How Much Does Automated Accounts Payable Cost?
We talk to companies every day who are looking to automate their accounts payable (AP) processes, and the burning question is always: How much will it cost us? And the answer is always the same: it depends. But that doesn’t mean you should be left in the dark.
Here are the factors that influence the cost of the switch to an automated AP system, and what you should plan for when deciding.
How much are you really spending on manual accounts payable? How much could you save by switching to an automated AP processing system? Use our ROI calculator to find out!
How Much Does Automated AP Software Cost?
There is a wide variety of AP Automation software out there and each one can have a different pricing model. Many cloud-based companies go by the Software as a Service (SaaS) model and charge a monthly or annual fee that is renewed for the lifetime of your subscription. This can be a set price and/or it can fluctuate based on a multitude of factors such as the number of users, the number of transactions (e.g. how many invoices you process per month) or how much data you’re using.
Typically a SaaS bill is based on one or two of these factors, at most. With the cloud, software updates and improvements are normally pushed out to all subscribers and do not require any kind of upgrade, download or additional payment to utilize. It is common, however, for certain add-ons or major upgrades to require an upgrade in your subscription to unlock.
For example, basic reporting may come out-of the box with a minimum subscription, but advanced analytics requires upgrading to a higher tier subscription or paying an additional annual fee.
Most on-premise solutions charge a one-time fee to download the software. This is usually substantially more than what a cloud subscription costs. Additional costs can be incurred when upgrading to a new version or adding more users.
Automated Accounts Payable Software Implementation
A major factor in the overall cost of software that is often forgotten is the cost of implementation. Some software can take months to completely implement company-wide, and others are just a matter of logging in and getting familiar with the new system.
SaaS companies are able to continuously push out improvements and updates and they also tend to be newer companies or newer divisions of companies (since the concept of SaaS is relatively new). As a result, cloud AP automation tends to have a more user-friendly interface which reduces the amount of training needed (if any) and simplifies the onboarding process, reducing the overall cost.
Conversely, on-premise solutions usually require training that can range from an hour to a couple weeks to fully onboard users.
With either type of solution, you should expect that some time is reserved for users to learn the new software. New processes and procedures will need to be documented and communicated ahead of implementation as well. Additionally, there should be some expectation that there will be a period of transition as employees are learning new processes and software that may take time to adjust to before processing time is improved and return on investment realized.
The Impact of Price Over Time
As with any investment, there is the intention to gain a return after a certain period of time. After investing in an AP automation solution, the length of time can vary before an ROI is realized . A major factor in this is the length of time implementation takes, and the ease in which a transition to new processes and software utilization takes place.
Some of this is due to the software chosen, if a third party consultant is involved (which usually has a positive impact), and the planning and project management invested in having a smooth transition. While it may take months and even years to gain an ROI with certain AP automation software, some have achieved ROI in as little as a few weeks, such as Uplevl’s AP Automation solution.
With cloud solutions, it should be budgeted that the cost of subscription will increase over time. Likewise, with on-premise solutions, the cost to upgrade and download newer versions will need to be budgeted for. Whichever solution you provide, additional training and configuration may cause additional costs. With acquisitions, mergers, or reorganizations, process change often happens which may impact company policies and the way software, such as AP automation, is utilized. This can lead to spending money on additional training and/or system configuration.
Most cloud solutions do not charge any maintenance costs. The cost for upgrades and improvements is built into the subscription so you do not have any surprises in your budget planning. You will also be saving on various aspects of your business, including the cost for office supplies, storage space, filing and scanning personnel, and employee time wasted looking for and retrieving documents.
With an AP automation solution, you can reduce the number of late or missed payments due to lengthy processes and increase your ability to take advantage of early pay discounts and other incentives.
How Much You Could Save by Automating
When investigating the cost of AP automation software, there are several factors to consider, including the cost of software, maintenance, upgrades, and increasing volume, data usage, and number of users. However, it is also important to consider the cost of NOT automating.
AP Automation software can save you money on office supplies, filing storage, sorting and scanning, personnel and time wasted looking for, retrieving, and manually processing invoices and other documents. You can get a quick look at how much you can save by taking your AP documents to the cloud with an ROI calculator.
Despite initial costs, you could be saving hundreds of thousands of dollars by utilizing an AP automation software system!