Streamlining SaaS AP with process automation: 9 use cases

As a SaaS CFO, you know that timely payments are HUGELY important to the success of your business. It probably won’t surprise you, then, that getting paid on time matters just as much to your company’s vendors and suppliers as it does to you.

But when you manually handle your accounts payable (AP), process inefficiencies and employee errors can be troublesome roadblocks to getting your suppliers paid and maximizing positive relations.

In this blog post, we’re aiming to, 1) Give you an overview of what AP is and why it’s crucial for SaaS companies, 2) Dive into how accounting software can streamline your payables workflow and help you monitor your payable expenses, and 3) Walk you through our top use cases for automating different aspects of your payables process, leveraging AI.  

If you’re tired of handling your SaaS AP manually, this blog post is for you. Let’s get started.

Understanding payables

AP is a crucial responsibility of your accounting department. It encompasses all the payments you owe to vendors who supply goods or services to your company, and the processes involved in tracking and settling your current liabilities. 

Accounts receivable (AR) is the other side of that equation. It refers to payments you’re owed by customers but haven’t received yet.

Common payables for SaaS companies include vendor invoices, travel expenses, and purchasing-related costs. Your accounting team is responsible for processing, recording, and reconciling payables, as well as managing current and short-term liabilities.

It’s important to note the distinction between AP and operational expenses. You incur your operational expenses over the course of the financial year, and they have their own subcategory on your company’s balance sheet. AP, on the other hand, involves shorter-term payments made to vendors and other parties.

AP metrics for SaaS CFOs

SaaS CFOs use AP metrics and KPIs to gauge the effectiveness of their AP department and its processes. Two of the most important AP metrics for SaaS finance are your:

• Payable days: This is a key metric for AP, and you might also see it referred to as days payable outstanding (DPO). It refers to the average number of days it takes for your company to pay its vendors. It’s an important component of maintaining strong vendor relationships.
• Payable turnover ratio: Your payable turnover ratio tells you how frequently your company pays suppliers who extend credit. To calculate it, divide your total credit purchases by your average accounts payable for a given period. To find your average accounts payable, add your accounts payable from the beginning of your selected timeframe to the amount at the end and divide by two. Always aim for a payable turnover ratio of 6 or higher to maximize vendor trust.

Accounting automation can help you streamline your AP and optimize your cash flow. Let’s see how.

Streamlining SaaS payables with AI

As your SaaS company scales, its financial liabilities will also expand. This is a perfectly natural part of the growth process, but it also means your AP can quickly become unmanageable with legacy manual tools.

With payments to vendors sometimes growing to thousands or tens of thousands of dollars as companies grow, manual data entry puts a lot at stake. 

And not just in terms of dollars and cents, either. Maintaining strong supplier relationships is crucial to maximizing profitability and winning your market. Maintaining optimal vendor relations is hard when your accounting systems and processes are subpar. 

AP automation gives you:

• Rock-solid vendor relationships: One of the core objectives of SaaS AP is maintaining the strongest possible relationships with your company’s various vendors. Automation ensures your AP runs smoothly to help you maintain the best possible supplier relations.
• Total financial visibility: One of the biggest problems with manual AP is the steady loss of visibility into your company’s cash that can occur as you scale. This is especially true for AP tasks that involve different departments. AI provides total visibility into your payables and all other aspects of your cash flow, including all your essential SaaS metrics.

• Enhanced accuracy and large time savings: Automation produces more accurate AP results in less time than humans can. Although that might trigger a fear of being replaced, it shouldn’t, and it’s actually great news for finance teams. Your department’s highest-value contributions are strategic rather than just busy work. Let the computer handle the repetitive tasks so you and your team can add more value elsewhere.

Now that you’ve got more context on AP and AI, let’s move on to the main event: our top 9 use cases for payables automation. Read on to learn how automation can make a world of difference in achieving optimized AP.

Use case 1: Automating vendor payments

Automating vendor payments offers numerous benefits, including reducing manual effort and improving payment efficiency. AI-powered accounting software can automatically match invoices with purchase orders and receipts, eliminating the need for error-prone manual processes.

By eliminating manual data entry and double-entry accounting, SaaS CFOs can ensure greater accuracy in invoice processing and payment reconciliation. Accounting automation also reduces the risk of duplicate payments and late fees, resulting in cost savings and improved cash flow management. 

Use case 2: Streamlining internal payments

In addition to vendor payments, internal payments are an important component of AP. Internal payments primarily involve the accounting department disbursing funds to other teams for various objectives. 

