Supply-chain managers have long faced challenges when it comes to accounts payable and procure-to-pay (P2P) processes. Despite the shift to digital taking place across all industries, many organizations still rely on manual, paper-based AP processes to approve and pay invoices. This creates a slew of problems — including lack of control around timing of payments to suppliers, invoice exceptions that take up precious staff time, and poor visibility for both your finance team and suppliers.
The good news is that by moving toward digital in your organization’s accounts payable process, you can eliminate the slow and error-prone process that is the root cause of many problems with your suppliers. By doing so, you will cut costs, optimize cash flow, get real-time visibility into outstanding payables and head off potential supply-chain disruptions before they occur.
Eliminate Invoice Exceptions
In an ideal world, invoice exceptions would be rare. But for many organizations still relying on outdated AP processes, that’s simply not the case. In fact, a recent study from Ardent Partners found that 62% of AP professionals agree that invoice exceptions give them the biggest headaches in their day-to-day.
Not only do invoice exceptions take a lot of time to resolve, but they also result in inconsistent payment cycles.
As a supply-chain manager, you may understand why AP wants to eliminate invoice exceptions. But you might wonder why you should care.
Imagine supplier invoices are on hold because the goods haven’t been received and AP can’t perform a three-way match. In this scenario, many suppliers will place customers on a credit hold. Some may even stop shipping additional goods altogether.
Even if things don’t get that extreme, your suppliers aren’t being paid in a timely fashion. In the best-case scenario, this leads to poor supplier relationships and instability for suppliers that find themselves in tough cash positions.
Scale Early-Pay-Discount Opportunities
While the COVID-19 pandemic disrupted supply chains around the world, not every organization felt the same level of pain. Those that had automated processes using software-as-a-service (SaaS) platforms were able to rapidly transition to a remote workforce without too much trouble. In the area of AP, that meant employees could handle invoices from anywhere — and at scale.
If a finance manager wanted to pay hundreds or thousands of suppliers early to capitalize on an early pay discount, it wasn’t a problem. On the other hand, if optimizing for cash flow was the goal, holding payment until the last possible day within terms was easy to schedule.
Provide Visibility Into AP and P2P Processes
The more visibility you have into your supply chain, the easier it is to predict cash flow, identify potential disruptions before they occur and make data-driven decisions. Unfortunately, when you’re relying on paper-based invoicing workflows, it’s virtually impossible to see where things stand at any given point in time.
By automating AP/P2P processes, you can gain 24/7 visibility into the entire invoice process. This eliminates surprises and improves business intelligence, which enables you to continuously optimize your operations by leveraging real-time insights.
If your organization is still using paper-based AP workflows, it’s impossible for your supply chain to be as efficient as it can be. By investing in tools that automate the AP process, you can create a digital connection to your suppliers which enables you to:
- Avoid supply-chain disruptions by sidestepping being put on a credit hold or cut off altogether;
- Streamline supplier data management by having all relevant data (e.g., W-9 and bank account information) in one place;
- Improve supplier relationships by providing visibility into payment status and making sure they’re paid on time; and
- Ensure AP, internal buyers and department managers are only spending time on value-adding activities.
Add it all up, and AP automation is an easy way to make sure your supply chain keeps humming along efficiently, while increasing productivity and profitability.
Shan Haq is vice president of corporate strategy and development at Transcepta, a cloud-based, procure-to-pay platform.