Automating incoming invoices: an AP guide
AP automation (accounts payable) means automating incoming invoices with software: from receipt through checking and approval to payment and archiving. Instead of typing invoices and emailing them around for approval, the data flows in a structured way through a digital workflow. Since all businesses in Germany have had to be able to receive e-invoices since 2025, this step is a particularly obvious one for many accounting departments.
Why accounts payable matters so much
Accounts payable brings together all the processes that ensure supplier invoices are checked, approved and paid. Each document goes through several stages: capture, checking, approval, payment and archiving. Traditionally, these processes are paper-based or rely on PDF documents that are entered manually. This ties up skilled staff, lengthens processing times and increases the risk of errors.
At the same time, legal requirements are increasing. Businesses must receive and process electronic invoices and retain them properly in accordance with the GoBD. Automated accounts payable processes reduce manual work and create end-to-end digital workflows.
Automating incoming invoices: the process steps
Invoice receipt and data capture
Invoices arrive via various channels: by email, by upload, via Peppol or directly via API. A good solution bundles all incoming invoices in one place. Structured e-invoices such as XRechnung or ZUGFeRD already contain the data in machine-readable form, so it does not have to be typed in. For PDF invoices without structured data, optical character recognition (OCR) helps with capture. In faktoora, you transfer text from the PDF into the appropriate fields with a click, as the article OCR for incoming PDF invoices shows.
Mandatory field check and validation
After capture, the software checks whether all mandatory details are present and formally correct, such as the invoice number, invoice date, tax details or total amount. For e-invoices, this includes validation against EN 16931 and the XRechnung rules. Incorrect invoices are detected before they reach accounting and can be returned to the sender. faktoora validates incoming invoices on import and creates a validation report. The article Incoming invoices: import and validation explains the status values.
Account assignment and cost centres
Many businesses assign invoices according to fixed rules, for example by supplier, general ledger account or cost centre. If this assignment is stored in the system, recurring manual account assignments are no longer necessary.
Release and approval workflow
Approvals follow defined roles and amount limits. Smaller amounts may need only one approval, while higher amounts go through an additional level. Every step is logged, so it remains traceable who approved what and when.
Payment and bank connection
After final approval, the payment is prepared and passed to the bank, for example via SEPA credit transfers. A bank connection also helps to match incoming payments to open items.
Archiving and handover to accounting
Completed invoices are retained in accordance with the GoBD, and e-invoices in their original format. The relevant booking data goes to DATEV, the ERP or other financial systems via export or interface.
The benefits of AP automation
Shorter processing times
When data no longer has to be typed in and approvals no longer have to be chased by email, invoices move through the process faster. How much time you save depends on your volume and your current workflow. So measure your current processing time before you start.
Lower costs per document
Every manual step costs working time. Automation reduces these steps and thus the process costs per invoice.
Better data quality
Rule-based validations prevent missing or incorrect details. This improves reporting and reduces rework.
Better liquidity planning
A central overview shows open items, approval status and payment deadlines. This lets you see early on which payments are due and make more targeted use of early payment discount periods.
Lower risk of fraud
Clear approval rules, verified supplier master data and the four-eyes principle make it harder to pay fake or duplicate invoices.
Legal requirements and standards
EU Directive 2014/55/EU obliges public contracting authorities to accept electronic invoices in accordance with the EN 16931 standard. In Germany, the following applies to B2B business: since 1 January 2025, all businesses must be able to receive e-invoices. From 1 January 2027, businesses with a prior-year turnover of more than €800,000 must send e-invoices; from 1 January 2028, this applies to everyone. This increases the share of structured incoming invoices that can be processed automatically.
The most important formats are XRechnung, a pure XML format, and ZUGFeRD, a hybrid format combining PDF and XML. In addition, the Peppol network, which enables the exchange of e-invoices across national borders, is becoming increasingly important. The article Receiving, displaying and processing XRechnungen explains how to display XRechnungen in readable form and process them further.
How to start your automation project
Process mapping and analysis of the current situation
Record all current workflows from invoice receipt to archiving. Note manual steps, waiting times and sources of error. This is the basis for your goals.
Set goals and key figures
Set measurable goals, such as a shorter processing time or fewer queries. Define key figures such as the number of incoming invoices, processing time and cost per document.
Define roles and approval rules
Determine who approves invoices and set amount limits. Describe escalation paths in case approvers do not respond within the intended time.
Inform suppliers
Inform your suppliers early on through which channels and in which formats you expect invoices, for example XRechnung or ZUGFeRD by email or via Peppol.
Technical integration
Connect the solution to your ERP or accounting system via an interface. Test with sample invoices whether validation and data transfer work as intended.
Pilot phase, rollout and optimisation
Start with selected departments and suppliers, gather feedback and adjust the workflows. Then introduce the solution step by step and review your key figures regularly.
Trends in accounts payable
Artificial intelligence in data capture
AI-assisted methods can recognise invoice data from unstructured documents more effectively. However, as the share of structured e-invoices grows, pure text recognition is becoming less important.
Cloud-based platforms
SaaS solutions enable access from anywhere and make collaboration across locations easier, without having to run your own servers.
Instant payments
With SEPA instant credit transfers, payments can be executed within seconds. This gives you more leeway in managing payment dates.
From order to payment
The trend is towards end-to-end processes from purchase requisition to payment (procure-to-pay). This allows the matching of order, delivery and invoice to be automated to a greater extent.
Conclusion
AP automation turns manual processes into digital workflows and creates transparency, speed and accuracy. If you want to automate incoming invoices, it is best to start with a thorough process review and a pilot phase. You can see how faktoora brings together incoming invoices from email, Peppol, upload and API in one place, validates them and makes them available for approval on the Incoming invoices page. Everything about receiving XRechnung and ZUGFeRD can be found under Receiving e-invoices.
Frequently asked questions
What does AP automation mean?
AP stands for accounts payable. AP automation means mapping the path of an incoming invoice digitally with software, from receipt through checking and approval to payment and archiving.
Can I also process PDF invoices automatically?
Partly. Text recognition helps to capture data from PDF invoices, but checking them remains more laborious. Structured e-invoices such as XRechnung or ZUGFeRD can be processed automatically much more reliably.
Do I have to be able to receive e-invoices?
Yes. Since 1 January 2025, all businesses in Germany must be able to receive e-invoices in B2B business.
Which functions do I need for automated incoming invoices?
Key elements are a central inbox for all channels, validation of e-invoices, approval workflows with user rights and a handover to your accounting, for example via DATEV export or API.