Travel reimbursements are another common example. Payroll, however, does not fall under the AP umbrella, even though it’s technically an internal series of payments. That’s an important distinction to be aware of. 

In legacy accounting departments, internal payments are subject to a hassle-filled and error-prone manual approval process. Accounting AI automates approval workflows and ensures timely processing of internal payment requests, allowing for efficient resource allocation and budget management.

How else can automation give your AP a boost?

Use case 3: Invoice receipt and review automation

Automating the receipt and review of invoices and bills is a crucial benefit of AP process automation. When you eliminate the manual handling of bills, invoices, and receipts, employee errors become a thing of the past.

AI accounting software enables intelligent data capture, ensuring accurate and efficient processing. Automated review processes flag potential discrepancies and verify the accuracy of bills, increasing overall process efficiency and drastically reducing delays in your payable process.

Getting your vendors paid as quickly and conveniently as possible should be a cornerstone of your AP goals. AI can make it happen.

Use case 4: Automatic general ledger updates and role-based dashboards

Automated accounting software also supplies real-time record updates after the receipt and review process. 

Automatic GL updates not only improve efficiency but also enable lag-free financial reporting in your department. Accounting AI even enables you to maximize your overall cash flow management with customizable role-based dashboards.

Additionally, automatic updates to your ledger accounts streamline the reconciliation process, providing end-to-end visibility into your financial data.

Use case 5: Faster payment execution

AI-powered solutions offer real-time payment scheduling and approval workflows, enabling your payable department to streamline the payment execution process. This helps SaaS companies reduce late payment penalties and maintain healthy vendor relationships.

Timely payments also enhance cash flow management and increase working capital, improving your company’s financial metrics and overall performance. By leveraging efficient payment processes, SaaS CFOs can optimize their department’s AP functions and drive organizational success.

Use case 6: Built-in reputation protection

Maintaining organizational credibility and maximizing vendor trust are two vital responsibilities of your AP team. It only takes one late payment to a vendor to make them question your trustworthiness.

Ultimately, AP automation acts as built-in reputation protection, safeguarding your company’s image and fostering a positive business environment.

Use case 7: Boosted time efficiency (and effectiveness)

Automation of payables processes offers significant time savings by reducing the need for manual, repetitive tasks. 

Traditionally, a lot of manual labor goes into SaaS AP. To name only a few examples, accounting employees routinely deal with processes such as:

• Reviewing and processing invoices
• Dealing with approval chains
• Recording payments and updating financial records

These are all tasks that AI can perform much more quickly, accurately, and inexpensively than humans. 

Remember, the goal isn’t to replace your employees. It’s to allow them to put their time to better uses that genuinely move the needle at your company. Automation makes that happen.

Use case 8: Enhanced cash flow monitoring

One of the key benefits of process automation in accounts payable is its enhanced monitoring capabilities. The SaaS industry is fast-paced, and keeping track of your cash inflows and outflows can be extremely difficult.

AI gives you real-time visibility into all your AP processes, allowing you to stay updated on your payables and identify potential issues before they become major problems. 

Automated alerts can be set up to notify stakeholders when there are delays or workflow exceptions, allowing for quick resolution and preventing disruptions in your vendor payment cycle.

Additionally, process automation provides access to detailed metrics and analytics, enabling you to measure process efficiency in real time and make data-driven decisions.

Use case 9: Standardization of processes

Standardization of processes is a crucial use case for streamlining SaaS payables. Consistent and uniform AP workflows help companies avoid late payments, missed invoices, and other problems. Standardized protocols are also extremely useful for reducing human error and maintaining internal controls.

When you handle your AP workflows manually, process standardization is extremely difficult. Even if you’ve taken the time for detailed and efficient process mapping, errors will inevitably arise. A rushed employee is bound to make a mistake at some point, potentially resulting in a missed invoice or late payment.

Process standardization with AI allows you to enjoy total peace of mind around all your AP workflows.

Are you ready to streamline your SaaS payables with AI?

Your payable team plays a crucial role in the success of your accounting department and your entire organization. Strong vendor relationships resulting from well-run accounts are a key ingredient in ensuring your company has what it needs to scale at speed.

Just as importantly, AI is a valuable partner to your team, offloading mundane tasks and making room for valuable strategic work.

To take a firsthand look at how AI can revolutionize your payables, check out our custom infographic about how AP bill automation is changing the game for SaaS companies.