The COVID-19 pandemic has caused many businesses to reconsider how they buy and sell goods and services.
While digitization efforts have been accelerated by many firms, small businesses have been slow to confront accounts payable (AP) automation. When it comes to AP automation, larger, enterprise-level businesses continue to lead the way.
Automation has rapidly become a way for businesses to drive efficiencies and stay competitive during the current global downturn. It is widely accepted that effective accounting and payment processes can have a major impact on the revenue and profitability of a business. Many smaller businesses still fail to see the connection between saving money and increasing profit. Why is this the case? Is AP automation unobtainable by SMBs?
Many businesses seem to be slowly starting to come out of their COVID induced hibernation. AP automation has historically been seen as being costly, and SMBs have been understandably been cautious about making such investment.
However, as AP automation technology has evolved, so have deployment options and business models available to businesses. Many of these options work on a subscription-based model. SMEs should ask themselves the following questions before starting their automation journey and engaging with a technology vendor:
Where do you think your business will be in three to five years’ time? Can your chosen platform scale with you, as you grow?
Does your business experience have peaks and troughs in invoice volume during the year? Does your chosen platform offer a pay-as-you-go type model?
What could your finance team do with more time? Consider that 72% of finance organizations spend as much as 520 hours per year on manual accounts payable tasks. What is the cost of that level of distraction?
A report from Inspyrus identified a huge gap in the views of executives and their front-line staff around whether faults existed in their AP processes. While 93% of front-line staff identified several faults, half of C-suite execs thought their AP process worked “just fine.” According to MineralTree, 63% of executives believe their vendors are paid on-time, but 52% of those actually processing those payments indicated that their vendors were paid on time.
While many organizations appreciate the problem of late payments, and the knock-on effects it can have on their supply chain, they remain hamstrung by their current systems, practices and processes and struggle to make the necessary changes to ease the issue.
In times of economic uncertainty, where cost reduction and spend control are priorities, SMB’s are overlooking an area that can drive real savings, simply because they lack the data and insight to identify the issue.
"We only process a few hundred invoices per month, it’s really not that big a job," was one comment I heard recently from a SMB executive. However, a traditional paper-based purchase invoice process consists of several manual activities: the supplier raises the invoice in their finance application; they print it out, place it into an envelope and send it on its way in the post. Their customer receives the post, opens it, and sorts the mail items and enters the invoice details into their accounting system. The manual activities do not always stop there, as the invoice is often photocopied or scanned, with the copy invoice sent around the organisation for approval for payment.
Automating the process also enables greater control and visibility within the finance function. These benefits have been discussed, and more importantly realized, many times before. But the benefits are realised by both the buyer and the supplier when trading electronically.
