Automating Accounts Payable: From Approved Invoice to Supplier Payment

Payment Automation

Automating Accounts Payable: From Approved Invoice to Supplier Payment

Ask an accounts payable team where the week goes, and the answer is often not "approving invoices." The time goes to what happens after approval: re-keying approved bills into a bank portal, building and uploading payment files, collecting and re-typing supplier banking details, checking whether a payment went through, and matching it back to the bill. Each task is small, but together they add up.

This guide follows one supplier invoice from the moment it is approved to the moment the supplier is paid and the record is reconciled. It covers the payment side of accounts payable, meaning supplier or vendor payments, not capturing or approving invoices. It is written for finance and accounts payable (AP) managers, controllers, and business owners, and for the software teams who build these steps into their products.

The Accounts Payable Cycle in Six Steps, and Where Manual Work Hides

The cycle is the same whatever software you use. What differs is how many steps depend on a person to carry a bill forward. Here are the six steps and where manual work collects.

1. The supplier invoice is received. It arrives by email or on paper and is entered as a bill in your accounting or ERP system. Manual work hides in the keying.
2. The bill is approved for payment. This happens in your accounting system, which holds the approval rules. Manual work builds up in the handoff: an approved bill waits until someone turns it into a payment.
3. The supplier's payment details are in place. Paying needs the supplier's banking details. Manual work sits in collecting those details by email and retyping them, where one wrong digit can mean a returned payment.
4. The payment is initiated and the supplier receives the funds. The approved amount has to reach the bank. Manual work lies in retyping bills into a bank portal, building payment files, or writing cheques.
5. The payment status is returned. A payment is pending, paid, failed, or returned. Manual work goes into checking the bank portal or waiting for a statement to see which of these it was.
6. The accounting record is reconciled. The bill is marked paid and the bank line agrees with the books. Manual work sits in matching payments to bills, often in a spreadsheet at month end.

Automation does not remove these steps. It changes who moves a bill from one to the next, so that the steps after approval can follow from it instead of waiting for someone to carry the bill forward. Our guide to automating the full payment cycle covers the same idea across collections and payouts, and what payment automation changes for finance teams looks at it from the accounting side.

Approval Stays in Your System: Your Accounting Software Decides What Is Paid

The key line in AP automation is the one between deciding and doing. Your accounting system or ERP decides which bills are approved, what is paid, to whom, and when. TIB Finance does not do accounting or run approval workflows. It carries out the payment instruction your system sends and reports back what happened.

QuickBooks, Sage, SAP Business One, Microsoft Dynamics 365, and NetSuite are the systems where bills are approved and recorded, and they stay that way. Automation adds a path from approval to payment, so the same amount is not retyped into another screen.

How an approved bill becomes a payment instruction

With TIB Finance, payment instructions can come from the accounting system through an integration. Once a bill is approved and scheduled for payment, your system can send the instruction: the supplier, the amount, and your own bill reference. TIB Finance then carries it out. Because the instruction comes from your system, your system can keep track of which bill each one was for. The integration is set up around your systems and process, through TIB Finance's API and webhooks. Direct integrations with specific platforms are also possible.

To see why the system that manages the transaction is not the one that moves the money, read why your business software needs a payment layer. Our article on integrating payment processing into an ERP covers both directions, and developers can start with the payment API integration guide. For the money coming in, see our guide to automating accounts receivable.

Before you start, decide which bill reference you will use with each payment, who approves a change to a supplier's banking details, and who handles returned payments.

Collecting Supplier Banking Information Directly From the Supplier

A payment cannot go out without somewhere to send it. For an EFT (electronic funds transfer), that means the supplier's institution, transit, and account numbers. In many AP teams these details arrive by email, and someone types them into a bank portal or a vendor record. That is a chance for a transposed digit, and a wrong number may only show up when the payment is returned, days later.

With TIB Finance, you do not have to collect those details yourself. You create the supplier by entering just a name and an email address, then create the payment with the amount and its details, such as the invoice number and notes. The supplier receives an email saying that their customer wants to pay their bill and that TIB Finance needs their payment information, with a link to TIB Finance's secure page. There, the supplier enters their bank account details themselves, instead of sending them by email for someone on your team to retype.

The supplier only has to give their banking details the first time, not for later payments. When the supplier provides their banking details, a TIB Finance account is also created for them. It is read-only at first: the supplier can sign in to the portal to follow the status of the payment, and can optionally complete the onboarding form to get a full TIB Finance account.

This changes who types the numbers, not who is responsible for them. Your own process for confirming a new supplier or a change of banking details still applies. If you also keep banking details in the vendor record in your accounting system, keeping the two in step depends on how that system is connected.

