With the shift from manual, in-person tasks to remote work and online tools, there has to be a better way to handle payments. But is AP automation software for small and mid-sized businesses the solution?
Until recently, the cost of accounts payable software outweighed the potential savings for many organizations. As solutions have become more affordable and accessible, the landscape for AP processing has changed dramatically.
And the 2020 pandemic only accelerated interest in automation—with one report finding that 75% of businesses were experimenting with digitization in 2021. And when it comes to AP processing, many small and mid-sized businesses have found success with 89% savings in labor costs and 71% fewer errors
To get an idea of how B2B accounts payable automation stands today, let’s look at how big (or small) your business needs to be to benefit from AP automation workflows.
How Small is Too Small for AP Automation?
Over the last decade, technology hasn’t just evolved, it’s become more affordable. Ten years ago, only businesses churning millions in revenue per year could afford to invest in AP automation.
But that’s changed.
In fact, there is no “how small is too small” question when it comes to AP automation. Instead, there are specific AP software solutions that cater to specific business needs.
For true mom-and-pop shops or businesses that generate $100,000 in revenue, digitized platforms and manual solutions make sense. But once your invoice processing amount breaches the 100 invoice mark, manual data entry bottlenecks cash flow and hinders growth.
And since the Small Business Administration (SBA) considers any organization earning less than $40 million as a small business, it’s easy to see how company size is becoming less important.
The main question should be how many invoices your process per month. And this barrier to entry is fairly low for most businesses.
How Much Can AP Automation Software Save You?
Generally, businesses that turnover around 50-100 invoices per month will begin to see cost savings when it comes to automation. But what does that exactly mean?
In 2016, the average invoice could cost up to $21 to process. According to the 2021 Ardent Partner’s State of ePayables Report, the average invoice processing cost dropped to about $9.25 per invoice. But for businesses with a best-in-class AP automation solution, that expense plummeted to $2.25.
But tangible cash is only one type of savings. An AP department with an automated AP workflow also saves a considerable amount of time. Processing a single invoice only takes about 3 days with AP software instead of 12.
Outside of savings, there is another benefit: Visibility. The right accounts payable solution provides end-to-end visibility and transparency around invoice management. As a result, your AP team can focus on anomalies in invoice data – items that don’t make it through the system either due to errors or fraud.
In fact, according to the same report, nearly 40% of businesses said they faced a business payment fraud attack. Overall, fraud attempts against businesses have increased by 6.9% since 2020, so the more secure and streamlined your AP process is, the more time can be spent on threats.
Finally, a fast invoice approval system also improves relationships with suppliers, who depend on your AP process for their own cash flow. Promptly and correctly filling invoices can lead to capturing early payment discounts and building supplier trust.
How Can You Determine if AP Automation Is Right for Your Business?
There are many AP automation solutions on the market, so what makes sense for your business? It helps to look at the different features of AP automation software. You’ll want to look at things like:
- How long will it take to implement?
- What kind of invoice data can it read? Is it just structured data or all raw data?
- How involved will the AP team need to be when managing the software?
- Does the software solution require knowledge of coding?
- Does the solution offer clear straight-through-processing (STP) and cost reduction rates?
- Is the invoice automation software built to scale?
The best AP software will be easy to use. It should also accelerate the accounts payable process. Top solutions have at least 80% STP rates and can capture data with 97% accuracy or more.
Furthermore, optimized invoice management solutions use more than robotic process automation (RPA) to reach sustainable and scalable results. An intelligent automation AP processing solution ensures that the program is learning with each new approval or rejection. As a result, accuracy will increase over time.
How Easy Is It to Implement New AP Automation Software?
Each accounts payable automation solution is different. As a result, it’s difficult to say how long it can take. In general, it can take anywhere from a few weeks to three months to complete the implementation, training, and begin using your new software.
At Itemize, we know how important it is to get up and running as quickly as possible. Our API allows for fast deployment with any major ERP or accounting software.
According to Forbes, up to 84% of digital transformations fail—and it’s not always due to the software. Small budgets, lack of staff buy-in, and unrealistic timelines can all contribute to poor outcomes.
Before choosing and implementing a solution, it’s essential that both you and AP team to demo the solution, evaluate the support team and training resources, and calculate the potential value of the software.
Grow Faster with Intelligent Automation
Itemize leverages the power of intelligent automation for a robust, end-to-end AP software solution that brings businesses more than cost-savings. Small and mid-sized companies benefit from reduced fraud risks, improved compliance, and actionable data.
Ready to experience an AP workflow without manual data entry or hassles? Book a demo with us today and see how Itemize works in real time.