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An Accountant’s Guide to Offering Automated AP Services

The opportunity in AP services for firms

Firms often start offering AP services for a single client—that one client asked, so the firm sets them up for manual or automated bill pay services. Sound familiar? All too often, that’s also where the service stops. The same firm will wait for another client to ask and react to that request. But that leaves a tremendous market opportunity open for other firms to fill.

The AP automation market size in 2019 was estimated to be USD 1.9B, according to Markets and Markets, and expected to grow to 3.1B by 2024. If you connect those dots with those that estimate the US B2B payments market to be worth USD 23.1 trillion (according to Deloitte, finextra.com), it’s an easy conclusion to reach: There’s a huge opportunity here for accounting firms.

Simply put, AP represents a raging new revenue stream—one that’s largely untapped by the accounting profession. In a recent survey we ran with CPA.com and Hinge Research, bill pay was one of the highest valued services from clients who buy accounting services, but only one-third of accountants offered it. Accounting clients have also reported that a key reason they fire or stop referring a firm is because that firm isn’t offering proactive services and going above and beyond for their clients. In today’s times, for businesses that are trying to pivot quickly, every step toward real-time data and managing cash flow has the potential to make or break their success.

Bill pay is squarely in a firm’s wheelhouse, offering an opportunity to provide clients with data-driven, advisory-based services.

But how do you get there? How do firm leaders claim their piece of the AP pie? In a word: automation. Automating the AP process ushers in unprecedented levels of efficiency, allowing accounting firms to build a highly scalable and profitable service that business clients both need and want. This guide, through a series of three articles, will walk you through the opportunity in AP services, how to launch a new bill pay service, and how to shift your conversations with clients to help them understand the value in it for their bottom line.

The bill pay opportunity

We know that billions of dollars are spent on AP. But where is that money going?

First, consider the millions of businesses out there and the fact that they all have bills to pay—vendors, utilities, rent, and so on. Many businesses still follow manual AP processes, like writing checks. Costs add up quickly when you factor in headcount costs, payment processing fees, cross-border payments, late fees, inventory financing, and more.

By automating the AP process, businesses can save an enormous amount of time and money—ditching labor-intensive, outmoded practices. And with real-time access to AP data, there’s also a big opportunity to provide insight into the numbers and advise clients at a deeper level. This is where you come in.

Take a moment to consider all the value to clients when AP is automated:

  • Money savings—By automating AP, you can significantly reduce the average transaction cost for clients.
  • Time savings—Again, automation removes the burden of manual processes for clients. No more late nights in the back office processing invoices. No more stress over dealing with stacks of monthly bills. Removing this pain point means owners can spend more time running their business.
  • New insights—Take your bill pay service to the next level by offering new insights into the numbers. When you automate the AP process with solutions like Bill.com, data syncs with the client’s accounting solution for on-demand access to accurate information, allowing you to advise clients in two key ways:
    1. Help them understand the how, when, and why of monthly spend—so they always have a clear picture of cash flow
    2. Use AP data across the business to provide advisory services on the client’s specific industry and market trends
  • Risk mitigation—Part of the power of automating workflows is the time stamped audit trail and paperless process, which provide internal controls. Digital processes help reduce concerns around check fraud.

Just imagine the positive impact you could have on your clients by automating their AP workflow and handling all the tasks that go along with it, like Redmond Accounting, which says that “our embrace of Bill.com and a paperless practice means internal controls and no manual checks for our clients, reducing concerns around fraud.” Now, envision this new revenue stream for your firm—your slice of a billion-dollar market.

What's in it for your firm

You’ve bought in. AP is a service you want to provide clients, and automation is the way to go. But what’s in it for you? It’s important to understand there’s value to your firm too. What’s the return on investment—and the key value points—when you move into the automated bill pay arena?

When you partner with a vendor like Bill.com to offer bill pay instead of manual processes or in-house systems, you have immediate access to smart AP and AR automation that streamlines the payments process—without adding time. Bill.com customer Noble Accounting reduced their AP time by 50%.

Automating bill pay allows your staff to work faster, supports standardized processes, and enables your firm to take on more clients without adding to the workload.

