Accounts Payable
Why AP automation is cost-effective for SMBs

Why AP automation is cost-effective for SMBs

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Small and midsize businesses (SMBs) spend a lot of time and resources managing accounts payable (AP). Matching stacks of paper invoices against expected bills, chasing down approvals, and predicting cash flow can be time-consuming and costly.

AP automation software can minimize manual processes and streamline the entire AP workflow, so your team spends 50% less time on AP management.

This post explores the many ways in which an AP automation system can be cost-effective for your business while saving you hours of precious time every month.

Seven myths that stop SMBs from investing in accounts payable automation

There are a lot of misconceptions around AP process automation that can stop SMBs from investing in their back-office tech. See if any of these sound familiar.

Myth 1: “AP automation is only for large businesses.”

Many SMBs think automation is just for big business, but organizations of any size can reap the benefits of automating their accounts payable processes. In fact, many software solutions, such as BILL, cater specifically to small and midsize organizations.

SMBs may also assume that onboarding a new AP automation solution will be expensive and time-consuming—the kind of investment only a large business can capitalize on. But these solutions can be affordable and very easy to implement, often in a matter of days or even hours, depending on your setup.

As for capitalizing on the investment, a recent Kofax report shows that companies using digital payables platforms can see 81% lower processing costs and 73% faster processing cycle times. Those are impressive numbers at any scale.

Myth 2: “There are too many security risks.”

Many SMBs worry about security risks and potential data breaches when it comes to any technology solution. But most AP automation solutions provide robust security measures to mitigate risks, such as:

  • Digital payments, including ACH transfers
  • Two-factor authentication
  • Permission-based roles and access
  • Clearing accounts to hide your banking information
  • Automated workflows and approval routing to enforce separation of duties
  • Optical character reader (OCR) checks against purchase order numbers
  • Transport Layer Security (TLS)

And many more. Traditional AP that involves paper invoices and physical checks is actually more susceptible to fraud, duplicate payments, and data loss than AP automation.

Myth 3: “Automation cuts jobs.”

If you are worried that embracing automation could lead to job loss, the World Economic Forum estimates that by 2015, technology will create 12 million net additional jobs in the market.

For business owners, one of the best uses of back-office automation is to shift your finance team’s focus from mundane tasks to strategic initiatives—like delaying cash outflows with credit card payments, capitalizing on early payment discounts, or comparing procurement alternatives.

Myth 4: “Automating AP isn’t a priority.”

Many SMBs don’t prioritize AP or business process automation when it comes to growth initiatives, but there’s a treasure trove of data in payment processing that the right AP software can uncover. Leveraging machine learning, the AP department can extract valuable insights to help with strategic planning, spend management, and cash flow optimization.

Myth 5: “SMBs don’t need it.”

Many SMBs think they don’t need to automate their AP because their traditional paper-based system “has always worked before” or “is good enough.” But as small businesses grow, those paper-based systems can become bottlenecks. They just don’t scale well.

Handling 3 or 4 invoices a month looks very different than manually entering invoice data from dozens or even hundreds of bills coming in through multiple channels. The opportunity for human error expands tremendously. Managing exceptions can become a real headache, and the time it takes the AP team to chase down approval signatures becomes unreasonable.

In short, small business processes don’t support big business growth.

Myth 6: “AP software won’t work with existing systems.”

SMBs that already use sophisticated accounting software or even an enterprise resource planning system (ERP system) think that adding something new will be a hassle. But an AP automation system like BILL can often integrate seamlessly with your existing tech stack, making adoption relatively straightforward and painless.

Myth 7: “We’re already automated.”

Some ERP systems offer automation for certain pieces of the AP process. Other companies might have home-grown solutions in place, but these don’t compare to what a dedicated AP automation solution can achieve.

With advanced AP automation, businesses can optimize the entire workflow from invoice capture, to the approval process, to document management, to a time-stamped audit trail, all while mining valuable insights from the invoice data.

How much does AP automation cost?

The exact cost of AP automation depends on the solution you choose, but pricing models usually vary with the size of your business. That’s what makes AP automation so affordable. Prices are based on the number of people who actually need to use the service or on your transactional volume.

Before you check specific prices, think about your company’s current AP process and evaluate the costs of doing nothing.

