Accounts Payables - The Manual Menace
As more and more companies embrace cloud-based technology, Accounts Payable Automation presents one of the most significant opportunities for forward thinking accounting firms. Traditionally, businesses have purchased specialised software solutions to solve specific problems required by different parts of their business, such as inventory management, CRM and accounting software.
Increasingly business leaders are looking to drive operational efficiencies and require technology that can streamline processes across their entire business, in a single joined up automated process. For finance teams, tracking down the right approver or chasing paper invoices around the company is hugely time consuming and painful. Multi-site organisations and businesses with distributed employees can make this process impossible to police and manage effectively.
Not only that – prudent cashflow management becomes challenging when unapproved purchase invoices arrive late and without any audit trail. And it’s the AP team who takes the call from the supplier chasing payment. Additionally, departmental managers are under increasing pressure to set and enforce budgets on their team. However, the process of managing budgets for groups of employees can consume significant management time. Time which could be freed up to focus on improving operational performance, if the right technology solution was in place.
Unlike accounting software, the processes of requisitioning, raising and approving purchase orders and invoices touches many individuals across different departments and locations. Every single break or delay in this often manual process can be, very time consuming, expensive, and create business risk.
The Bottom Line
According to a recent report by Ardent Partners,  reducing the cost of processing invoicing, automating the procure to pay process, and improving visibility and reporting were the top priorities for AP professionals. Consider the supplier of critical components to a factory who withholds supply due to non-payment of their invoices. This may simply be due to their invoice being sat on the desk of an employee who is off sick, on holiday or, simply has higher priorities.
The net result for many companies is that the finance team are often burdened with chasing approvals, checking order and delivery paperwork, retrospectively trying to enforce budgets and spending controls. All with limited time and limited resources. The pressure on Accounts Payables teams to ensure a compliant process, accurate accounting and reporting of expenditure, and ultimately paying suppliers – within agreed payment terms, can result in poor supplier relations, lack of auditable processes and potentially impacts cashflow and continuity of supply.
Traditional accounting software is no longer fit for purpose
Some mid-market accounting software products offer Accounts Payables modules to help finance capture requisitions, purchase orders, purchase invoices with all the necessary approvals – however many of these tools are cumbersome and difficult to use. Software that is installed on employees PCs or centrally held on a server, is by its very nature, less accessible and less convenient than a cloud based platform. Requisitions, purchase orders and approvals, require quick and easy access by a wide range of employees.
According to Paystream Advisers , in excess of 80% of businesses still use manual processes such as paper and email to receive, process and approve invoices from their suppliers. And yet, AP automation is proven to deliver quicker and more compliant invoice approvals, increased employee productivity and reduced processing costs. Hence these traditional accounting software products suffer from poor adoption beyond the accounts team.
Businesses who have adopted AP Automation across their organisation, typically realise cost savings of 10-20% alongside improved productivity and efficiency.
The Opportunity for Accountants
As with many sectors, the traditional role of accountants is changing and the future for high margin, project based, fee income is proving harder to find.
Innovative leaders of accounting firms are recognising the need for change. Their clients are more demanding and increasingly more self- sufficient, or require a light touch due to the explosion of cloud-based technologies. Just as accounting software has been revolutionised by cloud-based platforms, the next ‘big thing’ for businesses is Accounts Payable Automation. AP is a function that sits at the convergence of cash management, supplier relationships and business intelligence – and so presents a real business opportunity for Finance Directors and Accounting Professionals to drive significant value.
The catalyst for change has to be driven from finance. Smart finance directors, and financial controllers are demanding more visibility and control of company spending, and are increasingly turning to Accounts Payable automation as the solution. Forward thinking accounting professionals have recognised this opportunity and are engaging with best of breed cloud-based AP Automation providers, such as Zahara, to deliver significant cost savings and controls to clients, with a resultant increase in value delivered to clients.
AP Automation presents an opportunity for accountants to grow their practices by differentiating their offering from competitors and providing ongoing business analysis based on real time client data. Further, accounting firms can become leaner and more efficient, operate at higher margins and attract more recurring income from clients. Being ‘connected’ with your client’s data in real time, is a game changer for accountants. It’s also a lock-in, so the firms that move quickest are the most likely to successfully gain and retain client income streams for many years to come. Local accounting firms can offer a nationwide service by recommending or deploying more cloud-based technology solutions.
As many small firms operate different hours of trading or across multiple time zones, capturing approvals 24x7 from any location results in significantly higher rates of compliance. And, not to forget, client retention increases due to improved range of tools and services delivered. For bookkeepers and accountants extending their service offering into providing managed AP services, advanced cloud-based accounts payables platforms enable seamless onboarding of multiple clients onto one platform – resulting in a personalised experience for clients and a single centralised management view for the bookkeeper or AP Service provider.
And there’s no need to worry about data integrating into accounting software. The more sophisticated platforms have this covered through seamless plug and play integrations – without the need for costly customisations.
As more client businesses adopt cloud-based platforms across their organisations, the accounting profession has a window of opportunity to facilitate and advise, benefiting both client and practice. The rapid transition from a fee earning, project based professional service business, to a business advisory and technology enabler, will drive new business models and increasingly predictable recurring revenue opportunities for innovative accounting firms.
With AP Automation, accounting firms have a significant and timely opportunity to collaborate and add more value to clients, whilst growing revenues and profits for their firms. Take a look at AP automation platforms to help you deliver more value to your clients.