Walk into the back office of many Canadian nonprofits today, and you will likely see a familiar scene: paper invoices stacked for the executive director’s signature, filing cabinets overflowing with vendor files, and a cheque book ready for printing and mailing.
Manual accounts payable (AP) processes are notoriously slow, error-prone, and inefficient. For a sector that is constantly striving to do more with fewer resources, spending hours each week manually entering data and chasing down board members for dual signatures is a poor use of administrative time.
The solution is accounts payable automation for nonprofits. With modern financial technology, organizations can digitize their entire vendor payment lifecycle, from receiving an invoice to reconciling the final payment in the general ledger. In this guide, we explain how your organization can move from paper cheques to a secure, automated accounts payable workflow.
The Hidden Costs of Manual Accounts Payable
Before implementing a new system, it is important to understand exactly what the current manual process is costing your organization. The inefficiencies of a traditional AP workflow go far beyond the price of postage stamps and cheque stock.
First, there is the cost of time. Manual data entry requires a bookkeeper to physically type the vendor name, invoice number, date, and line-item amounts into the accounting software. This is tedious work that frequently results in transposition errors, leading to overpayments or duplicate payments.
Second, manual approval workflows create massive bottlenecks. When a physical invoice must be routed from a program manager to the executive director and, finally, to a board treasurer for signature, the invoice can easily sit on a desk for weeks. This leads to late payment fees, strained vendor relationships, and a lack of real-time visibility into the organization's cash flow.
Finally, manual AP processes are inherently vulnerable to fraud. Physical cheques can be intercepted or altered, and without a strict digital audit trail, it is difficult to prove exactly who approved a specific expense. If your organization is looking to strengthen its defences against these risks, we highly recommend reviewing our upcoming guide on Nonprofit Financial Controls.
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Step 1: Digitize Invoice Capture with Dext
The first step in AP automation is eliminating paper at the source. Instead of having vendors mail physical invoices to your office, you must transition to digital invoice capture.
We highly recommend utilizing a tool like Dext (formerly Receipt Bank). Dext acts as a digital funnel for all your organizational expenses. You can provide vendors with a dedicated email address (e.g., invoices@yournonprofit.org) that automatically forwards invoices to the Dext platform. For physical receipts collected by staff, Dext offers a mobile app that lets them snap a photo of the receipt, which is instantly uploaded to the system.
Once an invoice is in Dext, the software uses advanced Optical Character Recognition (OCR) technology to automatically extract the key data—such as the vendor name, date, tax amounts, and total. This eliminates the need for manual data entry. Your bookkeeper simply reviews the extracted data, assigns the correct expense category and restricted fund tracking code, and posts the transaction directly to your accounting software (such as Xero or QuickBooks Online).
Step 2: Implement Digital Approvals and Payments with Plooto
Once your accounting software securely stores the invoice data, your next challenge is to approve and pay it without printing a physical cheque. This is where a payment automation platform like Plooto can become invaluable for Canadian nonprofits.
Plooto integrates directly with your accounting software, pulling in all unpaid bills. Within Plooto, you can configure custom, multi-tiered approval workflows that align perfectly with your board's governance policies.
For example, you can set a rule stating that any invoice under $500 requires only the Executive Director's digital approval, while any invoice over $5,000 automatically routes to the Board Treasurer for a secondary approval. Approvers receive an email notification, can view the original invoice directly on the platform, and can approve the payment with a single click on their smartphone or computer.
Payment Method Flexibility:
Once approved, Plooto offers multiple secure payment methods to suit your vendor preferences:
- Direct Deposit (EFT): Electronic transfer directly from your bank account to the vendor's bank account—the fastest and most secure option for most vendors
- E-Transfer: Email money transfer, ideal for smaller payments or vendors who prefer faster, more flexible payment methods
- Cheques: Plooto can print and mail physical cheques on your behalf, keeping your workflow entirely digital on your end while accommodating vendors who still require paper payments
All payment methods are secure, traceable, and significantly faster than your organization manually printing and mailing cheques. Plooto maintains a permanent, unalterable digital audit trail for every transaction.
Step 3: Automate the Reconciliation Process
The final piece of the AP automation puzzle is reconciliation. In a manual system, after a vendor cashes a cheque, a bookkeeper must return to the accounting software, locate the original bill, and mark it as paid.
However, when you use an integrated stack like Xero and Plooto, the system automates this process. As soon as Plooto transfers the funds to the vendor, Xero marks the corresponding bill as paid.
When the transaction clears your actual bank account, the bank feed in Xero will automatically match the bank withdrawal to the payment recorded by Plooto. Your bookkeeper simply clicks "OK" to reconcile the transaction. What used to take hours of cross-referencing now takes seconds.
The Value of an Outsourced AP Partner
While tools like Dext and Plooto are incredibly powerful, they still require setup, ongoing management, and daily oversight. You must configure the OCR rules, manage the approval routing, handle updates to vendor banking information, and ensure the integrations are functioning correctly.
This is why many organizations choose to partner with an outsourced back-office provider. When you utilize Enkel's Accounts Payable services, you don't need to worry about the technical operation or management of these tools.
We provide the software stack, configure the approval workflows to match your exact governance requirements, and manage the daily processing of invoices. Your vendors are paid accurately and on time, your board maintains complete control over approvals, and your internal team is freed from the burden of administrative data entry.
Ready to eliminate paper cheques and data entry? Modernize your back office and strengthen your financial controls. Book a Free Consultation with Enkel today to learn how our fully managed Accounts Payable services can transform your organization's financial operations.
