Three Major Benefits of AP Automation for Small and Midsize Businesses

One of the major drivers of operational efficiency across industries is automation and, with the advent of increasingly sophisticated technology, it is becoming easier to implement and more accessible than ever before.

man and woman discussing AP Automation

For the vast majority of small and midsize businesses, back-office paperwork remains a production chokepoint for many. In fact, a study by Levell Research found that only 20% of SMBs enjoy some kind of accounts payable automation while 80% of enterprise clients utilize such a process.

Manual, labor-intensive processes not only eat up capital and productivity but also sap away precious human resources that could be diverted to other activities that provide growth for the company.

As such, AP automation presents a unique opportunity for SMBs to leverage the advantages often enjoyed by larger enterprises without the need to change the size of their current footprint or expend massive amounts of capital to do so.

The Case for AP Automation

As a major component of backroom processes, accounts payable is understandably critical to an SMB’s ability to function in the market. Yet it is also a potential source for new efficiencies and ways to approach doing business that could empower SMBs to take charge of their finances and corporate direction in new and exciting ways. Of course, as something impacting such a major part of the way things work, there will be some natural reluctance from your accounts payable department to implement any major changes to these processes.

The reasoning here is understandable and often falls along the lines of wariness about a new workflow, fear of automation as a job killer, and a natural queasiness about entrusting some critical to the running of a well-oiled corporate machine to a largely unknown process. As we noted in the introduction, accounts payable automation is still somewhat mysterious to SMBs; therefore, making the case for them involves more than a simple argument about the future of business and the need for greater efficiencies.

However, if there is one thing that most SMBs understand, it is that they already operate on slim margins. Anything that could increase their share of revenue is something worth considering and, eventually, a necessary competitive advantage to survive. Taken from this perspective, AP automation becomes a necessity for the forward-thinking business and primarily due to three major benefits provided by it.

Payment Efficiencies

Whether it is taking advantage of early-pay discounts or avoiding late payment penalties, the payment efficiencies offered by AP automation makes sure that your SMB reaps the benefits of timely payment processing. Again, a major concern of payment processing specialists is that the introduction of any new process could be more costly and ineffective if not tailored sufficiently to the needs of the SMB that it serves.

The fear that new things bring new costs is not irrational and it is often believed that larger firms push innovation in accounting and other manual tasks because they can afford to experiment. Unfortunately, for most SMBs, experimentation is not only costly but potentially deadly. Yet so is sticking with an outdated and inefficient process. Far from complicating matters, research has shown that AP automation lowers the cost of invoices overall, streamlines workflows with an eye towards operational efficiency, and conserves the human resources that would otherwise be devoted to a time-consuming manual process.

man and woman office


Further reading: A buyer’s guide to AP invoice automation solutions 


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Improved Supplier Relations

As a vital part of an SMB’s operations, suppliers are valuable partners and, because of this, their needs should be front-and-center in any automation scheme. The reason for this is twofold: One, you tailor your AP automation to the client and, two, involving your suppliers in your SMB’s digital transformation makes sure that each link in the supply chain is on the same page. You don’t want to invest heavily into improvements that alienate or even exclude your traditional suppliers.

Instead, you want the myriad advantages that come with AP automation with regard to the supplier relationship including efficient payment processing, increased harvesting of discounts and other efficiencies, and a system capable of providing actionable data from which SMBs can make strategic decisions regarding their future. This latter benefit we will address in the next segment.

Actionable Data and Analytics

Perhaps the single largest benefit of accounts payable automation is that it provides the firm using it with a vast array of actionable data and analytics. These tools can be harmonized to make important decisions regarding the future direction of a company.

Beyond that, they offer insights into business patterns and establish a kind of predictability from those selfsame patterns. While manual processes often consume time and energy when it comes to accounts payable, automated solutions allow those same workers to pore over data and look for vast, overarching trends that will help the company develop future capital expenditures. The benefits are not just one-sided, either, as suppliers can glean just as much information about their customers in order to make similar moves on their side in the future.

Moving Accounts Payable from Cost to a Value Creation Orientation

Traditionally, accounts payable is a cost center in any SMB yet AP automation allows it to move beyond this stance and into the realms of value creation. Value creation means that AP automation opens up new business opportunities for a firm through the process of implementing it. While it is not traditionally seen as such, accounts payable is the locus of multiple business opportunities when it comes to reconciling market conditions with overarching strategies and enterprise needs. As a frontline function, accounts payable acts as the canary in the coal mine, so to speak, for when a company is experiencing budgetary pressures.

They are also the first to rejoice when times are abundant and heady. In sum, integrating this expertise into the strategic matrix of a company’s overall administration makes sense from both a growth and cost perspective. These efficiencies are possible and enabled through a thorough process of AP automation and operational harmonization with that paradigm.

Further Reading: Streamlining Paper-Based AP Process with AP Automation

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eBook: A Buyer's Guide to an AP Invoice Automation Solutions

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