The Rising Trend of Accounts Payable Automation Adoption & Implementation

The Booming AP Automation Market

Worldwide, accounts payable automation is a $3 billion market, and it’s growing rapidly at a rate of 12.3% or even as high as 16% according to recent estimates. Organizations across the globe are realizing the immense benefits that accounts payable automation can provide in terms of cost savings, efficiency gains, and better financial control.

Poised for takeoff in India

While the adoption rate of accounts payable automation in India is still less than 10%, this modest percentage holds significant potential. The fact that it is growing rapidly is an important trend to watch. Unlike the U.S. market where adoption percolated from the top down, with large enterprises implementing these solutions first, India is witnessing a different pattern.

The choice of new age agile companies

In India, a lot of the adoption is being driven by small to medium-sized organizations and startups led by a new generation of entrepreneurs. These businesses want to keep their backend teams lean and powerful, and accounts payable automation allows them to achieve this goal. As a result, instead of the classic pyramid shape, India is seeing a more even distribution of adoption across enterprise and smaller organizations.

BFSI and Startups are the early adopters

While adoption is happening across industries and organization sizes, certain segments are leading the charge. The banking, financial services, and insurance (BFSI) industry, as well as startups, are among the biggest adopters of accounts payable automation solutions. However, encouraging trends are also emerging in sectors like services, logistics, and manufacturing, as companies realize that having a robust ERP system alone is not enough; they need to digitalize processes to meet their specific requirements.

Complementing both mature and basic ERPs

Interestingly, almost 80% of accounts payable automation users have already implemented a reasonably mature ERP system, such as variants of SAP, Oracle, Microsoft Dynamics, Infor, or other popular ERPs. At the other end of the spectrum, some organizations are using smaller ERPs like Tally and are exploring accounts payable automation as a complementary solution.

The Two Implementation Approaches

Indian organizations are taking two main approaches to implementing accounts payable automation:

Focused Start: Midsize and smaller organizations often begin by automating the core processes related to vendor and employee spends, such as accounts payable and travel and expense management. They then gradually add more modules over time.

Comprehensive Implementation: Larger organizations, with more complex and cumbersome approval processes, frequently opt for a comprehensive implementation, adopting multiple modules of the spend management suite simultaneously. This approach allows them to realize the full benefits of automation from the outset, without the need for multiple rounds of approvals and implementation phases.

As the accounts payable automation market in India continues to grow, it will be interesting to observe how these adoption trends evolve and how organizations across industries leverage this technology to streamline their financial operations, improve efficiency, and drive better business outcomes.