The 7 Biggest AP Automation Challenges After a Merger or Acquisition

Organizational growth can be accelerated by acquiring or merging a like-minded or complementary company. The benefits of a merger or acquisition can be many, such as expanding company reach to new regions or audiences, helping gain more market share, improving shareholder value, filling product or service gaps, and reducing operational costs. 

Often confused or lumped together, there are some unique differences between mergers and acquisitions, however the practice is often referred to as one: M&A. Investopedia says a merger occurs when “two separate entities combine forces to create a new, joint organization.” An acquisition is when one entity takes over another, eventually folding departments and teams into the acquiring organization. While the merger and acquisition market has yet to rebound to pre-covid levels, in 2023 alone, the total global deal volume was $2.9 trillion.

Post-merger or acquisition consolidation in AP

Combining, consolidating, or aligning existing teams, processes, technology, and operations after a merger or acquisition can be highly complex and time-consuming. A multi-entity organization also faces similar challenges. Due to the financial implications and extreme scrutiny on the balance sheet post-acquisition or merger, the accounting and finance departments are essential to focus on after the deal closes. 

For financial leaders, showing economies of scale by streamlining back office functions, such as in Accounts Payable (AP), is critical. And, if one company is farther along its digital transformation journey than another, achieving true AP automation across the new structure can be difficult. A 2023 IFOL survey found that more than half of accounts payable teams (56%) remain only partially-automated, and 82% still manually key invoices into their accounting system.

Some common post-merger or acquisition obstacles include demonstrating value, providing financial visibility, inconsistent processes, concerns about data integrity, and duplication of workstreams, systems, or tools.

This article outlines the top seven challenges a CFO will face post-merger or acquisition in the AP department and provides potential solutions.

The top AP automation challenges post-merger or acquisition

1. Pressure for the CFO to demonstrate value quickly

The acquiring company must prove to investors, shareholders, and other vital stakeholders why the deal was advantageous. Being able to show quick wins internally is essential, and aligning the AP teams can financially impact the entire organization. If not done well and promptly, this could negatively impact profit margins.

2. Lack of visibility into teams and day-to-day operations

With different systems, teams, and processes, there is no single, real-time view of overall cash management and financial reports. This can mean a lot of manual data collection and analysis, which can be highly time-consuming and delay critical business strategy and decision-making.  ‍

3. Too many systems with a lack of integration options

Often, companies involved in an acquisition have different accounting systems and processes. Integrating these systems can be complex and time-consuming, leading to delays and errors in AP operations. When operating as one team or department, this can result in unavoidable manual work and data entry. The long-term impact of a “Frankenstein” tech stack is not just financial; it can create employee burnout and churn, critical errors, issues with vendor relationships, and more.

4. Duplicate vendor records

Merging two AP departments may result in duplicate vendor records within various AP systems. While consolidating the tech stack can help provide visibility across the records, resolving these duplicates can require manual work and cause confusion or errors like over-billing, paying too late, or duplicate payments.

5. Inconsistent AP processes

Each company may have its own AP processes, workflows, and approval hierarchies. These processes can be manual, somewhat automated, or fully automated. However, uniting these processes post-merger or acquisition can be challenging and lead to more inefficiencies and bottlenecks. Consistency in quality and the pace of invoice processing can also go down. Human expertise is siloed, and the specialization of specific invoices or vendors is also causing delays.

6. Issues with data accuracy and completeness

Ensuring the accuracy and completeness of AP data becomes critical after a merger or acquisition. Inaccurate or incomplete data can result in payment discrepancies, compliance issues, and financial reporting errors. This can profoundly impact the bottom line for the overall organization and financial stakeholders. 

7. Issues with productivity

A merger or acquisition can hurt team morale and performance. Confusion, inconsistency across teams and processes, and uncertainty about the future can impact team productivity and potentially cause employee churn. If a company has primarily manual AP processes and limited or no automation, this lack of engagement could cause further issues and delays. 

‍

Overcoming challenges with AP automation and AI solutions

The consolidation of AP teams, processes, and technology can be complex. However, AP automation solutions can significantly impact the overall timeline to achieve operational efficiency post-merger or acquisition. A few key areas financial leaders should focus on are:

Consolidation of systems and tools

Consolidating AP systems and tools is critical in streamlining operations post-merger or acquisition. Often, organizations find themselves grappling with disparate technology across different entities, leading to inefficiencies and duplicative efforts. Businesses can standardize processes, data formats, and reporting mechanisms by centralizing AP systems onto a unified platform for invoice processing and bill pay. This consolidation simplifies workflows and enhances visibility and control over financial transactions. Moreover, it facilitates seamless integration with other enterprise systems, such as ERP software, enabling smoother data exchange, improved decision-making capabilities, and real-time analytics.

Investment in new technology

Investment in new AP technology is essential for staying competitive and future-proofing operations. Traditional manual processes are no longer sustainable in today's rapidly evolving business landscape. Embracing innovative solutions, such as end-to-end invoice processing and payments, can revolutionize how organizations manage their AP function. These solutions offer real-time data access, enhanced security features, and scalability to accommodate growing transaction volumes. Furthermore, they empower finance teams to shift their focus from mundane tasks to value-added activities, such as strategic analysis and vendor relationship management.

Leveraging AI to augment the team

Leveraging AI is a game-changer that enhances efficiency and effectiveness to impact the AP team positively. AI-powered solutions can automate routine tasks like invoice processing, expense categorization, and payment approvals, reducing manual errors and accelerating cycle times. Machine learning algorithms can analyze historical data to identify patterns and trends, enabling predictive analytics for cash flow forecasting and vendor management. Additionally, AI-driven insights provide valuable intelligence for optimizing payment terms, negotiating discounts, and mitigating risks. By adopting AI, AP teams can operate more efficiently, minimize costs, and drive greater business value in the post-merger or acquisition landscape.

‍

Vic.ai, an autonomous finance platform

Autonomous finance is a newer approach for AP operations. The concept of AP autonomy is leveraging AI to handle end-to-end invoice processing and payments, reducing human intervention, manual approvals, and data entry. 

Vic.ai is an autonomous finance platform for invoice processing and bill pay that provides CFOs with a single view for complete control over the AP function and enables the team to efficiently onboard new companies, divisions, or entities, while easily configuring approval flows and user roles. Seasonality is also easier to manage, as an increase in invoice volume can be met with the existing team and technology, without changing headcount. 

Scalability is more easily achieved by leveraging AI. With Vic.ai, AP teams are processing invoices 80% faster with 5x the productivity of each team member, allowing more time to focus on higher-value, strategic activities. 

HSB, a large real estate company, has saved 25,000+ hours per year for their finance employees through autonomous AI. Autonomous invoice processing from ingestion to payments means more money is saved per invoice, and there is less risk of errors and fraud. One large US distribution company now processes 76% of invoices with no human touch at 99% accuracy.