Do you have a comprehensive view of your Accounts Payable function?
Probably not. In fact, there's a good chance you don't know your company's total cost of paying its bills.
In most companies, CFOs pay little attention to the Accounts Payable process. It's considered overhead and part of the cost of doing business. However, if you knew over a third of your invoices are prone to errors, and the price to process those erroneous invoices is close to 10X higher than processing a "clean" invoice, you would want to fix this inherently broken process; right?
If your answer is yes, as it should be, there's good news in the form of Accounts Payable automation. With automated Accounts Payable functionality, invoices process themselves. This means your AP staff can free themselves up from pushing papers and answering vendor payment inquiries to being a proactive resource for improving overall financial performance.
Accounts Payable: The Strategic Resource
AP teams dedicated to manual paper-invoice processing tend to underperform and cannot focus on tasks that improve the company's profitability and cash flow.
With automation, you can free up your AP team's capacity to focus on those tasks, as well as lead higher-value initiatives, like:
- Transition vendors from outdated paper invoicing to electronic-based transactions
- Analyze and pinpoint core reasons for recurring invoice errors
- Help enforce contract compliance
- Identify discounted early payment opportunities
- Expand timely and accurate processing of payments to thousands of global vendors in their preferred currencies and localized payment methods
Automating the Accounts Payable process also supports better alignment between your AP and Procurement teams, which tend to operate in silos. Consider these obstacles your AP and Procurement teams face when the invoicing process is done manually:
- Delays in approving purchase orders
- Failure to work with preferred suppliers at negotiated rates (remote offices)
- No way to automate invoice matching with purchase orders and receipts
- Failure to identify early payment discounts
- Inability to control and monitor corporate spending
Automation fixes these broken processes, streamlines payables operations, strengthens compliance with your procurement policies, and reduces the overall costs of AP operations.
Value to Vendors
AP automation doesn't just help you as a buyer but also benefits your vendors. By transacting with you electronically, vendors can spend more time fulfilling orders and spend less time troubleshooting payments and transactions.
One significant advantage to automating AP is rapidly matching POs and invoices, known as PO flipping. When you establish electronic connections with your vendors, you can deliver purchase orders electronically. Vendors "flip" those orders to create matching electronic invoices. Matching is automatic, and invoices are approved for payment without further validation.
A self-service portal allows vendors to view their invoices and payment statuses without contacting you directly. Add support for the most popular payment options – ranging from credit cards and ACH to wire transfers and popular digital payment platforms – and your vendors will appreciate how easy it is to do business with you.
New Ways to Manage Cash
Automation can free up your AP staff to become valuable assets for managing cash and working capital. That's possible when an electronic invoice can be automatically matched and immediately approved.
Freed from the long and painstaking process of processing invoices manually, the AP team can pay attention to payment terms and take advantage of the most lucrative early payment discounts that exceed the hurdle rate set by your treasury group. Furthermore, with dynamic discounting, these opportunities are no longer static. While a traditional 2/10 net 30 discount (also known as a 2% 10 net 30 discount) means that on the 11th day, the 2% discount is expired, that changes today, with many suppliers extending the discount period up to the due date on a sliding scale.
AP: From Overhead to Strategic Resource
Suppose transaction automation and aligning AP with procurement remain low priorities on a corporate level. In that case, it's likely that key stakeholders don't fully comprehend their real value and may not realize the consequences of an AP staff primarily focused on managing transactions or the hidden costs related to off-contract spending.
In building a business case, the operational cost savings related to automating the Accounts Payable process, while dramatic, represents only one part of the return on investment. Even greater value comes by expanding your company's strategic programs, freeing up working capital, and enforcing contract compliance.
If you still aren't convinced AP automation should be a corporate priority, imagine this: Your AP team is free to focus more on business analysis and cash-flow management, as opposed to wasting time on mundane data entry, fixing transaction errors, and responding to vendor inquiries. With automated AP solutions, your company's Accounts Payable initiatives evolve from a cost center to a strategic asset, contributing to your bottom line.