  • Costs of existing systems: The full cost of processing invoices includes supplies like check stock and ink, the overhead of the physical space required, and additional costs if documents are stored with an off-site vendor. It also includes time spent on things like collecting invoices, chasing down approvals, and managing off-process exceptions.
  • Human errors: Along with simple data-entry errors that make invoices and payments hard to reconcile, human errors can lead to bigger problems like late payments, unused credit notes, unclaimed discounts, and even overpayments or duplicate payments.
  • Limited workforce: Today’s next-gen employees grew up as “digital natives.” They expect digital workflows and easy access to information in every area of their life, including the office. A clunky, outdated AP system can influence a candidate to choose another employer.

Why is AP automation important?

As you might expect, the benefits of AP automation solutions go far beyond cost savings. These include:

  • Time savings and accuracy: Advanced AP solutions offer features like automated inboxes and optical character recognition to improve both speed and accuracy in data capture. They streamline approval workflows by routing bills to the right people automatically, provide mobile apps to collect approvals remotely, and even process invoices automatically when the necessary criteria are met.
  • Improved visibility: Comprehensive dashboards make it easy to identify where an invoice is sitting and who you need to contact if there are delays. Clearing accounts also speed up your monthly close as well as reporting at the end of business cycles.
  • Easy auditing: One of the main benefits of AP automation is that it’s easy to integrate into your company’s accounting system, ERP system, databases, and other financial systems. An integrated tech stack reduces the chance of human error by removing the need to enter data in multiple systems. It also provides a time-stamped audit trail for every touchpoint in the invoice processing workflow.
  • Fraud detection: In 2020, the AFP Payments Fraud and Control Survey found that a staggering 81% of companies were targeted for payment fraud in 2019. AP automation software can reduce the risk of fraud by controlling user access through role-based permissions, automating rules and workflows that ensure separation of duties, and masking your bank information with features like in-network payments and clearing accounts.

Affordable AP automation in the cloud

Today’s global business environment demands real-time access to tools and data. Old school, on-premise systems simply can't do the job, especially given the trend toward remote work that was accelerated by the pandemic.

Fast-growing businesses with a distributed workforce need a cloud solution to ensure continuity and scalable operations. Cloud-based AP automation makes productivity and collaboration possible regardless of location, but not all “cloud” systems are the same.

  • Public cloud: A public cloud is a shared pool of resources that anyone with an Internet connection can access. The resources exist as software on servers rather than physical hardware. Third-party providers such as Amazon Web Services (AWS), Microsoft Azure, or Google Cloud Platform (GCP) manage public clouds.
  • Private cloud: A private cloud is a group of servers that reside on-premises where only authorized users can access them. Organizations manage private clouds internally.
  • Hybrid: A hybrid cloud is a combination of both public and private clouds. It allows organizations to take advantage of the benefits of both the public and private cloud.

With the Software as a Service (SaaS) model, companies can implement affordable cloud-based AP automation solutions with minimal effort and investment.

Benefits of cloud-based AP automation

There are many benefits of using the cloud to automate your accounts payable process and eliminate manual tasks. These include:

  • Accessible anywhere: One of the greatest benefits of cloud-based software is the ability to access information anywhere, anytime. On-premises desktop applications store data on your local computer, so you can only see it at your desk. By storing data in the cloud, you can see what’s happening with your business no matter where you are.
  • Unlimited storage: Another key benefit of a cloud-based AP automation tool is the vast storage space available. Storing thousands upon thousands of pieces of paper is expensive, bulky, and wildly inefficient when it comes to finding what you need. Storing those same documents in the cloud makes them remote accessible and digitally searchable, and you won’t have to worry about space limitations.
  • Cost-effective: Cloud-based solutions are usually more cost-effective than on-premises software. You can access this type of solution through a web browser, eliminating the need to purchase, support, maintain, and upgrade proprietary IT infrastructure to house your own servers.
  • Access to real-time data and reports: Cloud-based solutions update transactions in your dashboard as soon as they happen and even sync with your accounting system, making that data available whenever and wherever you need it. With AP automation, you’ll have up-to-date information at your fingertips with no need for manual data entry.

How BILL can help

If you want to improve the efficiency of your AP department, automation technology can save your team both time and money, freeing up your employees to focus on more value-added tasks.

At BILL, we work hard to make your transition to AP automation easy. Whether you’re a small business or midsize company, our solution is user-friendly and built with your security in mind, and it integrates with many popular accounting systems and ERPs. In fact, BILL is the most trusted automated payables and receivables platform among small and midsized businesses.

Learn how our AP automation solution can help you achieve efficiencies in your AP workflow at an affordable price here. Ready to try our cutting edge AP technology firsthand? Sign up for a risk-free trial today.

The information provided on this page does not, and is not intended to constitute legal or financial advice and is for general informational purposes only. The content is provided "as-is"; no representations are made that the content is error free.