CloudX Blog

Exploring Where Accounts Payable Software & ePayments Meet For SMBs

Posted by Chris Cosgrove

Dec 15, 2017 2:46:48 PM

prison mike.jpg

You know why they call me Prison Mike?

SMB’s can hardly be categorized “da belle of da ball” in the now famous Michael Scott, aka “Prison Mike” vernacular.  While they may have a bridesmaid and not the bride type rap, SMBs (small and medium businesses) make up nearly 97.9% of the United States’ 5.83 Million employer firms.  That is nothing to bat an eye at and until now has represented one of the last frontiers that is primed for process automation.

There are a variety of ways that automation is happening to the financial back office of the small business, whether you look at banking apps that simplify how checks get processed through mobile capture and manual indexing to things like accounting systems in the cloud that sync with your credit card provider to eliminate subsequent journal entries.

Some of the other, harder to reach areas include things that big corporates have been tackling for a while...invoice processing automation, epayments, and the like.  The intersection of these technologies, especially now through cloud based delivery methodologies essentially means a world of possibilities for small business leaders.  Not only can their processes be improved and transformed so they are virtually hands free and so that they have complete visibility, but they can literally be engineered to make their businesses make money.  This is no longer the realm of the big corporate only because cloud-based delivery has upended the traditional install based deployment model and paved the way for businesses of all shapes and sizes to follow in their footsteps.

With the expansion of repeatable integrations to key core SMB platforms like Quickbooks, Xero, Sage and such, moving data in and out is no longer a boondoggle and when we’re talking about automating how transactions get logged into a system that is otherwise reliant on manual entry, data manipulation and release is EVERYTHING.

Three Key Benefits to SMB’s Exploring Accounts Payable Software and ePayments

  1. Wave bye bye to data entry! - Through mobile (or desktop or MFP or email) capture, you’ll never have to enter another invoice into your accounting software.  Invoices and relevant documents get sucked into a capture process and enter your accounting software instance as if you had done the work.  Whether you want them be auto approved (assuming no GL coding is required and they match at a line level to open POs) you can shift gears to straight-through processing.  Gains in this area from a productivity standpoint are upwards of 80% to a manual process.
  2. Say hello to always knowing where your invoices are and what their status is! - This is a little thing called visibility and is kind of like a blind person receiving their sight.  If you don’t have sight, it can be difficult to imagine just how powerful seeing really is, but it is that profound.  Through a system integrated to your accounting software you can call up each and every invoice and understand every processing touchpoint, decision, payment name it, and never lose another invoice or miss a payment. POWERFUL!
  3. Count your blessings...and your benjamins! - This really pertains to those who would have the foresight to take automation all the way and get into payment optimization.  Through a simple epayments strategy tapping both virtual credit cards and ACH transactions you can divest yourself of approximately 50% of your check payments (maybe more).  Again, you save time, speed up the process, enhance controls, introduce visibility, and create a cash rebate flow back into your business fully flipping your back office cost center into a profit center.

If this seems too good to be true, well believe it.  We’ve seen numerous clients fully automate their process and enjoy the financial and operational benefits to automation and you can see that here!

Download The Four Keys To Maximizing The Strategic Value of Accounts Payable

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Topics: Accounts Payable Automation, accounts payable software, Invoice Processing, smb

How much does AP Automation cost? - Updated 2017

Posted by Chris Cosgrove

Oct 12, 2017 10:55:54 AM

AP automation price tag

How much is it?


If you’re anything like me then these are four words that can make or break the moment when you are talking about whatever the item is in question…..a car you’re thinking about buying, a planned vacation, a piece of clothing...whatever. However, the same question needs to be asked of AP automation because while it’s a great concept and certainly a needful one for most businesses, answering this question will by and large determine whether a business can make the decision for or against automation. The good news is that depending on your version or approach to AP automation, the costs vary greatly.


The models:

Scan & Archive: While this is admittedly a bit of a tame approach to automation, some businesses cut their teeth on process improvement through this approach. While it does help with archival and retrieval, it does little to improve the process and some could argue that it actually encumbers the process more by requiring an additional post-process step of scanning and indexing. Now, this can be achieved on the most basic of levels through some kind of a shared drive / folder-based storage approach, but this is typically not the best solution for finding things unless you’re a very small business. The moment your transactional levels jump into the hundreds or thousands per month, you’ll find this to be a less than adequate solution. Still, it can be done for mere hundreds of dollars on the micro scale. If you’re looking at layering in an electronic document management system, you’ll be looking at anywhere between $10,000-$100,000 depending on how robust it is plus annual license fees and any technical support required to maintain it.

Front End Invoice Processing, Auto Matching, Approval Workflow, and Archival: This has been a tried and true approach for many businesses but in a deployed setting the costs can run amok quickly as the systems necessary to power this approach (OCR, bi-directional integration, business intelligence, workflow, audit trail, and storage) are all complex and costly. These types of deployments are typically taken on by businesses running upwards of 10,000 invoice transactions a month and the associated spend can easily range from $100,000-$500,000 for deployment plus annual software license fees and related personnel support costs. For this reason many businesses shy away from the model because the costs outstrip the benefits and the return on investment is beyond a 12 month period and thus becomes seemingly unfavorable.