Some of the key benefits for firms:

  • Generate a predictable, recurring client service—Automated bill pay services support value pricing, enabling you to bill a fixed fee and generate regular monthly income for your firm. You can offer AP as a standalone service or within a larger product bundle. Either way, it represents a potential recurring revenue stream.
  • Produce more business per client—Offering AP is a value-add service that allows you to extend your engagements with clients.
  • Reduce client churn—When your firm manages key business processes like AP for clients (and delivers them well), it makes it harder for clients to leave. This is known as the “sticky factor.”
  • Reduce accounting cleanup work for financial statement prep, audit, and tax—When data syncs between a client’s AP and accounting system, you get clean data from the start. This makes much easier work of producing needed financial statements and reports for clients.
  • Gain new clients by offering a highly valued service—Take on a virtual CFO role and offer the kind of deep financial insight that clients need to make sound, smart business decisions and support long-term success.

The automated AP process in action

This is probably the part you’ve been waiting for … a look into what a true automated AP workflow looks like for a firm. And, we’ll get there. But before we do, let’s quickly review today’s all-too-common manually driven AP process. Many businesses still handle AP in this manner, which increases the potential for inefficiency, added costs, and an elevated risk of human error.

Today’s process breeds inefficiency

The traditional AP process is drastically inefficient, consisting of the following labor-intensive steps and the issues that inherently come with them:

ENTER APPROVE PAY RECONCILE
Bills, contracts and other docs flood in via USPS or email Multi-point and messy approval process, dealing with both email and paper docs Enter payments into online banking system and then re-enter into accounting system Reconcile accounting system and bank accounts
Paper piles up Manual routing for approval creates bottlenecks and delays Print checks Identify exceptions
Data is manually entered into the accounting system Manually gather approvals Sign, stuff and send checks Burdened with buried documents and incomplete audit trails
Main issue:
Paper-intensive
Main issues:
Manually driven, so highly inefficient and slow
Main issues:
Manually driven, so high risk of error, costs elevated and time-draining
Main issues:
Time-consuming and creates holes in audit trail

 

Does this process and its issues sound familiar? If so, you understand the pain points of working within an outmoded AP workflow. All the more reason to look to automation.

Four simple, automated steps with Bill.com

End-to-end automation is only possible if you have the right solution in place—one that enables you to keep work moving forward digitally and avoid the bottlenecks inherent in manual processes. Bill.com supports an automated AP process in 4 highly efficient, simplified steps:

  1. CAPTURE—Receive invoices in the Bill.com inbox. IVA (Intelligent Virtual Assistant) is built into the system, coding bills in real time and recording your preferred accounting treatment by vendor.
    Main benefit: Paperless!
  2. APPROVE—Easily view and approve bills online from any device. Whether sitting in front of your computer or using the mobile app on your tablet or phone, follow a simple and fast approval process.
    Main benefit: Automated!
  3. PAY—The system notifies you when it’s time to pay invoices. Make payments with just a few clicks via domestic ACH, international wire, virtual card, and even check payments for vendors who request them. (We’ll print and mail them for you.).
    Main benefit: Flexible!
  4. RECONCILE—Bill.com handles reconciliation for you on the backend. Data syncs with your general ledger, creating the expense and liability, then recording the payment and removing liability. Even initial setup is automated, making it easy to move vendors into Bill.com with no interruption of workflow. With auto data sync, you always have a complete audit trail.
    Main benefit: Efficient!

Harness the power of automation for AP

Bill pay represents a profitable revenue stream for firms. The value to clients is clear, including cost and time savings when you remove manual processes and replace them with automated, streamlined workflows. There’s also a long list of benefits for firms—from generating recurring revenue and creating a scalable new service to reducing client churn, eliminating tedious accounting data cleanup, and elevating the trusted advisor role.

Moving to an automated bill pay workflow has never been easier when you partner with the right vendor. Bill.com supports a fully automated AP process end-to-end—offering firms the leading AP solution and a proven workflow that enables them to enter the bill pay market with confidence. That’s the power of automation!

 

This is the first of 3 articles in our “The Accounting Firm’s Guide to Offering AP Services.” Stay tuned for our next article later this week, How to create a bill pay offering for your clients (and your firm). Ready to see how Bill.com can help? Start your trial or request a demo today.

July 22, 2020
Brandon Roth
Senior Manager of Technical Marketing, Bill.com
Brandon Roth is the Senior Manager of Technical Marketing at Bill.com. After years of consultation and sales, supporting firms of all sizes and their clients, Brandon is now dedicated to his role as a ‘technical translator’—helping firms better understand technology and how to use it to their advantage.