As companies have learned the hard way — due to political unrest, natural disasters, or the recent COVID-19 pandemic — processes that rely on people versus automation risk significant business disruption. Companies face a sudden shift in operations, while critical back-office processes like IT security, human resources and accounts payable must scramble to adapt.
New research shows that over 60% of companies have business continuity plans in place, while 85% said that automation technology would be helpful for their business continuity needs. When disaster strikes, large enterprises that have heavily invested in process automation may be able to weather the storm. However, business leaders at small to mid-market enterprises (SMEs) between $1 million and $2.5 billion in annual revenue are faced with bigger challenges due to their lack of automation.
SMEs Have Not Yet Achieved A High Level Of AP Automation
Many businesses, both large and small, have jumped on board with automated accounts payable (AP) processes. Unfortunately, a significant portion of SMEs are lagging behind large enterprises. For instance, 89% of SMEs still receive paper invoices, while 86% utilize manual invoice data entry.
Though paperless invoicing is becoming more mainstream, 55% of invoices overall are still received manually. This is especially true for non-PO-based invoices, like utilities, which are essential to continue operations but also present a more time-consuming and cost-intensive approach.
The Drawbacks Of Manual AP Processes
In a world of accelerating technological advances, relying on manual processes has several disadvantages. In accounts payable, even under normal operating conditions, a lack of automation can negatively impact an organization in a few ways:
• Inaccuracy: Manually entering data requires more staff resources, which can lead to error rates as high as 1% during transcription and transposition.
• Lack of visibility: Inaccurate and incomplete data makes it difficult for organizations to manage and understand their costs to make critical business decisions. It's impossible to monitor costs, much less reduce them, with data that is inconsistent and riddled with errors.
• High costs: The cost to process one invoice manually is roughly $13, almost three times more than automation. The process also carries additional costs related to identifying and fixing errors. Furthermore, 38% of AP professionals stated that the biggest bottlenecks in their AP processes are related to not receiving the invoice or receiving the invoice late, resulting in late fees and cutoffs.
The Missing Piece Of Automation
Historically, automation technology has been limited to the largest enterprises. But today, with the introduction of SaaS solutions and a crowded software market, technology is accessible to companies of all sizes, providing an ideal way for SMEs to accelerate the AP function.
By automating AP and digitizing invoice data, SMEs can reallocate time and employees to focus on other aspects of the business, streamline processes and increase the number of invoices processed per full-time employee by 90%. Overall, they also improve their workflow flexibility. Approval routing and payment processing can then be managed by employees remotely, anytime, anywhere.
Beyond automation of approval processes and B2B payments, more solutions are needed for digitizing and automating invoice collection and entry as well. With "manual data entry" cited as the top pain point in AP departments, many accounts payable software providers have established partnerships with companies that offer advanced invoice capture technology. Companies like Basware, Coupa and SAP Ariba have partner ecosystems with one or more invoice automation solution partners.
Non-PO invoices from electric, natural, gas, water and waste providers have remained elusive due to lack of standardization and the diversity of suppliers in the U.S. Solutions from other industries are entering the mainstream using new and existing technology solutions. I've seen this personally in my own company, Urjanet, as we've built on digital automation technology developed a decade ago for energy management to support invoice capture and extraction solutions for the next generation of AP automation solutions. When added to existing AP automation and procure-to-pay solutions, these automated connections to utility providers eliminate human intervention, reducing invoice costs by as much as 80%, and significantly decreasing overall costs.
During A Crisis, Automation Enables AP Continuity
When a crisis ensues, manual AP processes lead to costly delays due to changing work environments or staff shortages. With many SMEs still dependent on paper-based AP processes, maintaining business continuity will be challenging, and operations may not be able to withstand sudden changes. As an example, invoices that are typically mailed to the office may be processed late during a crisis where employees are forced to work remotely.
Technology plays a vital role in helping companies maintain continuity. The benefits of automation go beyond cost savings; it supports the ability for companies to continue critical back-office functions without disruption. Fifty-four percent of companies believe that working from home would have a significant impact on their finance team's ability to process invoices, with 53% stating that some or all invoices would be paid late. Being unequipped to continue "business as usual" results in an ability to take advantage of early payment discounts and even worse, late fees and service cutoffs. For these businesses, automation is an urgent need.
SMEs can combat business continuity challenges by:
• Creating a business continuity plan that includes plans of action for both employees and workflow processes to keep business running as smoothly as possible during times of uncertainty.
• Researching cloud-based platforms and automation tools that enable teams to work remotely and maintain efficiency.
• Utilizing service providers or suppliers that can assist with automated invoice capture and workflows and keep operations up and running.
Automation Supports Greater Efficiency And Business Continuity
In times of disruption, automation can support greater business continuity than processes that involve human intervention. Continuity of back-office functions, like accounts payable, should be a top priority. Fortunately, businesses that deploy cloud-based automated processes can manage operations remotely anytime, anywhere. As solutions become more widely available, it is an area that SME business leaders can and should explore.
