Month: March 2024

Are piles of invoices giving you sleepless nights? As your SaaS company scales, manually managing your accounts payable (AP) quickly becomes impractical. Manual AP jeopardizes vendor relationships and contributes to cash flow problems. Luckily, cloud-based automation is a better way to tackle SaaS AP.

This blog will explore the benefits of embracing cloud accounting for SaaS AP. We’ll explore 1) The challenges involved in traditional AP and handling invoices manually, 2) Why cloud AP is superior to legacy systems, 3) How touchless invoicing simplifies payables, 4) The role SaaS CFOs play in AP automation and more.

If you’re ready to take your SaaS AP into the twenty-first century, this post is for you.

Understanding the need to automate AP

AP has a simple set of objectives for small and large companies. They involve getting vendors paid quickly and promoting efficiency around your AP workflows. This may seem clearcut on paper, but a lot more goes into AP than is immediately apparent.

Your payables team juggles a wide variety of daily tasks, such as:

• Invoice management and ledger updates
• Tracking cash flow as it relates to your payables
• Staying on the lookout for fraudulent activity
• Ensuring invoices follow the correct approval chain

That’s a lot to handle, and tackling it manually isn’t in your employees’ or vendors’ best interest. Manual invoice processing frequently leads to delays and errors, causing frustration for both suppliers and accounting teams.

And the larger your business grows, the riskier legacy AP becomes. As you scale, the likelihood of manual errors resulting in late payments, missed invoices, or even vendor service interruptions scales with you.

Let’s take a look at how manual AP compares to cloud-based payables.

Comparing legacy AP to cloud AP

Legacy AP systems heavily rely on manual, paper-based processes, leading to many errors and inefficiencies. Spreadsheet-based solutions like QuickBooks are a slight improvement, but only slight. Their products only move inefficient processes from paper to spreadsheets, but cloud AP offers true process automation.

Furthermore, legacy AP lacks cloud AP’s collaboration and reporting capabilities, which help companies streamline their invoice tracking and vendor management. Cloud AP also enhances security and compliance with features like template-based invoice processing and automated receipt management.

Since invoices are at the heart of AP, touchless invoicing is perhaps the most crucial reason SaaS CFOs should automate their payables. Let’s see what it can do for your department.

How does touchless invoicing simplify payables?

In a legacy accounting department, the AP process looks something like this. Your AP team receives a paper invoice, physically types the information into your system, ensures the proper approval chain is observed, and executes the payment once all approvals are obtained. On top of all that manual labor, someone must update your ledger.

Cloud-based touchless invoicing automates those processes while keeping your AP team in the driver’s seat to oversee everything. This multiplies your employees’ time and efficiency, freeing their focus for more strategically valuable work.

Among other benefits, cloud AP is helping SaaS companies:

• Automate invoice tracking and management: With legacy AP, Achieving total accuracy around managing your invoices is next to impossible. But accounting software equipped with AI can make it happen.
• Dramatically simplify approvals: Approval routing is a significant headache when you handle your payables manually. With automated approval chains, you set up your desired AP routing structure, and invoices are automatically routed until you get everyone’s signoff.

Now that you’ve gained more context on the differences between legacy and automated AP, let’s examine the main benefits of AP automation.

Key benefits of payables automation for SaaS CFOs

As a C-level finance leader with a lot on your plate, you must seek process efficiency wherever you can. AP and related internal payments like payroll are prime candidates for automation.

So, without further ado, what specific and concrete benefits can you expect when you automate your payables?

Total financial visibility

Accessing and managing payables has never been easier with cloud-based AP solutions. Say goodbye to being tied to your desk and hello to on-the-go convenience.

Remote access lets you track invoice status, due dates, payment history, and all your other payables and financial data from anywhere with an internet connection. Cloud accounting offers total financial visibility for finance leaders.

No more flipping through paper receipts or scrolling through spreadsheets searching for important data. Stay organized and efficient while quickly handling vendor inquiries and resolving payment issues.

And when it comes to audits and reporting, rest assured that your AP records are accurate, encrypted, and up-to-date, including backups.

