By Rob Israch, President at Tipalti

Accounts payable (AP) is the most time-consuming and manually intensive function in finance. Despite this, AP teams are notoriously slow to adopt automation, with only 9% being fully automated in the UK. For scaling businesses, this won’t cut it. They need technology that grows with the business and finance team – helping them achieve true visibility and control for whatever lies ahead, which is particularly important in the current climate with the latest Bank of England interest rate hike being the highest in over three decades as fears of a recession grow.

However, it is often the case that businesses do not recognise the need to upgrade their financial tech stack before their employees become burnt out under rapidly increasing admin and difficulty in simply closing the books at month end, or the business is looking towards international growth – bringing a raft of new payment complexities.

From suffering under tedious reconciliation processes, to damaging relationships with payees, knowing how to identify whether current AP tools are inefficient and need to be modernised is crucial. It will positively impact the bottom line, improve employee satisfaction and finance teams will be equipped with the greater control and visibility needed to navigate the current and unpredictable climate.

Below I explore five signs that AP capabilities are no longer fit for function:

1. Invoices are piling up:

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

As a business grows, a key sign of having outgrown manual finance capabilities will be seeing 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. Month end is a headache:

If you are manually processing invoices, the month end reconciliation process will be tedious. 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 the business. Bogged down in the detail, you will lack the visibility needed to understand where the 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 help 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 bottom line long term.

3. Damaged relationships with payees:

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 the 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. Challenges scaling internationally:

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 the 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. Financial security and control under strain:

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, with a certified compliant tax module that automates tax identity collection and validation for IRS and VAT compliance will be in high demand.

If these five signs are ringing alarm bells for finance leaders when reflecting on the current state of their AP processes, it’s time to move to an AP automation technology that’s modern, integrates with existing accountancy software, easy to use, and designed to scale. In addition, if international expansion is on the cards, they must get ahead and implement automation before you really need it. Recognising the complexity of paying suppliers in multiple countries and currencies managing  AP across global and domestic subsidiaries and entities through a single platform, and the need to remove the challenge of extending supplier payment terms is key.