Automation has quickly become a crucial way for businesses to stay competitive in 2019, finding popular use cases across industries as more useful tools are created. From recruiters using automation tools to pre-screen candidates, to IT departments automating service tickets and maintenance checks, AI and automation tools are quickly revolutionizing how people work. Now, automation has reached accounts payable teams, transforming how invoice and routing processes are completed. The only problem is that when it comes to AP, the only companies that seem to be increasingly using automation tools are larger, enterprise-level businesses. Why is this the case?
Automated AP is just as important for SMEs and smaller businesses as it is for enterprises, but based on Levvel Research’s most recent market analysis, about 45% of SMEs fall into the novice category of AP efficiency — meaning they experience high paper invoice volume while mostly using manual data entry, invoice coding, and manual routing processes. Worse still, fewer than 10% of SMEs fall into the innovator category, meaning only 10% of SMEs have a high percentage of digital invoice formats and use cloud-based AP automation tools.
Why aren’t SMEs taking advantage of automation tools in a world that’s filled with manual, time-consuming processes? Let’s take a deeper look at why smaller organizations aren’t using modern automation tools, and why they absolutely should be:
Sticking with processes that are inefficient and costly
Why are typically only big businesses using automation tools? Levvel Research defines enterprise businesses as companies that earn over $100 million in annual revenue. Simply put, enterprise organizations have more resources available to research automation options — and the large budget to try out new tools and technologies without it affecting their bottom line in a major way. SMEs often tend to think that investing in these solutions isn’t worth the risk for their operations.
While introducing these solutions can seem costly to an SME at first, the truth is that automation tools actually drive down the cost of invoices, increase workflow efficiency, and save resources spent on manual invoice entering — so why continue wasting your business’ time and money on processes that could easily be automated and save your company money in the long run?
When doing more with less backfires
Because small organizations tend to have limited budgets and smaller teams, they are often pushed to do more with less for “the good of the company.” At the same time, they are also faced with the reality of having a small workforce to address a demanding invoice volume. This expectation frequently backfires, as placing a large burden on a small team can negatively affect morale, productivity, and quality of work.
The quality of work, in particular, is where it gets tricky: Even smaller teams are not immune to creating duplicate payments, payment fraud, and noncompliance with reporting requirements. One report revealed that organizations lose 5 percent of their annual revenue each year to fraud, which is no small number. For SMEs, that number can only grow higher.
Unaware of benefits of electronic payment options
Many SMEs are not aware of the many opportunities for savings made possible with electronic payment options such as commercial cards and ePayments. For example, using commercial cards can reduce payment fraud risk via one-time payment card options, and optimize working capital to extend DPO. Electronic payments are also a great way for SMEs to improve their current state with little impact on resources. Because they offer a large impact at an affordable cost point, they are becoming one of the most adopted AP automation tools among North American organizations.
Interestingly, a 2018 survey found that 93% of medium to large corporations already use ePayment systems, but smaller enterprises are adopting them much more slowly, with only one in 10 micro and small enterprises doing so. But the benefits of using ePayment options are clearer than ever: By using them, organizations can earn rebates from card payments, speed up invoice payment times to improve supplier satisfaction, and reduce data gaps within payments and reconciliation data. SMEs should identify an AP solution that includes robust payments options to complete the invoice-to-payment life cycle.
For SMEs that may be set in their ways or are often scared off by price points for automation solutions, deciding to implement this new technology into AP workflows and processes can seem like an overwhelming task. Perhaps you’re worried you won’t see enough ROI, or that your employees who are used to manual processes won’t adjust to the new technology quickly enough. Rest assured, that’s not the case: By automating workflows and eliminating human errors, your business is sure to see high ROI in no time, while allowing your employees to focus on more important (and less tedious!) tasks. More and more AP teams are starting to realize the benefits of using AP automation tools — so if you want to stay competitive in the 21st century, you’ll need to bring your tools up to date.