Superior data tracking and time savings

Accounting AI software features role-based dashboards that allow SaaS CFOs to track their metrics in real-time. Cloud accounting software also comes equipped with role-based dashboards that allow SaaS CFOs access to by-the-second financial updates.

The modern CFO’s role- especially at SaaS companies- could almost be described as a “financial data scientist.” Your job depends on the ability to accurately, quickly, and effectively work with large volumes of data–cash inflows and outflows, SaaS metrics and KPIs, and your accounts payable.

Accounting AI can be your trusted partner in streamlining your financial data management. By letting it do what it does best–automate accounting processes and track financial data–you can save significant time for more valuable work.

Simplified collaboration and continuous process automation

Cloud AP lets you seamlessly collaborate with internal teams and external stakeholders by sharing invoice data, comments, and approval workflows on a centralized platform. With real-time reports on your payables and cash flow, you and your team can make informed AP decisions no matter what’s happening around you.

Continuous processes are another significant benefit of AP automation. Your GL and financial data is continuously updated from moment to moment as changes occur, greatly simplifying your reporting. But just as important when talking about AP is that accounting AI continuously closes your books with each transaction.

Continuous closing saves your department a tremendous amount of time over the year and streamlines one of the most tedious processes in SaaS accounting.

Enhanced security and compliance

Cloud accounting offers several key features to ensure enhanced security and compliance for SaaS companies and vendors alike.

First and foremost, your sensitive financial data is safeguarded, preventing unauthorized access. This is achieved by encrypting and securely storing invoices in the cloud, protecting them from potential breaches.

Additionally, cloud accounting solutions ensure compliance with industry regulations and data privacy laws, reducing your risk of legal issues and regulatory fines. And speaking of regulations, cloud accounting software can even help you automate ASC 606 management.

Automatic audit trails further enhance security. User activities are logged, providing an audit trail for accountability. Moreover, automation of approval workflows enforces standardized internal controls and dramatically reduces the risk of AP fraud.

How can AP bill automation revolutionize your department? 

By embracing touchless invoicing and automating your payables, you can simplify and expedite every aspect of your AP management. Cloud accounting platforms offer visibility into and control over your payables, which isn’t possible with paper-based or spreadsheet-based AP.

Can you answer “yes” to any of these questions:

• Do you have limited access to real-time actionable data?
• Is your accounting team less productive than it should be?
• Are you overstaffed as compared with industry benchmarks based on revenue per employee?
• Are poor methodologies leading to higher costs in your accounting department?
• Are you burdened with inefficient manual processes that are difficult, error-prone, and require excess labor?

If you did, we need to talk. You’re likely struggling to make informed and accurate business decisions. Your margins are lower than they should be, and that’s leading to reduced profitability. Ultimately, that increases the business cost to attract new customers and maintain and improve customer satisfaction.

One of the solutions to these issues is a modern cloud-native financial management platform to provide:

• Out-of-the-box, fit-to-purpose automated workflows
• Real-time business analytics
• Self-service and mobile capabilities
• Forecasting to anticipate demand
• Seamless integration across systems, locations, and entities

What’s a platform like that worth to your business? In its recent report The Total Economic Impact™ of Sage Intacct, Forrester quantified the impact of Sage Intacct on accounting team productivity and reporting compliance. Let’s walk through the methodology it used to produce a real dollar figure.

Forrester interviewed four companies that switched from other systems to Sage Intacct. For their study, Forrester aggregated the interviewees’ experiences and combined the results into a single composite organization, a technology services company with global operations and headquarters in North America. The composite has 100 employees, generates $30 million in annual revenue, and grows 20% annually via acquisitions during the three-year TEI analysis period.

The four interviewed organizations said their accounting and financial systems were isolated, complex and problematic prior to deploying Sage Intacct. The financial processes resided across multiple platforms, such as enterprise legacy systems, bookkeeping software, spreadsheets and other applications. These systems included QuickBooks and Oracle NetSuite.

Lacking system consolidation and automation, the organizations used protracted manual processes to fill data gaps, often requiring additional labor to perform maintenance tasks, such as replicating the data in prior legacy and third-party software solutions or tracking contracts and invoices in individual spreadsheets.

