Once upon a time, small and mid-sized businesses (SMBs) expended significant effort to automate business processes such as accounts payable (AP). With the advent of cloud solutions, this is no longer the case. SMBs no longer have to deal with inefficient, paper-based processes that are a waste of costly resources or long-running technology implementations. And yet, despite clear benefits to AP automation and the ease of installation, making the change isn’t necessarily straight forward.
How do SMBs Run AP Today?
Because of the previous high cost of automating AP, both from the personnel and financial perspective, many SMBs run their AP operations in a mostly manual and inefficient way. This results in high operational costs from processing paper invoices, which, while lower in volume, doesn’t impact the processing cost itself. Automation can help with this. Indeed, according to recent Ardent Partners research, automation can reduce processing costs by up to 70%.
SMBs, like most other enterprises, require visibility into and direct management of company cash flow. With a paper-based process, SMBs create the possibility of costly errors and/or a general lack of transparency. Paper-based invoicing is more likely to spark errors such as overpayment, late payment, or even duplicate payments; a general lack of visibility can similarly make crafting a financial forecast a titanic endeavor.
Making a Business Case for AP Automation
As with any change in the business world, the first step is to craft a business case. In order to do that effectively in an SMB environment, it’s critical to first gain support from all the relevant stakeholders and also ensure that those stakeholders understand the goals, objectives, and benefits of the initiative. Finance and treasury, for example, should always be involved in cash management discussions.
Once everyone is on-board with the project, the next stage is to understand the current situation. We suggest looking at any accounts payable process in terms of the Ardent Partners ePayables Framework of “receive,” “process,” and “pay.” Once these specifics are outlined, next the SMB can identify where the current process falls short. Does the company have high processing costs? Is there a lack of transparency? These and other questions should be answered before moving on.
Only after the process and challenges are understood can the requirements—both technical and operational—be gathered for the new solution, the return on investment calculated, and the organizational impact determined. Keep in mind that getting the company to accept change may be a difficult task; it can even make or break the entire implementation in some cases.
Finding the Right AP Automation Solution
While SMBs need a business case just like large corporations, different factors hold higher weights at an SMB than a larger company. Solution delivery and pricing is one such item; cloud-based services make tremendous sense for SMBs, and a common usage or time-based model means the SMB pays only for what it uses. Similarly, SMBs don’t have the ability to wait six months for a solution to get installed. We suggest looking for solutions with a four- to six-week implementation period.
In that same vein, SMBs can save a lot of time and money in the long term by automating their entire AP process. This is particularly true in situations where visibility into cash flow is sorely lacking. SMBs should also pay close attention to how easy the solution is to use (Is there an easy method to add users? Does the user interface clearly label buttons?), as well as any additional capabilities such as mobile-enabled usage and standardized reporting.
Final Thoughts
Automating the accounts payable process doesn’t have to be a time-consuming procedure full of back and forth with multiple vendors and a six-month technology implementation. Indeed, small and mid-sized businesses have more important things to do—like run a company—rather than do this. Thankfully, the availability of cloud solutions has put within reach all the benefits of AP automation, such as improved efficiency, visibility into invoice and payment data, and greater control over cash flow. Just what any SMB wants from their AP operation.
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