How to Grow Your Business with Accounts Payable Automation
Accounts payable might not be the first thing on your mind when growing your business. Growth takes money, so like most business owners, you’re trying to keep operational costs down to preserve working capital and cash flow. That’s a rational strategy, but there’s one big problem – when your business grows, your spending grows with it, and that means more invoices.
Your AP team will get overwhelmed if your accounts payable processes aren’t optimized and scalable to handle that extra volume. Mistakes will get made, payments will get missed or be late, and days payable outstanding (DPO) will grow, all of which will affect your cash flow and costs. And if you’re still relying on time-consuming manual AP processes, fixing the problem won’t be as easy as adding staff.
According to a 2021 survey by PYMNTS.com, 84% of CFOs said digitizing and automating payments has increased working capital. To grow your business, you need to speed up your capital cycle and optimize working capital. Your growth strategy needs to include an AP automation strategy. Go without one, and you’ll waste time and money.
In this podcast episode, Rachita Sundar, SVP of Finance at HubSpot, explains how technology is the key to efficiently scaling a business. This article explains how investing in AP automation will help grow your business and how to get started.
What is Accounts Payable Automation Software?
In a nutshell, AP automation software streamlines and optimizes AP processes by replacing manual workflows, such as invoice processing, with an automated solution. For example, the process of manually entering invoices into a spreadsheet or accounting system can be automated by a solution that uses Optical Character Recognition (OCR) to scan and enter invoice data.
AP process automation is straightforward. Here are the main AP functions that you can automate:
Data Entry and Approval Workflows
Automate purchase order (PO), receipt, and paper invoice entry, reporting, and approvals to reduce human error, processing time and improve DPO.
Three-Way Matching
Invoices, POs, and receipt reports are stored within transaction files, and three-way matching can occur in real-time.
Spend Management
Track and report purchases, approvals, and payments to reveal spending patterns, find opportunities for cost savings, and make informed decisions.
Making Payments
Arrange and schedule payments for all payment methods and integrate payment processing with invoice processing to prevent errors and fraud.
Vendor Management
Centralize vendor communications and invoice submission through a vendor portal so invoices, receipts, and messages are tracked and recorded.
Controls and Compliance
Maintain a complete audit trail by implementing and automatically enforcing internal controls and separation of duties to reduce errors and the risk of fraud.
Reconciliations
Automatically reconcile financial records and bookkeeping, perform variance analysis at any time, and view results from anywhere with a visual dashboard.
ERP Integration
Integrate with ERP, accounting software, and other business systems to ensure the organization works from a single source of truth.
By automating and optimizing these functions, your accounts payable department can free up time and reduce invoice processing costs by as much as 80%, which is great for your cash flow and working capital. These savings alone would make a good case for investing in AP automation. But there are other ways AP automation can help your business grow that you may not have considered.
How Automating AP Helps Your Business Grow
We’ve already shown that an accounts payable automation solution can significantly reduce your AP processing costs, which improves your working capital and frees up money to fund business growth. Here are some other ways that automation can help your business grow:
Preventing your AP Processes From Becoming a Bottleneck for Growth
As your business grows, so does the amount of money it spends – and the number of suppliers and invoices it needs to manage. AP automation platforms are easily scalable to handle larger volumes. According to a study by the Institute of Finance & Management, AP automation increases the average number of invoices a single employee can process from 1,350 to 22,756 per year.
Save Money by Capturing Supplier Discounts
Automation reduces DPO and lets you pay invoices before the due date to qualify for early payment discounts. On average, 55% of companies that use AP automation pay invoices on time at least 90% of the time, compared to only 13% of companies that use manual processes. Companies with automated AP processes also capture 74.2% of available discounts.
Integrate with ERP Systems for Greater Efficiency and Data Accuracy
If part of your growth strategy includes implementing or expanding an Enterprise Resource Planning (ERP) system such as SAP or Sage Intacct, implementing AP automation alongside an ERP makes sense. AP automation platforms can integrate with most ERPs to provide seamless data transfer between departments. Integration reduces errors and provides a single source of data truth across the organization. And you can easily scale your AP platform as you scale up the ERP.
These tangible benefits provide a fast return on investment in AP automation and set your business up for successful growth. So how do you get started?
How to Implement AP Automation for Business Growth
Implementing AP automation may seem intimidating, but getting started with cloud-based platforms such as Stampli is straightforward and doesn’t require an investment in IT hardware. Here’s a quick checklist to get you started:
Begin With Your Technology Needs
Start by looking at your current AP processes and business systems and forecasting your future needs. It can help to work with an AP automation specialist to understand the essentials completely. Here are some everyday needs we’ve identified with clients in the past:
● Scalability to process invoices
● Cloud solutions for remote workers or multiple locations
● Integration with ERP, payments, and accounting systems
● Device and OS compatibility
● OCR and machine learning technology to enter paper documents
● Compliance with security, tax, and privacy regulations
● Virtual payment cards and credit cards
Track Your AP Metrics
How is your AP department performing today? Take a close look at your AP metrics, such as invoice processing times, DPO, error rates, and late payments. Knowing how your team is performing will make it easier to build a compelling business case for automation, especially when you can prove that investing in AP automation will help the company grow.
Get Buy-In From Stakeholders by Calculating ROI for Automation
It can be challenging to make a case for investing in a cost center such as AP when a company is in growth mode. Get everyone on the same page by estimating the positive impact on working capital, cash flow, and operational efficiency of implementing an automated system.
Align AP Automation Strategy with Business Growth Strategy
It may seem obvious, but make sure your AP automation strategy aligns with how your business plans to grow. Get an idea of how much your business expects to spend to support the new growth, and when those costs are expected to occur. This will give your procurement team time to prepare suppliers, and it will ensure that your AP processes are optimized and ready for the increase in invoice volume.
Check out Automating AP in 2022: A Step-by-Step Guide for a deeper dive into how to automate accounts payable for business growth. You’ll learn the following:
- Which AP functions you can (and should) be automating
- How to vet and assess providers
- Data-backed business benefits of AP Automation to share with stakeholders
- An 8-step plan for rolling out an AP automation solution to your organization
- Scripts for navigating common objections or challengers
By doing your homework and choosing the right solution for your business, you’ll set your business up for successful growth.
Stampli: The Best AP Automation Solution for Business Growth
Stampli is the perfect solution for automating accounts payable workflows to support business growth. Our collaborative approach empowers AP teams to streamline and optimize processes and communications. Automate your AP processes with Stampli for measurable cost savings and faster AP processing that will increase your working capital and remove bottlenecks to growth.
Our platform is scalable to match your business growth, flexible to adapt to your needs, and offers seamless integration with a full range of ERP and accounting systems.
A recognized leader in AP and invoice automation, Stampli is ranked #1 for Implementation, Usability, Relationship, and Results in the G2 Report for AP Automation and was named “Best Automation and Invoice Management Software in 2021” in the 2021 FinTech Awards by Wealth & Finance Magazine.
Take the first step to growing your business. Contact Stampli today to set up a free demo.