After deploying Sage Intacct, the interviewees acquired visibility into their organizations’ financial performance and had confidence in their numbers due to the platform’s real-time data. They gained financial insights and the ability to parse the data, drill down on numbers, and isolate any issues with a particular number, which they could not do in their previous environments.

With this, Forrester calculated a $165,984 total three-year margin benefit gained due to increased accounting team productivity and improved reporting, with a present value of $137,593. (The total economic impact of all benefits quantified is valued at $2.1 million.) Let’s look at the details.

Evidence and Data

The interviewees stated that Sage Intacct’s integrated, fully automated multiple-entity reporting, based on GAAP’s revenue-recognition requirements, significantly improved the accounting team’s productivity and better prepared them for a business transaction such as an acquisition or divestiture.

• In legacy environments, the interviewees said reporting of revenue recognition consisted of an overly complex and tedious process and was often inaccurate due to the manual processes being managed in spreadsheets.
• In addition, these manual processes were prone to human error and meshed the data together at a macro level, making it difficult to get through due diligence required by investors versus providing the micro-level automated calculations required for proper revenue recognition.
• Also, interviewees reported that their prior systems lacked integration with their accounts payable and third-party CRM solutions, and as a result, accountants had to manually enter the data into multiple systems. This became particularly problematic when they experienced significant rapid growth that their prior systems couldn’t accommodate, putting a strain on their internal resources and costing them an excessive amount to maintain.

Modeling and Assumptions

The composite has two employees in accounting, handling accounts payable and ensuring reporting compliance per GAAP revenue-recognition principles.

• With Sage Intacct, accounting team members save 32 hours per week: 10 hours from elimination of duplicate data entry into multiple systems and spreadsheets, 16 hours from revenue allocation processes, and six hours from manual entry of accounts payable and reporting.

Risks

The ability to realize this benefit will vary according to:

• The organization’s GAAP and other reporting requirements for its investors.
• The necessary add-on modules capture additional reporting requirements, such as revenue recognition, multiple entities, and dimensions.
• The number of persons on the accounting/finance team dedicated to data consolidation, analysis, and reporting.
• Salary levels, depending on skills and geographical location.

To factor in these risks, Forrester adjusted this benefit downward by 5%, yielding a three-year risk-adjusted total present value of $137,593. The calculations assume a $35 hourly rate for a fully burdened accountant and two accountants.

As one of the interviewees noted, “There are some complicated things in GAAP rules that Sage Intacct handles very well. It reduces the amount of effort required from our team. I would have to hire another person or two to be able to calculate the revenue recognition.”  The interviewee is a CFO at a cloud and software services company.

Unquantified Benefits

Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:

• Improved visibility and reporting in real-time to quickly analyze data and isolate any issues with numbers, locations, or products. This enables deeper dives into transactions to determine where problems occur, which is a function absent in prior systems. Furthermore, with Sage Intacct’s customized dashboard feature, executives have better visibility into the composite’s financial performance in real-time and the ability to drill down and get answers quickly without having to rely on the finance team. This level of transparency and detail allows them to make better decisions faster rather than waiting three weeks after the monthly close.
• With Sage Intacct, organizations experience greater flexibility in accessing and reporting the data in a more meaningful way. Sage Intacct allows finance teams to generate reports based on executives’ needs in real time with speed and ease. A CFO at a cloud and software services organization commented, “When my CEO asks for something, I feel pretty confident not only that I can get it but also that I can get it pretty easily.” The interviewees found Sage Intacct’s dimension module gives them the flexibility to do custom reporting, change how dimensions are used, and add new dimensions within the system at any point in time.
• The multiple-entity function effectively captures acquisitions and reports on company performance. Within Sage Intacct, the composite uses the multiple-entity function to manage acquisitions or divestitures and view domestic and foreign business-unit performance. The solution provides the flexibility to either fully absorb the acquired organization into the parent as a branch or keep it as a separate business unit while operating in multiple currencies and countries.
• Accounts payable and ACH transfers are managed easily and securely. Once vendors enter their information into the composite’s portal, the data is transferred to Sage Intacct in a secure environment and then uploaded to the composite’s bank automatically, eliminating any human access to sensitive information. The CFO of an insurance company noted, “Everything is completely secured and embedded.”

