More than 99% of the businesses in the US are small and medium-sized businesses. And the most common challenges that every SMB faces during these first two years is the lack of efficient cash flow management. Agreed that small business aims to do more with less (22% of the businesses are individually operated), when the businesses gain traction and volume of work increases, not having an efficient accounting system can derail the business in no-time.
Working as a remote accounting firm for all types of small and medium businesses, a common pattern Back Office Accountants identified among struggling business is their lack of standard and efficient Accounts Payable Process. Either due to lack of odd expertise or resources, most businesses that struggle with cash flow management often stick with the traditional Accounts Payable Process which holds them back from reaping benefits of automated AP system. If you are in a similar boat then our Accounts Payable experts at Back Office Accountants are here to help you improve your awareness about automated Accounts Payable systems.
In this blog here we state the problems businesses encounter traditional manual Accounts Payable Process and then help you understand how automated accounts payable process can help your business solve these problems and improves your cash flow management. Read on:
Why Traditional Accounts Payable Process Doesn’t Cut it for Businesses Today?
Not only most businesses with manual AP spends more time ( even days at a stretch) in invoice processing which increase the risk of delays but also increase the average cost per invoice processing significantly. Manual, paper-based tasks of traditional Accounts Payable process also demands human processing which increases the headcount and also the risk of errors.
Add this to the poor line-by-line manual matching of purchase orders, receipts and poor visibility that accompanies it. The clumsy manual approval process that is prone to delay, and all the other overhead costs in terms of training, maintenance of on premise software (if any), the average cost per invoice processing increases 500% when compared to businesses that embrace automated Accounts Payable Process which involve customized and streamlined AP workflow with no manual steps.
If you are business sticking with manual Accounts Payable Process, you might already be aware of the problems way better than us. Fortunately automating your Accounts Payable can fix all your problems, read on to know-how.
3 Ways Automation Can Improve Your Accounts Payable Process:
Accurate and Faster Invoice Data Entry:
Manual invoice data entry is a most tedious, cumbersome and error-prone stage in the AP workflow which can de-rail the invoice processing comfortably. There is no way to rectify the errors until the errors manifest in the form of late, duplicate or erroneous payments. There is no upside to adhering to manual data entry, not only the process involves a lot of man-hours, but it is also error-prone and can trigger AP problems from the word go. With automates AP systems, a business can make use of the latest OCR, AI and machine learning technologies to automate invoice data entry accurately – getting rid of errors altogether.
Reduce Invoice Processing Costs:
Errors in invoices are common when it comes to Accounts Payable – on average 5% of the invoices are filled with errors but the threat they possess can be devastating for a small and medium business. Automating the invoice data entry and other manual operations eliminates the errors, thus steering clear of potential dangers. But that is only a part of the picture; automating the accounts payable directly reduces the costs by decreasing the headcount and eliminating the need for manual resources. According to our Accounts Payable experts at Back Office Accountants, while a business with manual AP on an average spends $10 per invoice processed, other business adhering to automated AP process spends only $2 on every invoice processed – this should tell you the story.
Simple, Transparent and Scalable AP Process:
Quick, accurate and cost-saving invoice processing is essential for any business but also the entire AP process must be simple, transparent and scalable as well, to reap benefits in the longer, especially for small and medium business. An automated Accounts Payable Process offers a standard workflow that is easily scalable based on the demand without having to hire an additional workforce. Once set up as per your requirements an automated AP offers more visibility and transparency that give your greater control over your entire process.
Reduced invoice processing costs, faster accurate invoice process, and a simple, standard and easily scalable accounts payable system – automation is all an AP process of small and medium business needs.
However, automating your entire AP system can be complicated without AP expertise and this is where remote accounting firms like Back Office Accountants. You can simply test the waters by outsourcing your Accounts Payable Process until your zero in on your automation plan. Being one the best back-office accounting firms in the business, Back Office Accountants offers customized Accounts Payable Services that help you reap all the above benefits without any additional investment. For Outsourced Accounts Payable Services, you can contact us here: https://www.backofficeaccountants.com/