Paying Suppliers by EFT: How a Supplier Payment Works

Supplier payments with TIB Finance run by EFT, from bank account to bank account. The money leaves your bank account and arrives in the supplier's bank account. Behind the scenes, it is set up as a collection initiated on the supplier's behalf rather than a deposit sent to them; the result is the same. Our guide to ACH and EFT payments explains how the rail works, and choosing the right payment methods for B2B transactions looks at payment methods more broadly.

What you do and see

You create the supplier, then create the payment with the amount, the invoice number, and any notes, and TIB Finance takes it from there. Each payment has its own status, which you can see, and which TIB Finance passes on through its API and by webhook when the bank reports a result.

What the supplier sees

The supplier receives an email explaining that their customer wants to pay their bill, with a link to TIB Finance's secure page to enter their bank account details. After that, they can sign in to the portal with a read-only account to follow the status of the payment.

Getting the Payment Status Back to Your System

A payment is not finished when it is created. Each payment has a status, such as pending, paid, failed, or returned, which TIB Finance passes on through its API and by webhook when the bank reports it. A bank payment can stay pending until the bank reports a result, and the supplier can follow the payment in their read-only portal account. Our guide to webhook events explains how those notifications are delivered.

This is why your accounting system should keep the bill open, or marked as payment pending, until the payment is confirmed as paid. A bill marked paid when a payment is sent is wrong if the payment later comes back.

What happens when a supplier payment does not go through

If a payment does not go through, you see it as an error or returned status. What the status shows depends on the reason and the stage at which it happened, and a bank return can be reported several days after the payment was created. When it happens, the bill stays open. What happens next is up to your AP team: contact the supplier, confirm the banking details, and decide how to pay again. TIB Finance does not automatically retry failed payments, so a new attempt is a decision someone makes.

Reconciling Accounts Payable and Closing the Bill

Once a payment is confirmed as paid, two things remain: recording it against the right bill, and agreeing it with the bank.

Recording the payment against the bill

With TIB Finance, a system connected through its API and webhooks can receive each payment's status and use it to record the payment against the bill that triggered it. What the accounting system does after payment, such as closing the bill and updating the supplier's balance, depends on how it is connected. Whether a person reviews each payment before it is posted is decided on your side, in how the integration is built. Without a connection, transactions and their statuses are available in reports, and someone enters them.

Reconciling what is left

Reports list transactions and their statuses, so your team can complete AP reconciliation against the bank and the books and work through what remains, such as returned payments and bills that are still open.

How TIB Finance Fits into the Accounts Payable Cycle

TIB Finance, a Canadian payment automation platform, runs collections and payouts through one platform and API. For payables, supplier payments run by EFT from bank account to bank account, with each payment's status reported by API and webhook, a read-only portal account for the supplier, and reports your team can reconcile against.

If your team still spends its week re-keying approved bills and checking whether payments went through, contact our team to see how TIB Finance fits the way you approve and pay today.

Common Questions

What is accounts payable automation?

Accounts payable automation connects the steps between an approved supplier invoice and a payment your team can reconcile: the payment instruction, the supplier's banking details, the payment, its status, and the update to the bill in your accounting system. Your accounting system stays the system of record and keeps approving bills.

How do you automate supplier payments?

Approve bills in your accounting system as you do today, and let the payment instruction reach TIB Finance through an integration instead of retyping it into a bank portal. TIB Finance carries out the payment by EFT, from your bank account to the supplier's, and reports its status by API and webhook.

Can suppliers enter their own banking information?

Yes. You create the supplier with just a name and an email address, and the supplier receives an email with a link to TIB Finance's secure page, where they enter their bank account details. They only have to do this the first time, not for later payments.

How does a supplier get paid with TIB Finance?

By EFT, from your bank account to the supplier's bank account. Supplier payments work by bank account only. The supplier receives an email saying that their customer wants to pay their bill, with a link to enter their bank account details, and can then follow the payment's status in the portal.

Does the supplier need a TIB Finance account?

A TIB Finance account is created for the supplier when they provide their banking details. It is read-only at first: the supplier can sign in to the portal to follow the status of the payment. Completing the onboarding form to get a full TIB Finance account is optional.

What happens if a supplier payment does not go through?

You see it as an error or returned status, and the bill stays open. What the status shows depends on the reason and the stage at which it happened, and a bank return can take several days to be reported. Failed payments are not retried automatically, so what happens next is up to your AP team.

How does my accounting system know a supplier was paid?

TIB Finance reports the status of each payment, such as pending, paid, failed, or returned, through its API and by webhook when the bank reports it. A connected accounting system can use those statuses to record the payment against the bill. Without a connection, transactions and their statuses are available in reports.

Does accounts payable automation replace QuickBooks or SAP?

No. QuickBooks, Sage, SAP Business One, Dynamics 365, and NetSuite stay the systems where bills are approved and recorded. TIB Finance carries out the payment and reports the result, and it can connect to accounting and ERP systems through its API and webhooks.