If you’d like more information on The Total Economic Impact™ of Sage Intacct from Forrester, I invite you to follow this link, where the analysts not only explore the impact of increased accounting team productivity and reporting compliance but also examine the impacts of:

• More accurate customer billing
• Automation and integration
• Sales team effectiveness
• Increased finance team efficiency and auditability

These combined benefits add up to $2.1 million and a return on investment of 441%. Imagine the impact on your company.

As a SaaS CFO, you know the feeling: lying awake at night in a cold sweat wondering if that “one small accounting error” will have downstream effects. Maybe there was a payables mistake that impacted the timeliness of a payment to a key supplier. Will that put your company’s good standing with them at risk? And that’s just one example.

Finance leaders know the risks that can accompany even seemingly small accounting errors. You need to trust yourself, your team, and your tools.

In this blog post, we’ll explore why trust is critical when selecting automation tools for your business. We’ll be looking at the issue of trust from all angles as it applies to SaaS finance and automation. Why is it so vital that you trust these tools before switching to cloud accounting? There are answers to that question you likely haven’t even thought about.

Let’s get started.

From efficiency to trust: why you need to trust your tools

When selecting an AI accounting tool, CFOs’ main concern used to be about its impact on business efficiency. As time has passed, the core question has shifted somewhat to “Can I trust this product?”

Automation tools are crucial in streamlining financial processes and improving overall efficiency for SaaS companies. But that’s also what makes trust such an important factor when adopting these tools: they directly impact key processes tied to your business performance and cash flow.

And in SaaS finance, if something goes wrong, it can go very wrong. Whether you’re creating financial statements, running a forecast, setting a budget, or something else, a small slip can quickly trigger an avalanche of problems.

From the new accountant you just hired all the way up to your fellow accounting leaders, it’s safe to say that everyone in your department understands that.

There is no “small accounting mistake”

Even the slightest error in accounting can have far-reaching implications for your company’s ability to meet its financial goals.

This puts finance leaders in a double bind. Take your forecasting, for instance. You might know conceptually that email chains are far less efficient for forecast assembly than a centralized cloud-based platform. And you might even know that automated forecasts offer superior performance.

But here’s the thing: you don’t trust the idea of that cloud-based platform as much as your spreadsheets, or else you’d be using it right now.

This highlights two critical things:

• 1. The central role of trust in all of this. No reasonable CFO is going to offload essential financial processes to automation tools they don’t trust.

• 2. The importance of finding an AI solution you can trust. The cost of not finding one is to slowly (or not so slowly) lose market share to companies who weighed the risks, did their due diligence, and gave innovation an honest shot.

The good news is that accounting automation vendors also realize the importance of trust. And the reputable ones will bend over backward to observe several layers of meticulous trust-building practices. We examine some of them below.

Digital transformation with AI technology: the trust factor

A bit further in this post, we dive into a “vendor trust checklist” of what you should look for to maximize trust in your cloud software vendor.

In the meantime, though, here are some of the top things to look for when carrying out your due diligence. Following these tips can help you select software that keeps paying dividends for years to come:

• Check that the vendor maintains total transparency about their product development processes for AI tools.
• Make sure that their software still leaves you and your team in control: you guys still need to be the ones calling the shots. AI should be a trusted partner, not the boss of the operation.

• The software you select should be fully accessible, meaning you can trust that you can access it from anywhere with an internet connection.
• Your chosen solution should be fully auditable, providing a full audit trail of your financial processes and workflows.

If you can tick off all those boxes when doing your Google research on accounting AI solutions, you’re on the right track.

What are the benefits of using automation tools?

Using automation tools can streamline repetitive tasks for finance teams, improving accuracy and efficiency by reducing human error.

Accounting software equipped with AI helps CFOs and accountants save valuable time and financial resources while increasing productivity and ROI by eliminating data silos.

