2023 was a challenging year for small and medium-sized businesses. Many made the tough decision to cut back whilst low demand plagued the market. There were, of course, success stories where teams were able to fight against the tide and grow regardless of the market around them.



In short, anyone who survived the year should be proud of their efforts. 2024 is a year for change, finding efficiency and returning to profitable successes.

And with the Finance Department rightly placing pressures on their entire business to “do more, with less”, there is a golden opportunity right in their department to do precisely that.



More, with less!

Accounts Payable for many has become an area of finance that requires multiple team members. Often requiring either too much of the CEO, or CFO’s time and input from team members across the business in order to keep on top of:

• Organising payment runs;

• Reconciling the bank to your accounting software;

• Increasing fraud risks; and

• Evolving accounting and tax laws.

For anyone wondering what “Accounts Payable” is, here is a quick summary:

Accounts payable at its most basic level refers to the bills a company needs to pay. A company might owe a supplier for materials, or it could owe money for an unpaid utility bill.

Unless a payment is made at the point-of-purchase, a supplier will raise an invoice for those materials, and in your accounting software, the amount on that invoice falls part of your accounts payable.

Accounts payable in a growing business

In a growing business, accounts payable grows not just in volume, but complexity too. The more staff a business brings on, the number of people responsible for purchasing goods and services increases. The number of suppliers also grows, each of them with their own specific payment terms and bank details.

What was once an easy-to-manage process becomes unwieldy with accounting software exports, spreadsheets and lengthy email chains requesting approvals from purchasers and senior stakeholders. Most frustratingly of all though, the number of supplier payments that need to be made each week or month grows. So much so that it takes hours to enter these payments one-by-one in a bank account and ensure that all the bank details, amounts and references are correct is painstaking.





At this stage, you’re likely thinking: “This sounds very familiar… how do I fix it?”

And so, what’s the process that can NOW be automated: In a more established business, finance teams have someone in a dedicated accounts payable role, and in larger businesses, a whole team.

The people or teams responsible for this typically follow a process that goes like this:

1. Generate Purchase Order (PO): When a business decides on a purchase, it generates an internal purchase order.

2. PO Documentation: The accounts payable team then documents this order, detailing quantity, services, and expected delivery dates.

3. Supplier Invoice: This invoice from the supplier details the costs, quantities, and total amount for the delivered items.

4. Invoice Verification: Accounts payable usually compares the supplier invoice to the Purchase Order to ensure all details align before final payment.

5. Recording the Invoice: This involves entering the invoice details into the company's general ledger, including supplier information, items received, pricing, then coding these items to the appropriate chart of accounts code

6. Invoice Approval: The invoice must receive approval before it's paid from those in charge of the procurement process, a department head, someone on the finance team, and sometimes all of the above.

7. Preparation of Payment Runs: An aggregation of all due payments, their corresponding invoices, and details for where the payment should be made. 

8. Finalising Payment: The accounts team concludes the Accounts Payable process processing bank transfers and payments to suppliers.

Simple enough?

Not really. Even in established businesses, this process has become increasingly exposed to fraud, human error and the need for multiple team members to keep on top of the workload.

Hence, there has been a dramatic increase in businesses of all sizes looking for ways to automate the process to protect their business and reclaim their time and resources.

So, let’s see how small and medium-sized businesses can put this pain behind them by automating the process.



Three ways an SMB can Automate Accounts Payable

1. Build an AP ‘tech-stack’ – there are a lot of apps, or single point solutions, out there today that each execute a particular task very well e.g. invoice data capture, approvals, or payments. The downside is that you can quickly end up with four (often more) different apps for Accounts Payable alone. For your teams, that’s four logins to remember, four distinctly different tools to learn and a real lack of visibility, audit trail and reporting. These stacks are also quickly outgrown.

   
   

2. Make an enterprise investment – invest in a system like NetSuite. It has a high price tag, but all the functionality to relieve this pinch point of time, resources, and risk from your business. You can expect a cost of thousands per month.

   
   

3. Use an Accounts Payable platform like Nook (nook.io) – a solution designed from the ground up to turn the Accounts Payable processes of the most complex and busy business from days and weeks of effort to minutes.

Here is precisely how Nook does it:

1. Draft a Purchase Order - custom user permissions enable team members to create a purchase order and submit it for approval before sending it to the supplier.

   
   

2. Forward the Invoice - once the supplier invoice is received, forward it to your Nook inbox where it will capture and code the invoice, including line items, and match it to the purchase order. 

   
   

3. Invoice Approval - once the invoice has been reviewed in Nook, it can be submitted for pre-payment approval.

   
   

4. Create a Payment Run - approved invoices that are awaiting payment can be grouped and added to a payment run, which can then be submitted for payment approval and final adjustments.

   
   

5. Process Payments - approved payments and payment runs can be scheduled or paid instantly in bulk in a couple of clicks in 36 different currencies. Bank account validation also helps to reduce fraud risk.
   
   

6. Supplier Remittance - once payments are made, Nook will notify your suppliers and give them access to a secure portal to view the invoices you’ve paid them for and a high-level overview of future payments too.

Throughout this process, Nook keeps your accounting software up-to-date with status updates on invoices, auto-payment reconciliation and supplier detail changes, so it remains a source of truth for reporting and compliance requirements. 

In summary

This year, many businesses look for ways to “do more with less” for financial reasons.



The first place to look is at your Accounts Payable process. Streamlining this manual, time-consuming process allows businesses to reclaim time and resources while also reducing exposure to fraud risks.

If you’re interested in learning more about Nook, book a live demo and see how it could work for you!