Welcome to this week's edition on the CFO tech stack!
In case you missed last week’s article on Accounting software, you can grab that right here.
Today, we’re going to discuss the importance of Accounts Payable (AP) software - one of the most disrupted areas of Tech stack - Finance & Accounting this last decade!
We got a lot to share, so let’s dive in!
Before we talk about why you need AP software, let’s talk about what life looks like without one.
A vendor sends you a bill via email that is due in 7 days.
You download the bill from your email, log into your accounting software, and upload your bill.
You enter the vendor…amount…invoice date…due date…the GL account…and any descriptions related to the bill.
You then reach out to the department head in your company to ask for approval, and after a few follow-ups, you receive approval.
You then log into your banking system, enter the banking details to process an ACH/wire and send payment.
To be extra safe, you reach out to your vendor and share proof that payment was made (oftentimes referred to as “remittance advice”).
Man…those were a lot of steps!
Thankfully, with AP software, a lot of that process is simplified.
Let’s now go through the same steps we mentioned above, but this time with AP software.
A vendor sends you a bill via email that is due in 7 days.
This time…instead of downloading the bill, logging into your accounting software, and uploading the bill…you simply forward the bill to a special email address.
Voila! Now the bill is inside your AP software, which automatically syncs to your accounting software.
But the magic doesn’t stop there. Most AP software have gotten so good with their OCR technology that they can read the details of your bill, and automatically pull out the relevant fields, such as:
- The vendor name
- The invoice date
- The due date
- The description
- The amount
and if the vendor had already sent a bill in the past? The category and/or class would be synced as well.
But wait…we’re still not done! Because the heart and soul of AP software revolve around n the ability to assign each bill to the relevant department head for approval. Approvers can log onto the platform, review the details of the bill, and approve as needed.
For the final icing on the cake, you can invite your vendors to complete their ACH/wiring details directly on the AP platform, giving them insight into the status of their bill, and allowing you to process payment with the details that they enter.
Ahh…much better.
There have been a lot of software providers that have sprung up in the last decade or so, leaving you with plenty of options.
Here are our favorites:
Our favorite: Ramp
What we love about Ramp is that it’s so much more than just AP software.
They also have virtual credit cards, and expense reimbursements.
The best part? It’s entirely free.
Learn more about Ramp over here
Runner up: Bill.com
Bill.com was one of the first AP software in the space, and their platform is great.
Although they charge a fee for each user, to us the cost is worth it.
Honorable Mention: Airbase
Airbase is another popular vendor in the space that we feel deserves an honorable mention.
Similar to Ramp, they also offer expense reimbursements and virtual credit cards.
Learn more about Airbase over here
It doesn’t matter what AP software you use - what matters is that you use one.
And nowadays, many of them are entirely free to use.