Cloud-based software is becoming a popular tool for businesses. They have impacted important business processes such as invoicing, accounting, project management, human resource, customer relationship management, accounts receivable and accounts payable.
The traditional accounts payable (AP) process involves a lot of paper-based and manual work. It can become tedious to manage accounts payable with the same manual procedures with continued organisational growth. Hence, it is beneficial for businesses to choose cloud-based AP automation solutions.
Cloud-based AP automation involves setting up an AP infrastructure over the cloud streamlining the AP process by automating manual processes. The competitive outlook of businesses and the need for efficiency have brought in cloud-based automation. Members of the AP team need access to invoices, monitor due dates and approve clearance of AP. These needs have been met by integrating cloud-based software to automate the AP process. Processes that are automated include:
Automation of AP processes ensures reducing processing times and avoiding late payments, and the availability of AP information on the cloud means it can be securely accessed from anywhere.
There are obvious improvements that cloud-based AP automation brings over on-premise AP processes. The differences have been listed below:
|Basis||On-premise AP||Cloud-based AP automation|
|Set-up||Hard and expensive to set up hardware and security architecture, and costs have to be incurred regularly to maintain the systems.||It is affordable to set up and operate. The pay-per-use concept allows flexibility, and the service provider takes care of updating and maintaining systems and servers.|
|Invoice capturing||Requires manual entry of all invoice data into the accounting system. This is time-consuming and prone to errors.||Most of the data is automatically read using optical reading technology and processed by the systems. The only manual processes include a layer of manual review by humans.|
|Approvals||Officers of various departments need to sort out their respective invoices. Diligence is required to track approved invoices and follow-up on unapproved ones.||The approval process is streamlined where department heads can ensure quick and efficient approvals. Approval locations are centralised by the automatic routing of invoices to respective departments. The AP team can set thresholds of amounts that need two-stage approvals.|
|Payment procedures||Require officers to be physically present to authorise hundreds of payments at once. This also leaves a high chance of forged signatures and fraud.||Officers can authorise payments remotely. Approvals are kept on record for future audits.|
|Security and data backup||Businesses have to implement their own security control, which requires a high level of expertise and maintenance. Information is also stored in internal servers and physical locations, making it susceptible to data loss.||Cloud-based AP service providers offer high levels of security which cybersecurity experts maintain. It also allows the AP team to decide the access controls of its users. The risk of data loss is greatly reduced since data is backed-up and stored on the cloud.|
Given how much cloud-based software offers, there are many reasons why businesses must make the switch to cloud-based AP automation solutions:
Once the business decides to switch, it must find the right solution that accommodates its needs. One must carefully understand all the benefits and risks before investing. The aim must be to integrate and continue with the selected solution for as long as possible. A few areas to consider while choosing the cloud-based AP solution provider are:
As seen above, cloud-based AP automation can transform AP management. The earlier a business adopts it, the better it can reap the benefits, including better cash management, reporting, and visibility. Cloud-based technology will help keep pace with the rapidly changing business environment and realise long-term advantages.