Written by Magali Michael, Director, Yooz
To say Covid-19 had a big impact on SMEs is an understatement. With the first wave of lockdowns, many businesses were plunged into crisis mode almost overnight and forced to dramatically adapt their working practices.
When Covid-19 hit, the work employees did on a daily basis in the office had to be done from their homes, but many businesses were not set up for long term remote working.
For finance teams, the move away from physical workplaces highlighted the impracticality of continuing with manual accounts payable for small business.
Maintaining a paper-based way of working when your employees are working remotely is not sustainable. If paper invoices are going to your business address but either no one is picking them up, or they are collecting them sporadically then how are they being approved and paid on time?
In response to the crisis many businesses have come up with creative ways to get around such issues, but if continued remote working is the ‘new normal’ in a post Covid-19 world then SMEs have had a wake up call and need to think more strategically about their long term work processes.
For many firms, introducing remote working processes has meant increasing their level of digitalisation. The 2020 Harvey Nash/KPMG CIO Survey reported that of 4,200 IT leaders surveyed globally, nearly half felt that Covid had accelerated their company’s digital transformation and adoption of emerging technologies such as artificial intelligence, machine learning, blockchain and automation.
A separate study of 4,600 remote working employees of SMEs by Capterra in April found that 60% of SMEs had either bought or were planning to buy new software to adapt to remote working.
The survey also found companies were increasingly switching to cloud technologies, with 39% using these to facilitate remote working.
Looking to the future
Many of the working practice changes will have been rushed through to react as companies focused on keeping their businesses going in the midst of the pandemic.
But now, the majority of SMEs have moved beyond the initial crisis phase and are now starting to think more strategically about the lessons learned from the events of the past year.
According to the SME Finance Monitor Q3 2020, prepared by BVA BDRC, while about 75% of SMEs said they had been negatively impacted by Covid, 57% believe the worst is now behind them.
This is giving companies the ability to shift their focus to planning ahead. The survey found that four in 10 SMEs are now focusing on the future, with just 25% still occupied with dealing with the immediate impact of the pandemic.
What does this future look like? For many businesses, things look very different to the way they did before the pandemic.
The big change is that the trend for remote working appears here to stay. In a survey of nearly 1,000 company directors by the Institute of Directors in September, 74% said their firms would be continuing with increased working from home after the pandemic.
Automated accounts payable for small business
Assuming your company is among those that plan to stick with remote working in the post-Covid-19 world, if you’re still using a manual accounts processing system, it’s probably clear that this needs to change.
Automated accounts payable software has long provided an opportunity for businesses to reduce costs and the manual processing work being carried out by accountants, many of whom could be put to much better use carrying out more strategic tasks.
Over the past 20 years, many enterprise-level businesses have embraced such software and automated their accounts payable processes. But the rationale for digitising accounts payable for small business perhaps seemed less compelling than it did for large business and many SMEs pushed automating their finance functions to the bottom of the to-do list.
In many cases, this was because small businesses felt it would be too expensive or time-consuming to automate their accounts payable, or that the software wouldn’t integrate with their existing programs.
Some also worried that such a system would increase the risk of fraud, or that the software would throw up too many exceptions and therefore a significant amount of manual work would still be required to make corrections.
But these fears are largely unfounded. In the past the cost of such software may have been too high for SMEs, however with advancements in artificial intelligence and economies of scale, accounts payable software is now accessible to companies of all sizes.
Clear business case
In fact, unlike some of the other software changes that became necessary due to the pandemic, investing in accounts payable software should save your company money rather than cost it money.
On average, by replacing a manual accounts payable system with cloud-based P2P automation software, you could reduce your cost per invoice by up to 70%.
Even with a relatively modest number of monthly invoices coming in, 100 for example, your company could save up to £22,000 per year.
That’s because the estimated cost of processing an invoice manually is between £9 and £20, according to studies by analyst firms such as Aberdeen, Arthur D. Little, BVA, IOFM and Levvel. The annual cost depends on the number of invoices processed, but will always be much less than this.
Combining artificial intelligence and robotic process automation cuts the manual work out of accounts payable, freeing up your staff to do more important work, so you will see an immediate improvement in productivity.
It also cuts out the risk of human error and has extremely robust fraud detection capabilities.
There’s limited upfront time investment required – the software is simple to install and minimal training is needed. Within just a couple of days, you could be up and running, with even the most junior members of your finance team finding it intuitive.