For small and mid-sized businesses (SMBs) experiencing rapid growth, two key differences between long-term success and failure are (1) how well they manage cash flow and (2) the infrastructure they have in place to support growth. SMBs that are fast growing need a robust operational infrastructure to help support and control that growth and ensure that their key business functions and processes are working and performing well.
There was a time when SMBs were forced to deal with disjointed and generally inefficient paper-based processes. Those days are long done—cloud infrastructure has democratized business processes and allowed enterprises of all sizes to enjoy the benefits of automation.
As a result, the automation of key operational processes such as sales, accounts receivable, and accounts payable (“AP”) is now both an achievable goal and one that has become a critical part of doing business. For today’s SMB, there’s tremendous value in using cloud-based solutions to move key resources away from the more tedious and tactical tasks to the higher value activities that have a much greater business impact.
Accounts Payable and the Cloud
One area that presents a significant opportunity for SMBs is the accounts payable process, which manages how an invoice is received, processed, and paid. The AP function is also a key component of cash flow management, which is a crucial part of running any business. An efficient AP process that can provide visibility into current and future liabilities can be a great asset to a cash-conscious SMB.
Unfortunately, the AP process within most SMBs is largely manual and paper-based, which results in a general lack of visibility, gross inefficiency, and costly invoice/payment processing. This puts many SMBs at a disadvantage to enterprises that have automated AP. According to Ardent Partners’ research, the average cost of processing an invoice is approximately $14.21, nearly five times more than the average cost of processing an invoice in an automated environment.
Introducing a cloud-based AP automation solution will help SMBs automate the manually-intensive AP tasks such as entering invoice data into a system and enable the finance or AP staff to focus on more strategic areas like cash management and other key issues like when to hold a payment or take an early payment discount and how to avoid overpayments. Ardent Partners’ research has shown that the typical business that automates the AP processes can reduce its invoice processing cost by up to 80%. This savings benefit has a bottom line impact, but, it can also help an SMB shift resources to more strategic activities like developing the next product or launching a new marketing campaign.
Final Thoughts
Cloud infrastructure has leveled the playing field between enterprises of all sizes. Cloud-based AP automation solutions, such as Direct Insite and AvidXchange, bring the technological power that large enterprises have enjoyed for decades to the wider marketplace. Automating AP brings significant financial and process benefits to enterprises of all sizes, and the availability of cloud-based solutions offers the distinct advantage of accruing these benefits without making a significant investment in IT resources or technology infrastructure. Truly this makes cloud solutions worth a look.
Check out these related articles for more information:
How AP Automation Can Help SMBs Manage Cash
Where Do We Start? An SMB Primer for Travel and Expense Management
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