The Evolution of the Modern Accounts Payable: Automation fits well for Mid-Market Firms too
When you hear the words automation mentioned along with the Accounts Payable process, how are you NOT intimidated? This isn’t some fancy tech meant only for mammoth organizations or process rich organizations. AP automation would fit the bill for any organization size, or type of industry. Mid-market firms, like yours could benefit heavily from the right AP automation software.
However, without the kind of resources that large organizations wield, it may be difficult for mid-market firms to jump into automation that can run their AP processes. Also, since it’s not top of mind, you could miss serious indicators that point towards the necessity for a switch to AP automation. Let’s get this out of the way first, and then we’ll talk about the costs.
Here are 3 major indicators to look out for, that are screaming for the switch to AP automation:
High process costs
One of the foremost indicators of change is when you start sensing that your existing manual AP process is burning a hole in your pocket, surely even if slowly. But we’re not just talking about money, but also time. Time and money are resources that no organization can overlook. So, when you see an anomaly, start thinking about automation. It’s high time, and money, literally.
But how do you know?
Make a note of all current AP expenses, and convert it to a percentage of your total monthly expense sheet.
Then, break it down. Note the individual expenses associated with each vendor and compare them to the revenues that are directly impacted by that vendor.
In this way, you’d be able to measure the cost per invoice processed. Once you have an accurate figure for each vendor, you should start feeling the winds of change on your face.
Anything in the $8-$10 range or above per invoice is a clear indicator that it’s time for automation.
The Human Factor
With resource costs being an overbearing demon for all mid-market firms, it’s no surprise that often times, the mantra is “Do more with less.” Back-office resources are affected the most – easily replaceable resources. While this helps to quell the resource costs monster, and looks good on your P&L, it doesn’t benefit your workforce. Office morale is dwindling at this point. Unsure if this is the case? Here are a few pointers you could look at to know if morale is dipping:
- AP workforce complains about being overworked and underappreciated
- AP workload is not sustainable over-time
- Frequent human errors in calculations
- AP employees are leaving your firm
Sounds familiar? If it does, you better start thinking about AP automation.
Give your AP team the flexibility and leverage to work more strategically and quit thinking of themselves as mere paper pushers.
Pesky Bottlenecks and Showstoppers
Another important indicator is a bottleneck in your AP workflow. Showstoppers or bottlenecks in your invoice processing speed, might bring your vendor handshake to a standstill. Trying to understand the specific reasons behind the bottlenecks or trying to solve them might only tighten the aperture rather than fixing the bottleneck. Spending additional time and resources on getting past these bottlenecks seems like the only viable option, albeit costly. AP automation on the other hand, would not only flag any possible bottlenecks through advanced analytics, it would also highlight the fixes that can be made to ensure the bottleneck releases, for now and for the future.
Bottlenecks could pop up anywhere:
- Manual coding and data entry
- Verification processes
- Duplicate invoices
- Missing, partial or blanket purchase orders
- And the primoris problemata – Approvals or Delegation of Authority
With an quality AP Automation software at your service, you don’t have to worry about any of these problem areas. An AP automation software would provide you precise reports on how long it would take for invoices to travel the length of the workflow, from the point of data entry to approvals, it helps you see the areas that lag behind, and rectify even before a problem arises. With such visibility and control, the Management can make lightning quick decisions to diffuse problematic situations even before they arise, reducing the detrimental impact it may have on business.
Robust cloud-based, multi-tenant Accounting solutions such as Denali Business from Cougar Mountain Software, provides you with the right information at the right time and the right tools for you to seamlessly run your AP process. An automation tool of this calibre, will help you automate all your mundane AP tasks, such as data entry and codding and verification, streamline your process workflow, and ensure the routing of appropriate documentation to the appropriate authorities for approvals. A comprehensive package, Denali could be a game changer for your business.
Benefits bigger than costs
AP automation does not just benefit the accounts department, but other departments in the organization as well. It helps cut costs and improve services across the board, ultimately benefitting the entire organization.
Since invoices have to approved by decision makers outside of the accounts department, it makes sense that other departments should also benefit from the automation. Decision makers who have t approve costs and invoices, can easily do so through an automation toll that integrates the entire company.
With an AP automation software like Denali, we’re not just talking about routing invoices to the right stakeholders in the right departments, and going through the motions of the workflow, we’re also talking about intelligent invoice approval processes, with a complete context portfolio routed along with the invoice. This ensures that there is no need for clarifications and rebuttals at that point. Everything is seamless. Even if there is a flag, and if an invoice has to be routed back for clarification, the tool can handle it seamlessly.
Denali also provides historical data on any particular invoice, thereby allowing decision makers better visibility on cost changes and the reasons behind it. This helps them make quicker, more informed decisions.
An automated AP solution is going to streamline your AP process end to end, increasing control over and accuracy of payments, effectively improving P&L for the organization.
So as you can see, the benefits outweigh the costs involved with an AP automation tool. Even for smaller organizations, choosing an AP automation tool could prove to be more profitable than costly. And with a cloud based, multi-tenant solution like Denali, you can’t go wrong.
So what are you waiting for? Are you ready to hit the evolution button?