How Can Retailers Save Costs on Accounts Payable in 2026?

Retail margins are tighter than ever. While customer-facing technology often receives the bulk of the innovation budget, the back office—specifically Accounts Payable (AP)—frequently remains a hidden cost center, wasting valuable time and capital.

The average manual invoice processing cost is notoriously high, often exceeding $15 per invoice. In 2026, the competitive landscape demands that finance teams transition from being a reactive administrative function to a proactive, strategic advisor. The path to significant, sustainable cost savings in retail AP won’t come from mere digitization, but from adopting AI-driven automation, optimizing B2B payment flows, and establishing a unified Procure-to-Pay (P2P) ecosystem.

Here is a roadmap for how retailers can strategically cut costs and drive efficiency in their Accounts Payable function in 2026.

Leveraging AI and Automation for “Touchless” Processing

The single largest driver of AP expense is human intervention—manual data entry, chasing approvals, and fixing errors. Moving to “touchless” processing is the key to massive cost reduction.

1. AI-Driven Invoice Capture (The New OCR)

Legacy Optical Character Recognition (OCR) systems are often brittle, requiring templates and struggling with varying invoice layouts. Modern AI/Machine Learning (ML) technology is replacing this by reading invoices in their natural, unstructured format with near-perfect accuracy. Smart capture systems like PF 360 Capture automatically extract, code, and validate data.

The benefit is immediate: it drastically reduces data entry errors (which cause costly delays and rework) and cuts processing time by up to 50%. This accuracy is essential for high-volume retail environments.

2. Automated Three-Way Matching

For retailers dealing with high purchase order (PO) volumes, matching the purchase order, the vendor invoice, and the receiving receipt is a critical—and time-consuming—control step. Automated systems handle this process instantly:

System Action: The AP software verifies that the goods received match the PO, and the invoice amount matches the PO price.

Cost Saving: This eliminates manual reconciliation time, prevents duplicate payments, and acts as an immediate line of defense against both external and internal fraud.

3. Agentic AI for Smart Workflows

By 2026, AI is evolving from a data assistant to an autonomous decision-maker—known as Agentic AI. Instead of just flagging an issue, Agentic AI can initiate an action.

The Workflow Shift: The AI system can automatically route invoices for approval based on pre-set rules (e.g., invoice value, department, or budget holder) without any human clicking or routing required. The AP team only steps in for true exceptions, dramatically speeding up processing cycles and freeing up staff for strategic analysis.

Strategic Payment Optimization and Cash Flow Control

Accounts Payable should not just be a necessary chore; it should be a strategic tool for managing working capital. By changing how and when you pay, you can turn AP into a profit center.

1. Capturing Early Payment Discounts

This is the largest missed opportunity in manual AP. Many suppliers offer a 1% to 3% discount (e.g., 2/10 net 30) for paying an invoice within 10 days. When processing is manual and slow, these discounts are often missed.

Automation’s Role: Because automated AP systems can validate and approve an invoice in hours instead of days, capturing early payment discounts becomes feasible and systematic. This is a direct, realized reduction in your Cost of Goods Sold (COGS).

2. Modernizing Payment Rails

The 2026 trend is the shift to embedded payments. Instead of exporting payment files to a separate bank portal, payments are initiated and executed right inside the AP workflow.

Efficiency: This reduces friction, eliminates file transfer errors, and ensures on-time vendor payments.

Cost Savings: The system can intelligently choose the most cost-efficient payment method for each vendor (e.g., using low-cost ACH/EFT transfers instead of paper checks, which remain a major source of cost and fraud).

3. Predictive Cash Flow Forecasting

AP data holds the key to financial planning. By using historical spending patterns, seasonal purchasing trends, and contract renewals data, AP systems can provide predictive forecasts.

Strategic Value: This capability allows finance leaders to anticipate supplier payment spikes and cash needs before they happen, enabling better liquidity management and reducing reliance on costly short-term financing.

Governance, Integration, and Future-Proofing

Efficiency gains must be protected by robust controls and seamless integration.

1. Achieving Full Procure-to-Pay (P2P) Visibility

Siloed systems are the enemy of cost control. Retailers need to connect AP to Procurement (POs) and their Enterprise Resource Planning (ERP) systems (General Ledger). A unified P2P platform creates a single source of truth for all spend.

Cost Saving: This full visibility makes it easier to track spend leakage, identify non-compliant purchases, and leverage volume discounts across the entire organization.

2. Utilizing Supplier Portals for Self-Service

Retail AP teams spend countless hours responding to "where is my payment?" status inquiries. By implementing a supplier self-service portal:

Administrative Cost Reduction: Vendors can upload invoices directly, track their payment status, and update their banking details without contacting the AP team. This shifts administrative burden to the vendor, freeing up AP staff for higher-value, strategic work.

3. Compliance and Next-Gen Fraud Prevention

With fraud on the rise, AP systems must act as an early warning system. Modern platforms use machine learning to detect anomalies like duplicate billing or sudden bank detail changes instantly.

Future-Proofing: Additionally, 2026 will see accelerated global e-invoicing mandates. Adopting compliant digital platforms now ensures that retailers meet these regulatory requirements easily, avoiding potential fines and costly manual compliance efforts later.

Real-World Case Study - Longo's Handling High Volume with AI Capture

Longo’s, a leading grocery chain. Facing considerable growth (with 10+ new locations in a decade) and a high invoice volume—up to 12,000 invoices per month—their existing manual and mixed technology systems became a significant bottleneck. Manual processes and tasks in AP led to financial discrepancies and inefficiencies, causing operational delays and an increased risk of errors.

The Challenge

As Longo’s has grown, the volume of invoice processing had become more arduous. The company has been fielding an average of 12,000 invoices per month or 700 in a single day, according to Eva Kazemi, Accounts Payables Supervisor at Longo’s. Kazemi works on a team of six and hiring extra bodies would have added operational expense without necessarily addressing the volume of work in the best possible way.

Early on, Longo’s tried to address the issue with a mixture of technologies that included enterprise content management, collaboration and workflow applications, but this introduced additional problems. The systems were error prone and complicated and lead to slower than expected processing and user acceptance.

By adopting this PF 360 Capture, Longo’s realized multiple key benefits:

Avoided Hiring Costs: The company was able to manage increased volume without hiring additional AP staff, where salaries could start at $35,000 and more.

Increased Scalability: The new platform handled over 50% of all paper-based invoices, aligning their back office processes with their continued retail expansion without further strain.

Operational Efficiency: The seamless, single-platform integration eliminated the errors and slowness associated with their prior multi-system approach, dramatically boosting staff productivity.

Additionally, the system provides deeper insights into retail accounts and AP performance, enabling better decision-making and supporting the unique needs of retail businesses.

Conclusion: The Strategic Mandate for 2026

The shift in Accounts Payable from a clerical cost center to a strategic function is no longer optional—it is a competitive necessity. Automating business processes and aligning AP workflows with company policies is essential for compliance, efficiency, and reducing errors.

Retailers like Longo’s have proven that this investment yields immediate, quantifiable returns, enabling finance teams to scale growth without linearly increasing overhead. AP automation also supports customer retention by improving service reliability. The time to automate is now, ensuring your back office supports, rather than hinders, your strategic goals.