SMEs struggle with accounts payable automation despite recognising its benefits

By Puja Sharma

A recent PYMNTS report highlights a significant issue in the financial operations of mid-sized businesses: while 93% of these businesses recognise the limitations of their current accounts payable (AP) and accounts receivable (AR) systems, many still rely on manual processes. This discrepancy suggests a gap between awareness and action in addressing these inefficiencies.

The accounts payable process is a vital component within the broader procure-to-pay cycle, serving as a significant pillar in a business’s financial structure. This process involves several intricate steps:

1. Initiating the Purchase: The process typically begins with a purchase order (PO) from the procurement team, signalling a need for goods or services.
2. Receiving the Invoice: Once a vendor provides the required service or product, they send an invoice to the business.
3. Verification: Before payment is made, there’s a crucial step of cross-referencing the received invoice with the initial PO. This is akin to cross-checking your shopping list with your actual cart to ensure you get what you asked for.
4. Final Payment: After verification, the payment is processed, and the once payable amount is no longer a liability.

Despite the clear benefits of automation for operational efficiency, the report reveals that 96% of mid-sized businesses cite high implementation costs as a significant barrier to adopting full automation. As a result, only 5% of these businesses have fully automated their AP/AR processes.

Automating AP/AR processes is crucial for the growth of mid-sized businesses because it enhances efficiency and improves cash flow management. By automating these processes, businesses can streamline their financial operations, reduce human errors, and gain real-time insights into their financial performance.

Ajay Mehta, CEO of IBN Technologies, emphasises the strategic importance of automation in AP/AR processes. “Automation in AP/AR drives strategic business growth. It enables businesses to streamline financial operations, ultimately fostering efficiency and scalability,” Mehta said.

As mid-sized businesses continue to navigate economic uncertainties and competitive pressures, investing in customised AP/AR automation solutions becomes increasingly essential. These solutions not only streamline financial processes but also support scalability and resilience, positioning businesses for sustained growth and success in dynamic market environments.

IBN Technologies, a provider of AP/AR automation services, is making significant strides in helping businesses automate their accounts payable and receivable processes. Through their innovative solutions, IBN Technologies ensures cost reduction and enhanced visibility. By streamlining these critical financial functions, the company simplifies complex processes and provides real-time insights and robust financial controls. This comprehensive approach allows businesses to make informed decisions, reduce operational costs, and maintain healthy cash flows, thereby positioning them for long-term success.

In conclusion, the gap between recognising the limitations of manual AP/AR processes and taking action to automate them is a significant challenge for mid-sized businesses. However, the benefits of automation, including increased efficiency, reduced errors, and improved cash flow management, make it a crucial investment. As businesses face ongoing economic and competitive pressures, adopting customised AP/AR automation solutions will be key to achieving sustained growth and success.