What else can cloud accounting do for you?

CFOs should prioritize automation tools–without leaping blindly

Software CFOs need to prioritize AI in order to maintain profitability and win their market. In today’s competitive SaaS landscape, manual accounting processes simply don’t make the cut any longer.

AI has grown in sophistication, and it’s now capable of helping SaaS CFOs improve their performance in all kinds of ways. Some particularly profitable use cases include:

• Long-range, low-variance forecasts: Forecasts built with ML algorithms can make more accurate predictions in the future than spreadsheet-based manual methods.
• Optimizing your billing strategy: SaaS subscribers, regardless of your target audience, will be heavily influenced by your pricing strategy.
• Making payables a breeze: Accounts payable (AP) can quickly grow hectic for SaaS companies. AP automation keeps your payables running smoothly, no matter how layered your vendor relationships become.
• Gauging user sentiment: AI software can use advanced analytics functionality to assess how your customers feel about your products.
• Improving your marketing funnel: With the help of cloud planning software, you can analyze funnel performance to identify and correct sticking points in your digital marketing, maximizing onboarding and cash flow.

Clearly, automation has a place in your department if you want to get ahead. But to avoid leaping blindly into a purchase, it’s important to be aware of the different types of software on the market and what they do.

Key automation tools for business transformation

Taking the time to understand your options will enable you to maximize your trust in your chosen AI solution.

So let’s take a moment and examine what’s available. Below are three of the main types of automation tools SaaS CFOs use today.

1. Accounting automation tools

Accounting automation tools are meant to help SaaS CFOs streamline a wide variety of financial processes involved in tracking and reporting on your company’s cash flow.

Examples of workflows that this type of software is meant to automate include:

• Financial reporting
• Tax Preparation
• SaaS metrics tracking
• Consolidation accounting
• Managing capitalization, both for public companies and smaller entities

Accounting automation tools also help finance teams with AP and payables processes for faster transactions, improving cash flow management through automated invoicing and collections.

2. FP&A automation tools

Financial planning and analysis (FP&A) automation tools are designed to help finance professionals boost the ROI of their financial strategizing.

FP&A automation software can help you:

• Use ML algorithms to create longer-range and lower-variance SaaS forecasts
• Make wise long-term budgeting allocations
• Pick the perfect SaaS pricing strategy for your company’s unique business goals

SaaS companies that operate on a subscription basis are beholden to unique accounting standards, and there’s also a type of software that can help you automate compliance.

3. SaaS tools for recurring revenue management

SaaS companies that operate on a subscription basis rather than one-off license sales have a unique set of financial realities to contend with.

Rather than just worrying about one-off transactions, recurring revenue companies need to manage an entire customer lifecycle for every single customer. In addition to GAAP, they’re also beholden to ASC 606, which calls for extremely specific revenue recognition protocols to be followed for every single customer relationship.

That’s a lot to stress over, and a lot can go wrong–which is where subscription automation tools come in. A recurring revenue management tool is a software solution meant to help SaaS businesses manage and optimize their subscriptions.

Accounting suites with subscription management functionality can:

• Automate billing and subscription management processes, such as automating renewals or helping a customer with a refund
• Ensure compliance with regulations in the United States and elsewhere
• Track churn and retention rates to measure and enhance customer loyalty

All three types of software are extremely useful in helping SaaS CFOs enhance different elements of their business performance and financial management. Sage Intacct is a full-service accounting automation solution that rolls all these products into one.

Now that you know more about the different types of automation tools on the market for SaaS CFOs, let’s see how you can maximize trust in your software vendor.

How to select the right automation software to maximize trust

When selecting an automation tool for your company’s finances, it’s only natural that you’ll want to maximize different layers of trust: trust in your vendor, their products, and the underlying processes and corporate culture that shapes those products.

It bears repeating. When you select an AI accounting suite, you’re trusting it to help you with extremely delicate and important financial workflows. One wrong move could seriously cost you.

So you need to do everything you can to make sure the trust factor is taken care of upfront. There should be no “mid-deployment jitters” if you’ve taken the time to carefully vet your vendor and their products.

