If you’ve heard of AP automation, you probably know that there are many types of accounts payable solutions out there. Today’s global business environment increasingly demands real-time access to tools and data at any time from anywhere. Old-school software installed on-premises won’t do the job anymore - a lesson that everyone quickly learned during the COVID-19 pandemic. Remote workers needed instant access in real-time to records in order to make critical updates.
Fast-growing businesses with dispersed workforces require a cloud-based accounts payable solution to ensure best practices, continuity, and scalable operations. From natural disasters to quarantining for health reasons, cloud-based AP automation makes productivity and collaboration possible, regardless of location.
On-premise vs. cloud-based accounts payable solutions
Finance executives recognize a market-wide push for modernization and digital transformation of most business components. It’s especially powerful in driving the adoption of technology in departments that traditionally have a high level of manual or paper-based work. Generally speaking, the two most common methods to implement business technology are on-premise and cloud-based software.
Today, most companies realize that the on-premise option belongs in the past, since it requires an organization to cover the upfront capital expenditure and IT resources necessary to build and maintain the infrastructure for such a large application. For companies that don’t want to designate a vast amount of resources required to support these services in-house, the clear choice is to opt for cloud services with a Software as a Service (SaaS) model.
The 3 variations inside the cloud
In business, there are three types of cloud services:
Public cloud is when the services and infrastructure are provided offsite over the Internet. This is what is sometimes referred to as “true cloud” because it is the only type that brings you all the benefits of a cloud community and shared resources.
Hosted or private cloud refers to when the service is maintained on a private network. Here you will still need to purchase and maintain the software and infrastructure and miss out on the benefits of sharing resources on a public cloud. It’s basically the same as hosting your solution in-house.
Hybrid cloud includes a variety of public and private options with multiple providers. A possible downside to this variation is that a user will need to track multiple platforms and make sure that their different business solutions can communicate with each other.
The public cloud option is sometimes referred to as a “true cloud;” it’s where businesses usually see the most benefits and is the solution on which we’ll be focusing on for the rest of the article.
Cloud-based AP automation is fast, focused, and efficient
It’s no secret that reacting quickly and efficiently to change is essential to the success of a business. When fluctuations such as acquisitions, global expansion, and departmental reorganizations occur in business, it can often seem like a never-ending checklist of steps is needed to ensure a seamless transition.
Having a business process solution that is hosted in the cloud leaves you with one less process to worry about being affected. Cloud-based software is scalable and agile enough to work with new or multiple ERPs and can be deployed without extensive onboarding to new users for immediate adoption. Any customer service needs are managed remotely by the hosting company, which takes the strain away from your own IT resources.
Cloud-based accounts payable automation solutions also enable companies to measure and report on performance within the AP department. Management can gain actionable insights (invoice processing time and automation levels) into how efficient their AP process is, as well as the ease with which their team is able to adhere to best practices. Because this data is reported in real-time through the cloud, companies can make critical decisions using up-to-the-minute business intelligence and accurately measure the effects of those adjustments. The mobility of a cloud-based accounts payable system means that multiple stakeholders can access and manage reports from anywhere with an Internet connection, increasing cross-departmental collaboration and productivity. During quarantining and social distancing, this accessibility becomes a necessity rather than a luxury, setting the standard for future business operations worldwide.
For even more efficiency gains, organizations should seek a holistic, end-to-end AP automation solution that covers both the capture of invoices and the supplier payment portions of payables. The reason for this is simple: one intuitive system to rule them all will translate into higher touchless processing, greater levels of compliance, and more opportunities for savings that impact the business’ bottom line.
Reap the financial rewards of cloud-based AP automation
The cost-effectiveness of cloud-based accounts payable software is often a motivating factor for adopting a solution hosted in the cloud. Usually, the savings come after deployment of the solution in the form of streamlined IT requirements and reduction in soft costs for upgrades and customer service solutions.
The efficiency provided by remote access for approvers through cloud-based accounts payable software translates into the potential for considerable savings in avoided late-payment penalties and interest. Invoice approvers can access the tool through an Internet browser on any device, enabling an average manual approval lead time of three days or less, and an average total lead time of seven days. This kind of streamlined, fast approval rate makes it easy to achieve early payment discounts and take advantage of dynamic discounting models with key suppliers.
What to consider when choosing a cloud-based accounts payable solution
Choosing a partner in the cloud to accommodate your unique business needs is a big decision. It’s important to fully understand what a solution offers in its accounts payable software.
Below are a few key areas to explore when choosing the cloud-based accounts payable automation solution that’s right for you
- Can the solution provide touchless, end-to-end invoice processing (from scanning to coding/allocation through the approval and syncing with your ERP, all without human intervention)?
- Has the vendor deployed their solution with another client using the same ERP as your organization? Are there any case studies or testimonials for those clients?
- How long has the vendor provided cloud-based AP automation solutions?
- How does the vendor’s global presence look? Will they be able to support your business as you grow into new geographic areas?
- Does the vendor outsource any part of their development or customer service? What level of support can you expect before, during, and after deployment?
- Does the solution allow you to measure and track process performance KPIs?
- Does the vendor provide any benchmarks that you can leverage to compare your process performance with average and best in class peers?
- Does the solution require any strict rules or conformity from your suppliers so that it can be effective?
- Does the solution vendor offer additional Spend Management solutions that you can choose to deploy at a later date, effectively minimizing your technical partner footprint and expanding your automation capabilities?
Harnessing the power of the cloud recaptures the ability for accounts payable teams to maximize efficiency, better manage the business’s cash flow with increased visibility and reporting, and become the most agile, scalable component of a company’s financial department.
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