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Posted September 16, 2015

accounts payable cloud

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True, paper is usually the default format for accounts payable transactions. Even if a few digital transactions make their way into the workflow, most established accounting departments rely on time-honored manual processes to manage paper as it comes in and out of the mailbox. What’s happening, though, is more companies are embracing the time- and cost-savings of automation—proactively or reactively—as their web-enabled customers and business partners demand the speed and flexibility of electronic invoicing and payment.

One Option: Software-as-a-Service

This trend is leading some finance and accounting executives to look beyond the capabilities of their in-house systems and investigate next-generation payments technology to meet their changing business needs. One such type of AP automation tech can be found in the clouds: cloud computing, that is.

According to the 2014 AP Automation Study from the Institute of Financial Operations and ReadSoft, just over 10% of companies already use cloud-based SaaS solutions for AP Processing, and another 7% planned to do so within 24 months of the survey. Over 10% plan to implement it, but the timing is unclear, leaving roughly 26% as not sure. Forty-five percent said “no” to the cloud.

To be sure, cloud-based solutions are not the perfect fit for every accounting organization. Companies with legacy systems containing many years’ worth of data and large IT teams to support them may not be as open to innovative remote-server-based SaaS solutions. On the other hand, smaller companies with leaner IT teams and web-based systems already in place may be culturally (and technically) more prepared to transition their AP data and process to the cloud. Take a look at the benefits and disadvantages expressed by respondents of the 2014 AP Automation Study:

The Pros

  • No capital investment: 22.1%
  • No software or hardware: 16.9%
  • Lower cost per invoice: 13%
  • Fast startup: 9.1%
  • Other: 7.8%
  • Reduced operational risk: 3.9%
  • Rapid return on expense: 1.3%

The Cons

  • Limited availability to customize a solution: 18.8%
  • Risks to our data security: 18.8%
  • Problems integrating with ERP solutions: 16.3%
  • Lack of control over change to software: 11.3%
  • Potential problems with bandwidth, connectivity, or “down” time: 12.5%
  • Cost: 8.8%
  • Other: 8.8%
  • Runs counter to IT mandate for on-premises solution: 3.8%
  • Concerns with service-level agreements: 1.3%

Accessing a wide range of AP-related services over the Internet provides almost unparalleled convenience, especially when people can work from any device, around the clock. And the fact that the service provider maintains customer data on their servers, thus requiring no special hardware or software for companies to purchase or install, means there’s relatively fast start-up. The service provider handles all updates, and has staff dedicated to providing 24/7 operations with limited downtime. Additionally, SaaS packages provide companies with deep analytics via executive dashboard for real-time insights into cash flow and other KPIs.

Nevertheless, moving to the cloud continues to be met with resistance from many decision-makers. Security is an oft-cited concern among executives faced with the SaaS option. Their data and processes live in the “cloud” and are perceived as out of their control. The sensitive data that may be currently held in proprietary software/servers are a critical asset for organizations who count on the information to inform business decisions. The process of importing this data into the cloud—and trusting it will be immediately accessible and actionable—needs to be foolproof. That’s why it’s important for companies to get their internal IT staff involved in vetting SaaS vendors and working with them on the back-end to integrate systems.

Cloud-based solutions are evolving, and their second- and third-generation iterations are better addressing customer pain points. And executives are becoming more familiar with how cloud computing works and, consequently, getting more comfortable with implementing SaaS solutions to meeting their business needs.
Companies not finding a fit “in the cloud,” however, have other ways to automate their accounting processes—and these will be explored in future posts.

For more insights on AP automation, read:

Going Green: Another Reason To Go Paperless With Your Payables


Corporate Payments Insights

Corporate Payments Insights