Lately I have been writing a lot about mid-market and large market companies. I have gotten on this kick in anticipation of the “rise of the mid-market” (sounds like a movie). I have always contented that The United States is three to four federal laws away from mass AP Automation adoptions. Until that time, companies are in the need of justifying any automation plans.
By The Numbers
The last number that I have seen about Accounts Payable Automation adoption is that only 10% of US companies are fully automated. There are variations of a larger group that up to 40% have some aspects of automation in AP, and then there is my favorite group which is over 80% that have no real idea of what AP Automation is and what it does. Ok, I just made the last number… it seems that there is a huge group that doesn’t know what automation is. I can give you an example. When looking for new business, I ask if their company is automated, and I get a large part of the time, “yes”, which gives me an opportunity to make a statement followed up by a questions. “When I refer to AP Automation, I mean the paper invoices are gone. Do you have any paper invoices in your accounts payable process?” This is always followed by, “YES! We have a ton of paper.” This doesn’t mean they are stupid, it just means they really don’t know what AP Automation is. That’s why I am so big on definitions.
Larger companies, for the most part, know what AP Automation is because they were the first to adopt. If you look back on my number of 10% of companies in the US are automated, it doesn’t tell the whole story. If you take out large companies, those are companies that are over $1 Billion in annual revenue; the number goes from 10% to less than 2%.
There could be a few obvious answers to this question, but the one that makes the biggest difference is ROI. ROI, for those of you that don’t know, stands for return on investment. A ROI with a large company will be rooted in an entire team of people being layoffs whereas with a mid-size company there won’t be any or very few layoffs. A friend of mine said it best, as a CFO of a mid-market company, when he told me, referring to ROI, that no one was going to write him a $90,000 check once he was automated.
Does Size Matter?
The size of the company doesn’t really matter if you should automate AP or not. The benefits of automation greatly out weight keeping the paper, however, size matters a lot when it comes to how a company justifies AP Automation.
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