SMB Accounts Payable: MSP Profit Opportunity?
Accounts payable (AP) is one of the most basic processes every business undertakes. Plus, improvements in AP efficiency and cost can have a huge impact on a company’s bottom line — especially in the case of SMBs, which need to run at maximum efficiency just to stay competitive. Investments in AP efficiency can provide significant hard and soft ROI. Here’s where managed services providers (MSPs) can potentially assist SMBs.
A recent report from Aberdeen Group, “Cloud Invoice Management and the SMB,” details the key pressures driving SMB interest in AP improvement, as well as their AP technology preferences. A brief review of the study’s findings will help illuminate what types of services and benefits MSPs serving an SMB client base should include in their managed AP offerings.
Operational Efficiency Beats Cost as Top Pressure
Although they are somewhat interrelated, SMBs cited stakeholder demand for operational efficiency as a pressure driving interest in AP improvement (64%) at a rate roughly 20% higher than corporate mandate to reduce costs (53%). The only other pressure mentioned by more than one in five SMB respondents was lack of predictability of cash flow (26%).
This is good news for MSPs. While obviously cost reduction is a key consideration of any managed services implementation, SMBs are more likely to be focused on operational efficiency, giving MSPs some leeway to focus on solutions that provide the best efficiency possible without having to sacrifice functionality in order to cut costs.
AP areas where SMBs see the most benefit from improvements include automated approval, e-payments, paperless supplier communications, AP/procurement collaboration, and automated invoice matching.
SMBs Most Likely to Focus on Document Imaging
When asked what AP technologies they are adopting, almost half of SMB respondents (49%) said document imaging, while another 42% said scanning. This shows that automation of electronic image creation and storage is of the highest importance to SMBs in terms of AP improvement. Smaller percentages cited technologies such as electronic approval workflow (34%) and electronic procurement solutions (25%).
Almost 1 in 3 SMBs Prefer Hosted AP Solutions
A combined 28% of SMB respondents prefer their AP solutions hosted by a third-party or dedicated single-client server (10%), hosted as part of a networked service (10%), or hosted by a third-party or shared multi-client server (8%). Another 49% prefer AP solutions that are installed in-house or on-premise (49%), while 24% have no preference.
These numbers offer more hope than they may appear to at first glance, as MSPs can still play a vital role in implementing, integrating and maintaining in-house solutions. In addition, the current and preferred rates for in-house AP solutions are identical, while there are substantial gaps in the current and preferred rates for hosted AP solutions (6% vs. 10% for dedicated single-client servers, 3% vs. 10% for networked services, and 2% vs. 8% for shared multiclient servers). Thus the growth potential is much greater for these hosted solutions.
So MSPs servings SMBs should not overlook the potential for providing managed AP services. Sometimes the simplest things in life are best.