Cloud-Based AP Automation: Essentially this approach is similar to the above, but because the infrastructure investments are in the cloud and generally deployed across multiple tenants, the cost is shared. Further, hardware requirements are obviated, especially if data center elements are hosted and therefore the point of entry costs for businesses are vastly reduced. In many cases, the providers of this approach charge transactionally instead of software license model. Implementation fees are typically proportional to the number of invoices processed per month, but piggybacking off the scenario above at 10,000 invoice transactions per month, it’s not uncommon to see an implementation fee of $20,000-$35,000 and transactional costs ranging from $.65-$.95 depending on the scope of services / automation provided.

AP automation & ePayments: This is where things get interesting. In all the above cases the typical play for a CFO, Controller, or Treasurer is to look at AP automation as a means to cost cutting and process improvement, which it certainly is. However, when we start to consider the vital role of physical payment execution and the byproduct of automation (ie. time saved and visibility generated through data lifting and automation) there are a world of possibilities. For starters, ePayments (ACH, EFT, wire, and virtual cards) are growing quickly and displacing the heavy reliance on checks in the B2B space, but more importantly they provide a more secure conduit and one that can actually monetize the process (virtual card payments). Through this one payment type alone, many companies can generate a 1-1.5% tap on eligible spend.

The math looks like this:

Spend / mth = $20,000,000Invoices / mth = 5,000VCards @ 25% / mth= $5,000,000Rebates @ 125 bps / mth= $62,500Annual impact= $750,000

This does not even factor additional cash saved through the elimination of checks, but The Accounts Payable Network estimates the average cost to cut a check at $5.14, so a simple formula multiplying that value with the forecasted number of checks saved by using a virtual card in their place will yield the result.

Beyond that the other strategic gain is early payment discounts, which can be massive and will be something we look at more deeply in future posts.

All that said, remaining in the state of a painful, dysfunctional process is not really an option in today’s networked economy. If you’re unsure of what approach is right for you, may we suggest checking out our eBook on AP automation vs E-Invoicing?

Free eBook on AP Automation vs E-Invoicing:  What's Right For My Business?

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Topics: Invoice Processing, ap automation, epayments

Why Invoice Automation Through Accounts Payable Software Paves The Way For ePayments

Posted by Chris Cosgrove

Sep 11, 2017 4:34:52 PM

Get rid of paper invoices through accounts payable software!


Get The Junk Out

If you’ve ever seen the TV show Hoarders, you’re in for a real treat.  Through its raw and real approach to exposing the substandard level that some people are acclimated to living at, it provides a unique insight into a rare and disturbing subset of people in our modern society.  Unfortunately some people get into such a psychological or spiritual place of negativity that they manifest a psyche that feels the need to grasp and retain literally piles upon piles of junk, to the point that common thresholds of cleanliness often go out the window.  Through an intense gut-check process, interventions are staged and the cleansing process involving family, medical, and even operational folks kicks off after the subjects realize the state to which they’ve sunk.  It’s kind of a cathartic experience, though something that should probably be avoided at all costs.

With that said, Accounts Payable invoice processing is very much something akin to this especially when you’re found in a manual processing environment.  Paper invoices, copies, supporting documents, coding documents or notes, and the like create a hoarder’s paradise, and many businesses are eager to get out from the cushing weight of manual invoice processing.  This is not only due to just the sheer volume of documents but the myriad challenges that manual processing creates to include late payments, lack of visibility, and high processing costs.

Enter Accounts Payable Software

With the deployment of advanced automation tools that comprise Accounts Payable software, you can meaningfully transform your invoice processing into something excelsior.  Through intentionality and the right alignment of people, process, and technology you can make it something that creates value for your organization and curb the flow of documents internally while ushering in visibility and slashing costs.  The wins generated through this effort, which don’t necessarily come cheap and easy, will be the wind in your sails to continue innovating internally.  Often this becomes the gateway to ‘wall to wall’ process improvement and the gains in this area become the springboard and the impetus to drive change in others areas of Accounts Payable, most notably in payments.

When you get out from under the thing that is crushing you gain renewed energy from a fresh perspective to advance other positive changes.  So, and this is more to the thrust of this article, beyond the basic concept just offered about momentum and perspective swing, Accounts Payable software paves the way for things like ePayments.  Once you start to exercise tighter controls over the process and you don’t have the tiger by the tail, you can take the same tack with respect to payments, and the way most businesses are trying to go is via ePayments.

ePayments empowered through Accounts Payable Software

In our travels we came across this interesting article from PYMNTS.COM talking about this exact idea...and unfortunately some ePayments, particularly virtual payments powered by virtual cards are still slow to adopt in the market.  Part of this has to do with vendor acceptance and the workflow required to process incoming payments.  PYMNTS.COM asserts that more vendors are and payables departments are inclined to process ACH payments, which makes sense because of the push pay methodology, which while more efficient lacks the financial motivation that you get from monetizing your payment stream.

We think the bottomline here is that a rolling stone gathers no moss.  Essentially if you’re already jumping on the invoice automation train and are willing to go half way in terms of invoice processing and get things streamlined and automated, then jump in with both feet and go all the way.  In this regard you can literally transform Accounts Payable from just a process stakeholder to a value creator as it will more tightly align to treasury and cash management functions.

If you got something out of this, then please check out the ebook below!

Free Whitepaper on Why CFO's Are Ditching Checks!

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Topics: accounts payable software, Invoice Processing, invoice automation, epayments

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