• Rob Israch, President at Tipalti


• 18.10.2022 11:00 am
#payments

Accounts payable (AP) is the most time-consuming and manually intensive function in finance. According to Tipalti’s research, 56% of finance professionals spend over ten hours a week processing invoices and supplier payments. 

For some companies, simple accounts payable technology is enough—their business doesn’t need the robust capabilities of a mature solution. But if you’re steadily scaling, adequate means to pay supplier bills and lightweight bookkeeping capabilities aren’t going to cut it. You need an accounts payable process that is going to grow with you.

With GDP on the decline, and the UK economy predicted to be weak until 2024, it’s crucial that businesses get a foundation of technology, people and processes locked down in order to adapt and survive through new and challenging conditions. 

However, it is often the case that businesses do not recognise the need to upgrade their financial tech stacks before their employees become burnt out under high volumes of payments and lengthy reconciliation processes, or late payments begin to cause a real problem and supplier relationships are being damaged.  

From suffering under tedious reconciliation processes to setting your sights on global expansion, knowing how to identify that your current AP tools need to be modernised and when to facilitate an upgrade is crucial. It will positively impact the bottom line, and improve employee satisfaction and the finance team will be equipped with the greater control and visibility needed to navigate the current and unpredictable climate. 

Below we explore five signs that finance teams have outgrown their AP capabilities.

1. Increasing payments volume: 

The larger an organisation becomes, the more bills it needs to pay. But it’s not just the invoice process that growing companies need to contend with - the entire supplier engagement process is impacted, including onboarding, tax identity collection, invoice management, and payments.

As your business grows, a key sign that you’ve outgrown manual finance capabilities will be seeing your employees overworked and overwhelmed.  According to our research, 30% of financial professionals cited stress to the AP team as one of the main issues caused by processing challenges. In addition, capacity issues will be a headache for senior financial professionals.

Businesses may find a short-term solution to a long-term problem by adding headcount to keep up with the workload. But if the organisation continues on its growth trajectory, with invoice numbers piling up, then it’s time to consider a change.

2. Tedious reconciliation processes: 

If you are manually processing invoices, month-end will be a headache. You will be checking that the payment amount and payee details are correct, as well as verifying all paid and unpaid invoices which will be putting a strain on your business. Bogged down in the detail, you will lack the visibility needed to understand where your business is in terms of performance and mistakes will be frequent.

The biggest sacrifice in manually checking invoices is time; time which could be better spent on strategic endeavours to drive forward the business. In struggling to keep up, the time spent on processing invoice exceptions will also be causing delays in the delivery of services – a problem that will impact the business's bottom line long term.

3. Supplier churn: 

Over a fifth (21%) of finance professionals cited damaged relationships with vendors and suppliers as one of the main issues with manually processing finances. Each month you will be running the risk of late payments, delaying the delivery of goods and services on time, and losing suppliers.

If you value what your suppliers bring to your business, then supplier payables have an increasing impact on the overall daily operations of the company. It’s imperative to everyone’s success that global suppliers get paid electronically and on time.

4. Going global: 

Global expansion is a cornerstone of many business strategies, however, when inundated by time-consuming manual processes, you will be finding it difficult to find the time to focus on expansion. Considering that over a third (39%) of CFOs are now being tasked with greater collaboration with the C-suite, it is essential for finance departments to adopt technology that removes manual labour to free up time for international growth – cited as a top priority for 28% of CFOs.

On top of this, global suppliers have unique needs. If your business is expanding globally and relying on cross-border providers, it must be ready to address all the added complexities of international payments including designating the currency, managing multiple subsidiaries and local compliance to regulations. 

5. Weakening financial controls: 

As a company grows, more people become involved in the day-to-day payables processes and they’ll be accessing critical systems. Increased financial controls are crucial to securing payables data and processes.

The complexity of tax and regulatory compliance will increase under a system controlled by manual processes. With automated financial controls, businesses will have granular role permissions and regulatory screening before all outbound payments. In addition, a certified compliant tax module that automates tax identity collection and validation for IRS and VAT compliance will be in high demand.

If the five signs above resonate with your business, it’s time to move to an AP automation technology that’s modern, easy to use, and designed to scale with you. A solution which has capabilities to pay suppliers in multiple countries and currencies can manage AP across global and domestic subsidiaries and entities through a single platform, and can remove the challenge of extending supplier payment terms is key. 

Ultimately if you’re a high-growth business, your manual AP process will quickly outgrow your team's capabilities, if it hasn’t already. Finding a long term solution in a scalable infrastructure, that takes the complexity out of the finance teams’ hands, is key to ensuring payments are always efficient, effective and compliant.