Forward-thinking small-to-medium business owners understand embracing technology is critical to maximizing ROI and ensuring sustainable success for their companies.
Although significant investments in tech are often made to optimize the production floor and sales and marketing processes, one department that is sometimes overlooked is accounts payable.
Integrating automation technology into your existing AP system provides ample opportunities to streamline processes, improve efficiencies, and save money while offering an attractive ROI you’ll quickly notice on your bottom line.
Below, we’ll discuss understanding ROI for AP automation for SMBs.
The ROI of AP automation for SMBs
The formula generally used to calculate ROI is:
ROI (%) = (Net Savings/Total Cost of AP Automation) x 100
Let’s look at a real-world example and apply these numbers to the formula.
Company A invests $50,000 in AP automation. In the first year, it sees total net savings of $38,000, broken down as follows:
Reduction in manual labour and processing time
An AP automated solution eliminates manual paper handling by allowing invoices to be scanned into the system and forwarded digitally to managers for review, approval, and payment processing. The AP team no longer has to key invoices in, forward paper invoices for approval (risking loss along the way), or spend time filing paper into a filing cabinet. Net savings: $28,000.
Decreased errors and associated costs
Invoice information is now accurately captured using optical character recognition (OCR) technology, virtually eliminating input errors, duplicate entries, and labour-intensive investigations. Net savings: $3,000.
Early payment discounts and reduced late payment fees
An automated AP system improves invoice processing time, allowing the AP department to take advantage of early payment discounts and avoid late payment fees. Net savings: $7,000.
Using these sample numbers, the ROI in the first year is calculated as follows:
ROI = ($38,000/$50,000) x 100 = 76%
The ROI rate of 76% can be expected to increase starting the following year as Company A continues to recoup the initial $50,000 investment and the net savings continue to accrue.
AP automation also indirectly saves SMBs money by reducing paper, printer ink, energy consumption, physical storage units, office space, and much more, all contributing to the automated system’s ROI.
Key benefits of AP automation
Along with offering a substantial ROI, automated AP systems offer SMBs a host of other benefits as well, including:
Operational efficiency
AP automation streamlines the invoice approval process with a secure cloud-based platform that minimizes the need for manual data entry, invoice handling, and paper processing. Transforming the manual process into a tech-driven digital system frees your AP team to focus on more non-repetitive, value-based tasks that build relationships and increase revenue.
Your leadership team will also be able to make informed financial decisions based on real-time data such as company spending patterns, cash flow, vendor performance, and other critical metrics.
Compliance and security
An automated AP system helps ensure your business adheres to all internal policies and external compliance requirements, minimizing the risk of penalties and fines by virtually eliminating the risk of input errors and duplicate payments.
Should an audit be required, the cloud-based platform makes the entire process easier than having to dig through filing cabinets for paper invoices, leading to additional time and cost savings.
Scalability and flexibility
As your SMB grows, your AP automated system scales accordingly. It can quickly adapt to your seasonality with the same level of cost-saving efficiency without needing any add-ons or additional staff to operate.
With a manual paper-based system, you may need to hire more staff or secure more storage space as your business grows, costing you more money. With an automated system, you’re assured of optimal efficiency that will continue to save time and money, regardless of how fast you build your business empire.
Considerations for implementing AP automation
As with any significant change to your processes, there are essential factors to consider when considering an AP automation solution, such as:
Integration with existing systems
Your AP automation solution will need to integrate with your current technical infrastructure, such as your ERP system, so ensure that the system you are considering is fully compatible with your current setup.
Choosing the right Solution
Evaluate AP automation vendors based on reviews and customer testimonials so you can make an informed decision on which company you should go with. Additionally, ask your vendor about the different AP automation software options on the market to get the best solution for your needs and prevent issues down the road.
Training and Support
Before deciding on a vendor, review their software training programs and support services so you aren’t stuck after system implementation. The vendor should also offer ongoing maintenance packages and regular updates to keep your system running smoothly and reliably.
If you’re interested in saving money with an AP automated system that provides an exceptional ROI, get in touch with Ash Conversions International (ACI) for a solution that will fit your every need.
Enjoy significant ROI with an automated AP system for SMBs from Ash Conversions International
For over 40 years, ACI has specialized in transforming how companies run their daily business processes with efficient, cost-effective solutions that provide complete AP invoice visibility, easy invoice routing for approvals, one centralized cloud-based location for invoice processing and retrieval, robust workflow reporting, and much more.
We offer ROI-friendly solutions that are completely customized to your requirements, integrate seamlessly with your existing tech infrastructure, and are supported by our team of tech experts during and after installation.
For more information on how your SMB can benefit from automating your accounts payable process, call us at 800-719-9621 or click the button below.
