- Automate Accounts Payable first in your total automation journey
Automate Accounts Payable first in your total automation journey
Sure. The goal is process improvements and automation across your purchase-to-pay (P2P) process. But starting and committing to an entire transformation in one go is not the only approach. Read more to learn how you can start with Accounts Payable (AP) automation first and use it as a way to kick off your initiatives and ensure the best chance for ROI.
Total P2P deployments can create unforeseen problems
In a recent webinar and with the Institute of Finance & Management (IOFM), we discussed the problems that often arise when trying to deploy an entire purchase-to-pay (P2P) solution all at once. These frequent issues include costs, complexities, unforeseen costs, and poor project management.
Once deployed, businesses also face adoption hurdles like users barely using the new tool or even worse, not using it at all. And if that solution happens to have a broader, non-intuitive user interface, chances are your users won’t quickly adopt it. That means users are back to old habits, like taking work offline, using Excel to organise and analyse, and making it nearly impossible to get the ROI wanted from their P2P deployment.
Moral of the story: a poorly implemented full P2P solution can create just as many new headaches as efficiency gains. Often, one of the biggest challenges of a P2P deployment is that it spans across two vital business functions—procurement and finance. Because of this, there can be a lack of clarity or consensus on who “owns” the project. Adoption hurdles and unforeseen costs can worsen this divide, and without alliance between the two departments and clear executive level support, the P2P deployment may not reach its full ROI.
Automate AP first, not the entire P2P
So, what if we started with automating some of the manual processes that consistently drain critical resources? By automating portions of the AP process, you can establish a fast and straightforward method for proactively eliminating unhelpful complexity and preparing to fund beneficial costs through the reduction of bad ones.
Starting with AP Automation doesn’t require as much IT interference and therefore means you can easily implement your automated solution and hit the ground running, supporting quick wins for your business, like:
quicker time to value
operational efficiencies from day one
and more control during tumultuous times.
4 processes that AP can automate straightaway
AP automation refers to the use of digital tools to increase the number of invoices and payments processed in a “touchless” manner as often as possible. Ideally, a business could process nearly all their invoices, 95% or even higher, without human intervention.
Automating these 4 steps can go a long way in addressing the common challenges encountered in P2P deployments:
1. INVOICE RECEIPT: consolidate the receipt of all invoices in any format from suppliers – including EDI and true electronic invoices, emailed PDFs and even paper – in a central system
2. CAPTURE: Process all invoices to extract the needed information (including OCR for paper invoices) and store the data in the system
3. VALIDATION & APPROVAL: Confirm that the extracted data is accurate against the document and reference data (e.g. matching invoices against Pos and goods receipts), then routing for coding and final approval
4. SETTLEMENT: Issue a payment to supplier or raise an issue (like a duplicate charge) for correction before release of payment
(Read more in our report “’Backing In’ to Improve Procure-to-Pay (P2P) ROI)
3 Challenges solved with an “AP automation first” approach
Challenge 1: You lack visibility of your purchasing habits and supply base
When you capture 100% of your invoices digitally and store them in a unified system, you can analyse the content of those invoices. This visibility supplies insights into your organisations buying practices, meaning you can find areas for improvement. Improved spend visibility can then inform supplier rationalisation efforts and help prioritise items or categories. This can generate new savings and ensure the content you need to have in your catalogs will be available when you eventually deploy an e-procurement solution.
Challenge 2: You can’t easily locate savings opportunities or efficiencies
The clearest and arguably most important benefit of AP automation is the fact that it cuts repetitive and manual tasks. Manual tasks add no value to the AP cycle, especially since invoices today can be processed in a mostly “straight through” manner. The operational savings from reducing these manual tasks will help fund additional solutions in your P2P deployment.
(Learn how Heineken improved invoice processing times by 95% in their case study)
Challenge 3: You want a quick win to boost P2P project momentum
Generating initial savings and operational improvements from automating AP functions gives managers the momentum they need to keep the larger P2P project on track, by creating a sense of shared ownership between procurement and finance to collaboratively work together to prove the value of further P2P automation to management.
AP Automation first will improve business flexibility
When tumultuous events arise like the current situation we’re facing, the disruption of processes, performance, customers, suppliers, and partners simply cannot be avoided. During uncertain times, keeping cash flowing is fundamental to keeping everything else moving too—and AP Automation is key to doing just that.
Taking slow, tedious, manual, paper-based processes out of the AP cycle and moving to a digitised process provides clear and compelling benefits for the entire process. Submitting, processing, and paying invoices electronically is easier and faster. It means less paper, decreased handling of physical documents, and fewer manual interventions. Additionally, the automation of associated workflows such as routing, coding, matching, and approvals will realise similar benefits.
Agility and flexibility are further vital considerations when it comes to digitisation and automation. Done properly, finance teams can work from anywhere, at any time, on any device providing significant payables, cash, and workflow benefits. Emerging machine learning (ML) and artificial intelligence (AI) elements also help prioritise payments and manage discounts based on early payments.
(More in our on-demand webinar, “Machine learning in practice – towards a touchless AP automation process.”)
Dealing with curve balls is sometimes simply part of doing business. Given all this, it’s clear that AP automation can drive a direct and positive impact on the bottom-line of suppliers and customers alike. A crucial step in such a complex climate.
The key to success? Alignment between Finance and Procurement
CPOs want digitisation, CFOs want to increase profit margins and decrease risk, and all these goals can start being achieved through automation and specifically, putting AP Automation first.
An issue we often see is that no one really knows who should own the entire adoption process – should it be Finance or Procurement? While both play vital roles in the purchasing and payment procedures, sole ownership is often hard to determine. And if you start with AP first, when is the right time to deploy the P2P side?
In a perfect world, both functions can and should own the AP automation endeavor, but this means collaboration and alignment is key and the AP teams sharing their success and continually reiterating the benefits above. All departments will benefit from automation, so establishing early goals and communicating progress throughout the journey is crucial to a successful implementation.
Pave the way for easier P2P deployment
Because of the data, savings, and implementation momentum it can quickly generate, AP automation allows project leaders to analyse current processes, measure the performance against a clean-sheet assessment of what the process “should” look like, and identify gaps. Once these areas of opportunity are identified, businesses can create a plan to reach their desired end state using AP automation as the launch initiative to prepare for and fuel other automated solutions.
Develop an “AP First” approach
Get ready to tap into a strategic source of visibility and insight and find out how to make your cash flow with AP Automation. Download our ebook to learn more.