To realize the full potential of your AP department, you need to automate the full procurement workflow, including electronic payments, the “last mile” in B2B transactions.
Whether we like it or not, a majority of companies still use paper checks to pay their suppliers, and that’s a huge waste of time and money. Not only does a company bear the cost of the checks themselves, postage, and processing; the company is also left with little to no visibility into their spend. I have often commented on the inefficiencies inherent in paper and manual processes and that’s true from the beginning of the procurement process through the invoice receipt and approval process right through to payments.
But an increasing number of companies are realizing the actual costs of maintaining the status quo and are looking to change their P2P processes through automated solutions. We’ve seen this with the increase in e-invoicing acceptance and usage, where companies have seen the benefits in greater efficiencies, reduced costs, and better use of resources for more strategic initiatives. But the one missing piece…the one item that will enable AP to cross that “last mile” in B2B transactions has been the payment process itself.
There are five very distinct reasons to look at automating this step in the P2P process:
- Cost – Not only will you experience an increase in process efficiencies, you’ll likely also see an uptick in terms of rebate/discount capture.
- Compliance – Simply by minimizing human intervention, you minimize human error; and that can go a long way toward ensuring price and contract compliance.
- Fraud risk – Check fraud is a real concern for many businesses. E-payments cuts down on that risk significantly with a system of checks and balances in place to alert users to exceptions (intentional and unintentional).
- Supplier relations – Besides the goodwill resulting from accurate, on-time payments, visibility through supplier portals gives internal and external stakeholders insight into payment status, but more than that: visibility from the supplier side means everyone has insight into payment status.
- Visibility – Improving visibility into cash flow and cash management is a major goal for CFOs and other finance executives. Plus, easier access to data ensures smarter decision making. insight into invoice workflows, and easier access to the data needed for smarter decision-making..
When it comes to that “last mile” payment step, make sure to insist that your e-payables solution provider has the ability to offer a holistic approach to disbursement. That’s because, even after you automate, you will likely still work with suppliers who only accept payment by check, especially when it comes to infrequent or low-cost purchases that fall under the indirect procurement category. However, rather than handling those accounts internally, you should instead ensure that your provider offers 100 percent disbursement, whether through ACH, virtual credit cards, or paper checks.
Above all, look for a provider that can offer an integrated, end-to-end solution that automates all back end AP and payment processes; a solution that reduces or eliminates all of your AP and payment costs.
See how to transform your entire P2P process, from the first step to the “last mile.”