AP automation: tips for long term success in the next normal
Accounts payable automation is a critical differentiator in today’s marketplace, and it positions organizations for long-term success as we navigate the next normal.
That statement is not an oversimplification, but rather plain and simple logic. While accounts payable (AP) departments have historically been slow to modernize processes with technology, as we all know, 2020 shook up nearly every corner of our businesses.
And AP departments — whose operations directly affect the bottom line along with sales and accounts receivable — have had to retool critical functions in real time to support remote workforces, navigate supply chain disruption and support customer relationships in an entirely new way.
This is not new information. But what organizational leaders are quickly recognizing is this: remote work is a business model that isn’t going anywhere.
Four key components critical to succeeding in this next normal
The next normal extends beyond the business continuity measures we’ve had to instantly adopt in every industry. Rather than a temporary measure, like many thought at first, “… among CFOs and finance leaders, 49 percent say remote work will become permanent for some roles,” according to a recent Forbes article.
And the urgent, overnight shift in operations was telling in its level-setting of the correlation to the state of our organizations’ digital maturity and its impact to organizational health.
It instantly revealed that organizations that had already started to leverage cloud platforms and AP automation have found it much easier to adjust to remote operations and succeed in the new digital landscape than their counterparts that are still dependent on legacy platforms and manual processes.
This means that expediently transforming manual AP processes with digital- and cloud-first AP automation solutions has never been more important as we navigate an uncertain global marketplace.
Why? Here are four reasons.
1. Strengthening supplier relationships
The disruption faced globally in supply chains illuminates relationships that are healthy and mutually beneficial, versus those that put one party at risk. And in efforts to protect cash flow, supplier inquiries to accounts payable departments are up 22 percent, according to IOFM, taxing the time of AP workers who are already stretched thin.
Supplier inquiries to accounts payable departments are up 22 percent.
With cash flow being a top concern for both organizations and the suppliers they depend on, on-time invoice processing is a key way to strengthen supplier relationships. This is exponentially easier with AP automation that includes key integrations between ERPs and other financial systems as well as all supporting documentation.
With AP automation, digital invoices are available with a few clicks from your ERP, with keywords that indicate where they stand in terms of approvals and payment. This empowers staff with the ability to respond to inquiries immediately, resolve any issues rapidly and consistently keep invoices within payment terms.
This reduces the need for inquiries, which makes everybody happy.
Additionally, rather than relying on manual accounts payable processes for keying invoice data, forwarding invoices for approval and chasing down key documents and information, digital workflows that begin by digitizing and aggregating invoices enable critical data to work better for you. Regardless of how you receive them, whether by mail, e-mail, fax, portal, electronic data interchange (EDI) or file transfer protocol (FTP).
From capture to validation, AP automation reduces the number of times a transaction is handled, reducing invoice approval cycle times from days or weeks to hours.
2. Improving first-pass match rate, straight-through processing percentages and cost per invoice
It starts with digitally capturing invoices at their sources, whether they are scanned or delivered electronically. Intelligent data capture should automate the extraction of data contained in the invoices and leverage corresponding ERP data to make invoices available for processing quickly – without the need to manually key information.
This enables AP staff to focus on exceptions, not on searching for information and supporting documents. This technology also allows remote staff to have immediate access to invoices and related content right from their ERP application, email inbox or smart phone.
“By automating AP and digitizing invoice data, SMEs can reallocate time and employees to focus on other aspects of the business, streamline processes and increase the number of invoices processed per full-time employee by 90 percent,” according to a recent Forbes article.
It also significantly shortens processing times and cost per invoice.
“A business with non-automated invoicing is paying an average of $10 per invoice. Businesses using automated invoicing average $2.07 per invoice,” according to Forbes. “By implementing AP automation, companies can manage their invoices, suppliers, workflows and spend management metrics remotely, securely and from anywhere in the world.”
The differentiating advantages of better cash controls cannot be disputed in today’s uncertain marketplace. And there is simply no way to keep up with today’s digital-first advantages if your AP operations are largely manual.
3. Improving visibility for leadership
Organizations need to operate with the agility that comes with a digital environment in order to appropriately manage rapidly evolving risks. This requires enhanced visibility into operations, cash and spending as well as having a valid pulse on the health of key supplier relationships.
But today’s accounts payable leaders struggle to provide visibility into invoice-related information to senior management, who rely on accurate, timely information to make the best decisions for the organization, according to IOFM.
Data silos and manual processes certainly impede the ability to access a complete view of this critical data. This contributes to a landscape of inaccurate, incomplete or out-of-date invoice information. And it makes controlling cash and spending difficult.
The right AP automation solutions provide interactive, graphical reporting dashboards and workflow rules that enable managers to spot bottlenecks before they become problems — as well as ensure they are aware of early payment discount offers nearing expiration. This transparency enables leadership to have instant access to real-time key performance indicators (KPIs) and critical metrics, even from their mobile devices.
It’s all about providing the data insights and flexibility needed to manage challenging ebbs and flows in volume and adjust to changing market-driven needs.
4. Risk mitigation
With 88 percent of accounts payable staff working from home with newly retooled operations, 25 percent of accounts payable leaders are concerned about growing fraud and compliance risks, according to IOFM.
25 percent of AP leaders are concerned about growing fraud and compliance risks.
AP automation removes much of the burden of risk of fraud by applying rules and integrated digital workflows to ensure visibility, consistent record keeping and secure retention of documents. Additionally, AP automation delivered as part of the right content services platform offers ironclad security, protecting every data state, whether at rest, in transit or in use.
The good news? You can quickly automate AP with today’s tools and experts to guide your journey
With rapidly emerging content services features transforming the capabilities of today’s AP operations, many organizations are choosing to move to cloud and managed services models for leading-edge AP automation.
Managed services for AP can take on the critical maintenance and optimization of your evolving AP solution, helping your organization lower the costs of administering and supporting your solution, while bringing a variety of resources with the most skill to continually optimize it.
This is a significant advantage in a rapidly evolving digital landscape. It means that rather than dedicating your in-house resources to support key areas including administration, integration and solution configuration and development, managed services provide these expert resources on tap.
AP automation is a journey, not a destination, and its momentum is accelerating
AP operations not automated? Semi-automated?
The time is now to get on that train as it is speeding up. This digitally dependent, remote-workforce world is not temporary. It is the next normal.
“Among CFOs and finance leaders, 40 percent say they plan to accelerate the use of automation as they transition their remote workforce back to on-site work,” according to Forbes.
40 percent of CFOs and finance leaders say they plan to accelerate their use of automation.
The right AP automation solution transforms the strategic capabilities of AP operations — and critical processes that were once time-consuming, frustrating and prone to errors and delays become those that yield transparency and better cash controls, all while alleviating risk.
A year ago it might not have been a top priority, but today, the return on investment for accounts payable automation has never been better.
This article originally appeared on Hyland.com. Inpute Technologies are proud partners of Hyland, a global provider of content intelligence solutions and services.
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