can schedule payments for approved invoices, and the system will execute payments automatically based on predefined payment terms avoiding late fees.

How To Set Up Accounts Payable Automation Within NetSuite

While there is an abundance of reviews and demos you can access online (e.g. Reddit, YouTube), we wanted to make the NetSuite accounts payable tutorial simpler for you. To set up AP automation within NetSuite, here is a quick user guide to follow:

Install the Payment Automation SuiteApp

  1. Once the AP Automation module has been purchased, install the Payment Automation SuiteApp from the SuiteApp Marketplace in NetSuite. But before that, enable the following features:
  • A/P
  • Accounting Period
  • Bill Capture
  • Custom Records
  • Client SuiteScript
  • SDF
  • Server SuiteScript
  • SuiteFlow
  1. To install a SuiteApp from the SuiteApp Marketplace, go to SuiteApps.
  2. Search for Payment Automation and click the tile.
  3. Click Install.

Apply for an HSBC Account

  1. Go to SuiteBanking > HSBC Application > Apply.
  2. To learn what permissions are required to access the HSBC application page, go to Permissions for Role Customization.
  3. Before starting the application process, go to Setup > Company > Company Information.
  4. Make sure that the details are the same information that you will provide when submitting the application.
  • Return Email Address
  • Return Address
  • Phone

Note: To provide a phone number on the Company Information page, click Edit next to the Return Address field, and enter the number in the Phone field.

Generate Payment Tokens

Before you can start processing payments, first generate payment tokens that the payment processor will use.

Before you generate payment tokens, enable two-factor authentication (2FA) with a one-time password (OTP). For information about setting 2FA, see Set up Your Preferences for Two-Factor Authentication (2FA).

Note: Users with an AP Integration Manager role can generate tokens.

To generate payment tokens:

  1. Go to SuiteBanking > Setup > Token.
  2. Enter your NetSuite password in the Password field.

Set up the Source Bank Account for Auto-Funding

Auto-funding streamlines your accounts payable workflow. You are unable to make any payments before auto-funding is set up.

To set up an existing account for Payment Automation:

  1. Go to Setup > Accounting > Chart of Accounts.
  2. On the line of the bank account you want to set up, click Edit.
  3. Set the following fields:
  • Payment Automation Bank Name – used on the Payment Automation dashboard.
  • Payment Automation Bank Routing Number – use only domestic US accounts. The routing number will be validated by the system.
  • Payment Automation Bank Account Type
  • Payment Automation Bank Account
  1. Click Save. If this is your first time setting up a source account, you will be automatically redirected to the GUID setup page:
  2. Provide a 16-character passphrase. This will be used to set up NACHA encryption rules for the ACH account number.
  3. After submitting the GUID, you will be redirected back to GL setup.
  4. Click Save.

Allow Automatic Debit of Your Source Account

For auto-funding to initiate, first permit HSBC to automatically debit your source bank account. To allow funds to be transferred, contact your GL source account bank.

Note: If there is a debit block on the source bank account held with your bank, you will be required to provide your HSBC ACH Company ID, which is required to authorize auto debit.

To determine your HSBC ACH Company ID:

  1. Go to Setup > Accounting > Chart of Accounts.
  2. On the HSBC Bank Account line, click View.
  3. Note down the number in the Payment Automation Bank Account field.

If you set a maximum debit value for this authorization, align the value with your Daily Transaction Limit displayed in the Payment Automation dashboard.

Set up Auto-Funding

You must set up your source account for auto-funding before you can start initiating payments.

To set up auto-funding:

  1. Go to SuiteBanking > Payment Automation > Dashboard.
  2. On the left pane, click Bank Account.
  3. Click Set up Auto-Funding.
  4. From the Auto-Fund list, select the auto-funding source account. For more information, see Setting Up the Source Bank Account for Auto-Funding.
  5. Check the boxes to certify that this account is exclusive to your organization and to authorize HSBC to automatically debit your source bank account.
  6. Click Submit.

Set up Vendors

To set up a vendor for Payment Automation:

  1. Go to Lists > Relationships > Vendors.
  2. Click View on the vendor you want to set up for Payment Automation.
  3. On the SuiteBanking subtab:
  • Check the Automated Payments box.
  • Select modes of payment in the Accepted Modes of Payment list.
  • Select a mode of payment in the Preferred Mode of Payment list.
  • Enter an email address in the Remittance Email field.
  1. On the Financial subtab:
  • Select a payment account from the Default Vendor Payment Account list.
  • Select USD from the Primary Currency list.
  1. Click Save.

Set up Vendor Bank Data

This is required when the preferred mode of payment is ACH. To set up the vendor bank account:

  1. Go to Lists > Relationships > Vendors.
  2. Click View on the Vendor you want to set up the Vendor Bank Account.
  3. In the SuiteBanking subtab, click New Vendor Bank Account.
  4. Enter values for the following:
  • Bank Name
  • Bank Account Number
  • Bank Routing Number
  1. Select the type of bank account from the Bank Account Type list.
  2. Check the Primary Bank Account box if you want to make this bank account primary.
  3. Check the Inactive box if you want to mark this bank account as inactive.
  4. Click Save.

Set Up Approval Routing

To set up batch approval routing:

  1. Go to SuiteBanking > Payment Automation > Dashboard.
  2. On the left pane, expand the Set Up section, and click Approval Routing.
  3. Click Setup.
  4. On the Setup page, set values for the following fields:
  • Approval Type – choose one of the following options to indicate how approval routing should be triggered:
  • Bill Payment – payment amount limit for each bill in a batch.
  • Vendor Payment – payment amount limit for each vendor in a batch.
  • Batch Payment – total payment amount limit of a batch payment.
  • The approval type determines the value in the Amount for Approval field on the Bill Payment Batch page.
  • Payment Limit – enter the maximum amount for a payable transaction that can be processed without approval.
  • Level – set the approval level for each payment approver. Begin with the Level 1 approver. Note: Multiple approvers can be set up for one level, but only one approver is required to approve.
  • Payment Approver – select the payment approver for each approval level. The approver will receive an email notification whenever an approval is required for a payment batch.
  • Payment Approval Limit – enter the maximum amount that a payment approver can approve for a payable transaction. If blank, the approver can approve any amount.
    Note: When the approval hierarchy is set, the limit of the last approver must be left blank.
  1. Click Save.

Note: For more information, see Approving Payment Batches.

How Seller Universe Can Help

There is no doubt that NetSuite’s AP automation module has many powerful features that can benefit any business.

At Seller Universe, we have the best consultants with a broad range of experience in automating accounting processes such as the AP function. We pride ourselves in our expertise when it comes to eCommerce and outsourced accounting services, fully equipped to understand your needs, offer solutions that work, and support you throughout the process.

If you want to learn more about how we do things, simply reach out to us today.

Frequently Asked Questions

Can accounts payable be automated?

Does NetSuite have AP automation?

What are the best practices for accounts payable automation?

Can you automate accounts receivable and other financial management processes?

What software options do I have for accounts payable automation?

How do I implement accounts payable automation with NetSuite?

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