Below is a checklist of things you should look for to ensure the trustworthiness of your chosen software vendor.

Vendor trust checklist

We realize that trusting your key financial workflows to AI isn’t easy. In fact, it probably goes against your basic instincts somewhat.

That’s why we’ve compiled this checklist of 7 essential things to look for to gauge the trustworthiness of your software vendor.

1. Evaluate their reputation and track record in the industry. Look for reviews from users in your specific industry, and make sure they have specialized experience helping clients like you.
2. Make sure the vendor complies with all applicable data security and privacy regulations.
3. Pay close attention to the caliber of their customer support: support speed, quality of assistance, and frequency of support needs should be taken into account.
4. Be sure that the software emphasizes putting you in control. Remember, AI is a partner, not a replacement. It’s very important that your vendor be on board with that.
5. The company should be customer-centric. Do they actively take measures to get as much customer feedback as possible, helping inform their product development?
6. Do they offer free product demos? This is an important low-risk way to gauge whether a solution is right for you.
7. What level of deployment assistance and post-deployment help do they offer? This is a huge aspect of maximizing success with these tools.

Even if you trust AI, your team members and fellow stakeholders might not. How should you handle that?

Addressing common concerns about automation tools

Overcoming resistance to automation is crucial for successfully implementing cloud accounting in your department. These tools are extremely powerful, but employee resistance or hesitation can strain the learning process and slow down your success in the long run.

Dispelling misconceptions about automation tools helps to ensure widespread acceptance and utilization among employees. Most importantly, be sure to spend time addressing fears of job loss due to automation. Clearly communicate that the role of this technology is a complement, not a replacement.

Highlighting the benefits and opportunities of automation can inspire enthusiasm and buy-in, both for employees and other stakeholders. How can you help your team appreciate what’s really at stake?

Financial process automation: appreciating the stakes

Automation tools play a crucial role in streamlining complex financial workflows that frequently produce a lot of stress for accounting employees, and stakeholders all over your company as well.

This sets up the competing stakes that we mentioned earlier: the risks of adopting AI versus the risks of not adopting it.

You should clearly convey the risks involved in not using AI while giving equal emphasis to the rewards at stake for innovating with cloud-based tools. We’ll use SaaS budgeting as a brief example.

Setting quarterly and annual budgets for a software company is an intensely collaborative process. In a manual accounting department, the collaborative elements alone are a massive headache, and that’s before you even get to the dollars-and-cents complexities of budgeting.

Cloud accounting software, on the other hand, makes collaborative budgeting seamless. So instead of wading through email chains, you can spend time making profitable allocations for the months ahead. The cumulative benefits of that will quickly add up, and soon you’re likely to see a significant leap from your pre-automation performance.

That’s just one small example, but they’re everywhere in your department if you just take a moment to look for them.

At Sage, we know the value of trust

At Sage, trust is the cornerstone of our business. We fully understand the level of trust it takes to allow AI to assist you with your crucial financial processes. We know exactly what’s at stake for your company, which is why we do everything in our power to develop products you can place your trust in.

Below are some practices and commitments that help us produce world-class cloud accounting products.

We have customer advisory councils comprised of clients.

This allows us to maintain an ongoing pipeline of real-time feedback about how our products are helping clients just like you.

Sage works extensively with AI auditing teams.

Our commitment to extensive AI auditing helps ensure that our products are free of bias and that our product development practices meet the highest possible standard.

We maintain an international employee advisory council. 

Our employee advisory council is made up of Sage employees all over the world and provides a crucial counterpoint to our customer advisory council.

Together, they help us maximize our internal and external communication to stay informed and deliver superior value to our customers.

Our commitment to trust ensures that our customers can rely on us to deliver automation tools that live up to even the most complex accounting situations.

Embrace automation with tools you can trust

There’s a lot at stake when you decide to switch to automation accounting at your company. But there’s just as much risk, and arguably more, in sitting on the sidelines while your competitors adopt these tools and get ahead.

To see how AI can streamline your department, check out our infographic explaining how AP automation streamlines SaaS finance.