Manual AP process inefficiencies: risks and solutions

Despite advances in digital payments, a surprising number of organizations in the U.S. and Canada continue to rely on manual, paper-based accounts payable processes. The 2025 AFP Digital Payments Survey reveals that 91% of organizations still use checks for some payments, but only 10% use checks as their principal payment method. The overwhelming trend is toward digitization, yet a substantial share of businesses remain exposed to the risks and inefficiencies of manual AP.

Manual processes: A breeding ground for inefficiency and risk

Manual AP processes – rooted in paper invoices, email approvals, and fragmented spreadsheets – create operational silos that block visibility into spending, compliance, and cash flow. These silos mask inefficiencies, making it difficult for finance leaders to identify bottlenecks or respond swiftly to risks. The lack of real-time data makes strategic decision-making and cash management challenging, often leading organizations to hold excessive cash as a buffer, which reduces competitiveness.

The 2025 AFP survey highlights that manual processing is not just slow – it is error-prone and expensive. Data entry mistakes, lost invoices, and unclear approval chains are far more likely when humans handle every step. The survey also notes that 39% of invoices contain errors, and about one-third of organizations experience duplicate payments – issues that can directly impact financial reporting and vendor trust.

"It's more than just using digital tools; it's about providing visibility, control, and efficiency for staff, customers and vendors," says John Melvin, vice president and working capital consultant at U.S. Bank.

Cost implications: Manual AP is a hidden drain on resources

Processing invoices manually is both time-consuming and costly. While automation can process an invoice in seconds for a fraction of the cost, manual workflows often take 10–30 minutes per invoice and cost up to $40 per transaction, depending on process complexity and company size. The cumulative effect is substantial, diverting resources away from strategic initiatives and inflating the total cost of ownership for AP.

Beyond the direct costs, manual AP processes consume valuable employee time with low-value tasks, limiting the opportunity for staff to contribute to strategic projects. The 2025 AFP survey found that organizations who invest in automation realize not only cost savings but also free their workforce to focus on higher-level analysis, exception management, and business growth.

Fraud exposure: Manual AP leaves the door open

Perhaps the most alarming risk of manual AP is fraud. According to the 2025 AFP Payments Fraud and Control Survey, 79% of organizations experienced attempted or actual payments fraud in 2024, with checks being the most targeted payment method (63% of respondents reported check fraud incidents). Manual processes lack the layers of protection – such as real-time monitoring, multilevel approvals, and automated audit trails – that digital solutions provide. This exposes companies to duplicate payments, unauthorized transactions, and invoice fraud, with some organizations reporting annual fraud losses exceeding $250,000.

AP automation dramatically reduces fraud risk by enforcing controls, flagging suspicious activity, and ensuring only validated vendors receive payment. The ability to create comprehensive audit trails and apply multifactor authentication helps organizations comply with regulatory requirements and respond quickly to auditor or business partner inquiries.

Visibility and scalability: Manual AP holds companies back

Without automation, organizations struggle to gain a real-time, holistic view of their financial position. Manual processes obscure spending trends, delay reconciliation, and make it nearly impossible to access critical data for forecasting and decision-making. The AFP survey indicates that only 5% of purchase orders match invoices on the first attempt, and 39% of invoices have errors – clear evidence that manual systems cannot keep up with the demands of modern business.

This lack of transparency hinders scalability. As companies grow – through acquisitions, new ventures, or increased transaction volume – manual AP becomes a bottleneck. Adding staff is neither efficient nor sustainable. In contrast, AP automation tools deliver real-time analytics, seamless approval tracking, and the ability to scale operations without ballooning labor costs.

Vendor relationships: The strategic cost of manual inefficiency

Manual AP processes not only slow payments but also damage supplier trust. Delays, errors, and poor communication force vendors to chase overdue or incorrect payments, straining critical relationships. The AFP survey underscores that digital payment methods – especially those with straight-through processing – improve supplier relations and often unlock early payment discounts or preferred pricing.

By automating AP, companies provide vendors with real-time visibility into invoice status, accelerate payments, and demonstrate operational excellence. This strengthens partnerships and positions the business as a preferred customer.

Compliance, audit, and strategic value: Unlocking the full potential of AP

Manual AP makes compliance a scavenger hunt, with documents scattered across emails, paper files, and disconnected systems. This increases the risk of errors in financial reporting and slows the audit process. Automation centralizes records, enables real-time reporting, and supports dashboards and analytics for better cash flow management.

The AFP survey reports that organizations implementing technology in payments realize major benefits: 81% cite reduced manual processes, 74% see fewer errors and fraud, and 63% note enhanced automation of AP processes. These gains translate directly into improved compliance, faster audits, and a more strategic AP function.

Making the Move: A Roadmap for AP Automation

Transitioning from manual to automated AP is not simply an IT project – it is a strategic transformation. The 2025 AFP survey shows that 76% of organizations plan to update their payments strategy in the next three years, with the majority focused on adopting new payment formats and expanding technology capabilities.

To start, organizations should assess where manual processes create bottlenecks, errors, or hidden costs. Consider the ROI not only in terms of reduced processing costs, but also in improved visibility, fraud reduction, and the ability to redeploy staff to higher-value activities. Involve all stakeholders – finance, IT, and vendors – in designing a solution that supports current needs and future growth.

Partnering with an experienced AP automation provider is crucial. Look for a partner who can support your organization’s pace of change, provide training, and offer ongoing guidance as your needs evolve. Remember, automation is not just about technology – it’s about empowering your AP team, strengthening vendor ties, and building a resilient, future-ready finance function.

Conclusion: The compelling case for AP automation

The evidence is clear: manual AP processes expose organizations to unnecessary costs, fraud, operational silos, and lost opportunities for growth. The 2025 AFP Digital Payments Survey demonstrates that leading organizations are moving decisively toward automation, reaping the benefits of efficiency, control, and strategic agility. By making the shift now, companies can transform AP from a cost center into a driver of value, resilience, and competitive advantage.

Optimize and secure your invoice-to-pay process by contacting your treasury management consultant. Learn how U.S. Bank is helping automate accounts payable.