Two-thirds of finance professionals expect their accounts payable departments to be fully automated by 2025, reflecting fundamental shifts in fund accounting operations. The AP automation market is expanding at 12.8% CAGR from 2024 to 2030 as manual invoice entry plummets from 85% to 60% in just two years and fund accountants reclaim days from quarter-end close cycles.
The Fund Accounting Automation Imperative
Fund accounting combines the complexity of corporate accounting with the regulatory requirements of investment management and the multi-entity structures of private funds. This combination creates operational workflows that resist standardization—each fund maintains separate books, applies unique fee structures, and reports to investors with different preferences.
Manual processes that sufficed when firms managed 2-3 funds break down at 5-10 funds. Invoice processing, expense allocation, management fee calculations, and investor reporting consume increasing resources as fund counts grow. Automation transforms these linear cost relationships into scalable operations that support growth without proportional headcount increases.
Current State of Automation Adoption
52% of AP professionals now spend fewer than ten hours per week processing invoices, down from 62% a year ago. This efficiency gain reflects automation tools handling routine invoice entry, approval routing, and payment processing that previously required manual data entry and verification.
However, adoption remains uneven. While 60% of invoice processing is now manual—a significant improvement from 85% in 2023—this means 40% automation represents the current industry standard. The two-thirds of firms expecting full automation by year-end suggests rapid acceleration ahead as platforms mature and implementation barriers decline.
Core Areas for Fund Accounting Automation
Fund accounting automation delivers highest impact in repetitive, rule-based processes where accuracy matters and volume scales with fund growth.
Accounts Payable and Invoice Processing
Automated AP systems extract invoice data using optical character recognition, route invoices for approval based on fund allocation and amount thresholds, and generate payment files automatically. This end-to-end automation eliminates manual data entry while maintaining proper authorization controls.
Many companies now integrate their ERP and accounting software as an AP automation best practice, eliminating the inefficiency of maintaining separate systems. This integration ensures invoice data flows directly into general ledgers without manual reconciliation.
For fund managers, AP automation extends to expense allocation across multiple funds. Shared service costs—legal fees, technology subscriptions, office expenses—require systematic allocation to each fund based on AUM, investor count, or other metrics. Automated allocation eliminates manual spreadsheet calculations and ensures consistent treatment across periods.
Management Fee Calculations and Billing
Management fees represent funds' primary revenue but calculating them correctly across varying commitment sizes, timing of capital calls, and different fee tiers requires systematic automation. Fee calculation errors create LP disputes and compromise fund economics.
Automated platforms calculate management fees based on LPA terms—whether fees apply to committed capital, invested capital, or NAV—and generate investor statements showing fee calculations transparently. This automation ensures fees precisely match governing documents while producing the backup documentation LPs require.
For funds with tiered management fees that decline at specific AUM thresholds or anniversary dates, automation tracks these transitions and applies correct rates. Manual processes often miscalculate during transition periods, either overcharging LPs or undercharging fees the GP has earned.
NAV Calculations and Reconciliation
Robotic process automation now handles daily or even intraday NAV calculations, pulling valuations from multiple data sources, applying waterfalls, and reconciling cash movements automatically. RPA bots surface only genuine anomalies for human review while routine calculations proceed without intervention.
Early adopters reclaim days from quarter-end close cycles. Rather than dedicating week-long efforts to gathering data, performing calculations, and reconciling discrepancies, automated NAV calculations complete in hours. This time savings allows fund accountants to focus on analysis and strategic planning rather than mechanical computation.
Financial Close and Period-End Processes
Cloud platforms and automation enable continuous accounting by digitalizing transaction processing and automating core financial workflows. Rather than month-end or quarter-end close periods, continuous accounting maintains current financial records that can generate reports at any time.
This shift transforms close processes from intense period-end efforts to ongoing validation. Automated reconciliations run continuously, flagging discrepancies immediately rather than discovering them during close. When period ends arrive, financial statements generate automatically from continuously maintained records.
Technology Drivers Enabling Automation
Multiple technology trends converge to make fund accounting automation both more capable and more accessible than previous generations of accounting software.
Artificial Intelligence and Machine Learning
AI investment is predicted to increase by 42.5% compound annual growth rate through 2027. For fund accounting, AI applications include invoice data extraction, expense categorization, anomaly detection in transactions, and predictive cash flow forecasting.
Machine learning models trained on historical transaction data automatically categorize expenses, recognize vendor patterns, and suggest proper fund allocations. This intelligent automation reduces manual classification work while improving accuracy through consistency.
However, only 7% of respondents currently leverage AI technologies for spend management, though 40% are considering implementation within the next year. This lag between AI capability and adoption suggests significant automation opportunity remains as firms implement AI-powered accounting tools.
Cloud Accounting Platforms
The global cloud accounting software market was valued at $3.5 billion in 2023 and is expected to expand at 7.8% CAGR through 2032, reaching $7.0 billion. Cloud platforms deliver continuous updates, seamless integrations, and accessibility that on-premise systems cannot match.
For fund managers operating globally or supporting remote teams, cloud accounting provides the anywhere-access and real-time collaboration essential for modern operations. Multiple users can work simultaneously in the same system, eliminating version control issues inherent in spreadsheet-based processes.
