Small businesses have long had to struggle with cash flow challenges, delays in technological implementation, and more when it comes to accounting. It’s an environment when AP automation in small and medium-sized businesses adoption can make sense.
You must keep in mind, the smaller the organization, the more critical it is to perform more with less. It is because each dollar counts and there isn’t much time to do high volumes of task individually with a small team.
It is not only cash flow that remains limited for SMEs. The available personnel can be a problem. AP automation adoption by small business can aid the team that might be a bookkeeper, or someone else holding one-person division.
This might seem like automation would be cost-effective for a single accounting function. However, when we discuss it, AP automation can be invaluable for SMBs that process massive volumes of invoices.
Restricted Cash Flow
Small business companies often get along tight margins with one website finding that 45% of them function on less than 55,000 dollars of sales every year. It monitors from a small business profile stating that the self-employed individuals with incorporated organizations earned around 52,820 dollars, while the ones who had not incorporated earned only around 25,094 dollars as a median.
Adopting Accounts Payable Solution for SMBs
Here are the key advantages of leveraging cloud-based accounts payable software for small businesses.
Improves Cash Flow
For many reason, automating AP for small and mid-sized businesses can improve cash flow. First, automating accounts payable systems can save your money. But how? They minimize the invoice processing time significantly, from weeks to days. Plus, they can leverage artificial intelligence to enter invoices into GL and flag issues with the invoices, minimizing the time that humans spend on them.
Also, the early payments discounts usually ranges between 2% to 4% that AP vendors will grant when businesses are willing to pay bills early. The discounts frequently remain uncollected, though organizations can be in a better place to gather them with automation.
Minimizes Fraudulent Activities
There are several advantages for organizations to automate AP functions, there are multiple drawbacks for holding off. One of the primary risks that are specifically fraught for small businesses is potential fraud.
According to ACFE, small enterprises were twice as likely as large enterprises to experience billing fraud, twice as likely to hit with the payroll fraud, and four times likely to become the victim of check/payment tampering. The proactive data tracking is an effective way to control fraudulent activities, but found that 20% organizations with less than 100 workers did, whereas 44% of bigger firms did it.
Implementing accounts payable solution in small businesses can help them combat fraud. AI and ML can flag anything that is suspicious like in the case with duplicate invoices.
Digital Helping Hand
Still many organizations have not completely automated accounts payable operations. Most of them are using some invoice scanning applications for entering data. It is needless to say that AP automation can make a difference as it can scan invoices via OCR technology, robotic process automation.
Instead of having an employee manually key in the data from a paper invoice, it is far more effective to leverage online AP solution to catch and insert invoices that come in. The approaches that combine artificial intelligence and RPA apps allow AP teammates eradicate themselves from the mundane activities of managing invoices, enabling them to act when human intervention is needed to authorize payments.
Is Automating Accounts Payable the Right Solution for Your Business
Accounts payable software solution is best implemented by small and medium-sized organizations with at least 200 to 300 invoices each month. Also, it is best used by organizations that have purchased ERP solutions. The exemption to the thumb rule is anybody whose time is valuable that they will make money offering their businesses principal product than by simply going through invoices manually.
Here whatever loss they will incur for general ERP software and AP automation may be more than the offset by time savings that they can pour into the business.
Many modern AP solutions enable small enterprises to manage enhanced invoice volume without adding more employees. When this staff does join the organization, it is easy to bring them as authorized users and train them fast on how to use the solution effectively.