Businesses often hear about the cost and time savings that can come from automating accounts payable. Instead of spending hours processing invoices and reconciling accounts, software can handle everything for them. With advanced reporting features and built-in payment tools, accounts payable software can not only save a business time, but it can also reduce costly errors.
But accounts payable software often adds cost to a business’s bottom line. In addition to the monthly fee that comes with a cloud-based solution, employees have to invest time in learning the new system and teaching it to any new employees who arrive. Proving that this additional expense is worth it can be difficult, especially if professionals must take the request to outside business partners.
Calculate Current Cost
To effectively demonstrate how much you’ll save with a new system, you must first show how much you’re spending. With so many moving parts, this can be tricky, but the key is to fully audit the time your team spends on accounts payable processes on a daily basis. This includes every employee who processes invoices and makes payments, as well as those who create reports on your business’s profits and losses.
If there are positions you could eliminate or phase out thanks to automation, factor in the cost of their salaries and benefits, as well as any office space that can be reallocated. If you outsource processes, calculate the cost paid to the contractor doing the work, as well as the value of the time your full-time employees spend managing those contractors. Also factor in supply costs such as paper and postage used to print and mail invoices and paper checks, as well as all printing equipment and cost to support that equipment if it breaks down.
Find the Right Software
Your choice of an accounts payable solution directly affects your ability to show a return on investment over time. Cost is only a small part of that, since the more features your solution has, the more administrative processes you’ll be able to replace. Integrations are also a consideration, since some solutions will be able to connect to your existing business applications, reducing even more administrative overhead.
Before choosing a software package, consider other applications you use to conduct business each day, including any CRMs or reporting tools. If one of your teams currently uses spreadsheets to manually handle other aspects of your operations, you can choose an accounts payable solution that replaces those, as well, boosting the plus column even further.
Show Timeline to Recoup Cost
For many businesses, the ROI won’t be immediate. Full-time employees and outsource workers won’t be eliminated right away, but instead phased out over time as the staff gradually learns how to use the new tools. To show this, determine if these workers will be reassigned and, if they’ll be sent to other areas, how those areas will benefit from having additional help. In doing this, you can provide a timeline for the changes this new software will bring to your organization over the coming days, weeks, months, and years.
In addition to showing the bottom-line benefits, it can also help to determine how these new tools will help your business scale more quickly than it would have otherwise. In smaller organizations, employees can refocus their efforts on helping land new accounts or managing other aspects of day-to-day operations that contribute to growth.
Automating accounts payable processes can help a business save money and time. Unfortunately, these tools can add significant cost to a business’s monthly expenses. When professionals can calculate the return on that investment, they’ll be able to demonstrate the benefits of automation to themselves, as well as any business partners they have.