Workflow Automation Software
55.2% of accounting firms bought workflow automation software to resolve workflow issues. These platforms automate approval routing, document collection, deadline tracking, and task assignment—the coordination activities that consume significant time in manual accounting operations.
For fund accounting, workflow automation ensures expense reports receive appropriate approvals, capital call notifications reach investors on schedule, and period-end tasks complete in proper sequence. This orchestration reduces errors from missed steps or incorrect sequencing.
Benefits Beyond Efficiency
While time savings drive initial automation interest, secondary benefits often deliver greater long-term value.
Improved Accuracy and Reduced Errors
Automated calculations eliminate the transcription errors, formula mistakes, and version control issues inherent in manual spreadsheet processes. Each calculation executes identically regardless of workload, time pressure, or staff changes.
This consistency matters particularly for calculations affecting multiple funds or periods. Management fee calculations, expense allocations, and waterfall distributions that must remain consistent across time benefit enormously from automated processes that apply rules identically.
Enhanced Compliance and Audit Readiness
Automated systems maintain complete audit trails showing exactly when transactions were recorded, who approved them, and what calculations were applied. This documentation satisfies auditor requirements without manual compilation of support.
For regulatory compliance, automated systems enforce controls that manual processes struggle to maintain consistently. Segregation of duties, approval hierarchies, and transaction limits apply automatically rather than depending on staff compliance with policies.
Strategic Analysis and Decision Support
Time freed from manual accounting processes allows finance teams to focus on analysis and strategic planning. Rather than week-long close processes, automated systems generate financial statements in hours, leaving days for variance analysis, forecasting, and performance evaluation.
This analytical capacity helps fund managers identify cost reduction opportunities, optimize fee structures, and make data-driven decisions about fund launches or closures. The shift from accounting as record-keeping to accounting as strategic function represents automation's highest-value outcome.
Implementation Best Practices
Successful fund accounting automation requires thoughtful implementation that balances capability with change management.
Phased Rollout by Process Area
Rather than attempting comprehensive automation simultaneously, prioritize high-volume, rule-based processes where automation delivers quick wins. AP invoice processing, management fee calculations, or expense report processing provide good starting points that demonstrate value while building organizational confidence.
Document time savings and error reductions from initial automation phases to build support for expanding automation to more complex processes. Success stories from early phases help overcome resistance to changing established workflows.
Data Migration and Validation
Accurate automation requires clean, complete data. Before implementing automated processes, validate historical data quality and correct errors that might corrupt automated calculations. This cleanup work represents significant effort but prevents automation from perpetuating or amplifying existing data issues.
Test automated calculations extensively against known results before deploying to production. For fund accounting, this validation should cover multiple periods and different scenarios to ensure automation handles all situations correctly.
Training and Change Management
Accounting teams must learn new workflows and develop comfort with automated processes. Provide comprehensive training on both how to operate automated systems and how to verify their outputs. Staff should understand automation logic well enough to identify when results warrant investigation.
Address concerns about automation replacing jobs directly. Position automation as eliminating tedious manual tasks while enabling staff to focus on higher-value analytical work that better utilizes their expertise and judgment.
Key Takeaways
- • Two-thirds of finance professionals expect full AP automation by 2025, with the AP automation market expanding at 12.8% CAGR through 2030 as firms reclaim days from quarter-end close cycles through robotic process automation.
- • Manual invoice entry has dropped dramatically from 85% in 2023 to 60% in 2025, with 52% of AP professionals now spending fewer than ten hours weekly on invoice processing compared to 62% previously.
- • Cloud accounting platforms growing at 7.8% CAGR to reach $7 billion by 2032 enable continuous accounting through digitalized transaction processing and automated core workflows that maintain current records rather than period-end closes.
- • AI investment increasing at 42.5% CAGR through 2027 powers intelligent invoice data extraction, automated expense categorization, and anomaly detection, though only 7% currently leverage AI for spend management with 40% considering implementation.
- • Automated management fee calculations eliminate errors during tier transitions and produce transparent investor statements showing fee computation details, preventing LP disputes from manual miscalculations during threshold periods.
- • 55.2% of accounting firms purchased workflow automation software to orchestrate approval routing, document collection, and task sequencing—the coordination activities consuming significant time in manual fund accounting operations.
Join the two-thirds of finance teams achieving full AP automation in 2025. Polibit's platform automates invoice processing, management fee calculations, NAV computation, and investor reporting—reclaiming days from close cycles while eliminating manual errors. Explore Fund Administration Features or Schedule a Demo to see how automation scales operations without proportional headcount growth.
Sources
• SAP Concur (2025). 2025 Accounts Payable Automation Trends Report - Two-thirds expect full AP automation by 2025, manual entry dropped from 85% to 60%
• Dokka (2025). Key Accounting Automation Stats for 2025 - AP automation market expanding at 12.8% CAGR through 2030
• NetSuite (2025). 18 Accounting Trends to Pay Attention to in 2025 - Cloud platforms enable continuous accounting through digitalized transaction processing
• SolveXia (2026). 32 Finance Automation Trends and Statistics for 2026 - AI investment predicted to increase by 42.5% CAGR through 2027
• Financial Cents (2025). Future of Accounting Trends - Cloud accounting software market growing from $3.5B (2023) to $7.0B (2032) at 7.8% CAGR