Accounts Payable – Central to Strategic Financial Reporting
The contribution of Accounts Payable (AP) towards the strategic objectives of an enterprise can no longer be undermined, given that the function is central to strategic savings and liquidity management. The catalyst to this transition of Accounts Payable from a back-office support function to a strategic contributor is AP Automation. Hence it comes as no surprise that AP Automation is one of the top priorities for organizations now.
The 2008 financial crisis shook the working capital management systems so much so that major amends had to be made to them. Strategies to maintain a stable working capital level with a firm eye on compliance became the priority for most of the CFOs. However, formulating and executing a strategy to optimize working capital doesn’t remain restricted to just the CFO anymore. It has diffused to administrative functions like Accounts Payable that handles invoice processing and payments on a day-to-day-basis and is hence central to cash management, supplier risk management and business intelligence which are all relevant even to the CFO.
The wonders of AP Automation Manual AP processes have not only increased associated processing costs and hit operational efficiencies but also tend to be more error prone. Invoice processing errors have a long lasting and adverse implication on the entire organization. AP Automation not only reduces the invoice processing cycle time making processes more efficient, but also ensures compliance adherence & increased visibility into discount opportunities and aids timely payments. Since automation reduces the AP department’s manual efforts and saves time that would usually be spent in manual tasks, they would have more time to spend on strategic activities which align with the goals of Finance reporting in the organization. Here’s a guide to build an impactful business case for Automation
E-Invoicing Solution – Digital Transformation of AP
While most invoices are either paper-based or are scanned and sent in PDF form, the most ideal strategy is to have an e-Invoicing portal to send and receive invoices automatically to and from suppliers and an invoice virtualization center with set workflows, customizable exception handlers and security access control to ensure a shorter and error-free invoice processing cycle time. The portal should work seamlessly with the existing ERP solution to provide data integration across procurement and should also have the capability to process recurring invoices against a contract and non PO based invoices. The portal should be user friendly so it is a tool that facilitates both suppliers and buyers thereby ensuring a hassle-free experience for both leading to better adoption. A robust e-Invoicing system should be capable of handling multiple currencies; various invoice formats and should be compliant with tax laws across multiple regions.
Supplier Risk Management – Smoother supplier relations
Manual maintenance of an organization’s vast supplier network can be a time-consuming and tedious task, not to mention extremely error prone. Outdated and duplicate supplier data increases risks considerably; it can also lead to missed discount opportunities and loss of savings. Also, many suppliers come with a baggage of historical risk and fraud records. An automated solution saves time by maintaining accurate supplier data, red flags blacklisted suppliers, weeds out duplicates and provides a strong basis for strategic decisions.
Exception Handling – Increased Operational Efficiency
The AP department of an organization, at any given point in time, is burdened with numerous exceptions to tend to and discrepancies to handle. This also takes up majority of their time and increases cost. An automated solution facilitates simpler and faster exception handling and provides more visibility which leads to lower discrepancies.
Invoice Compliance – Enhanced regulation-specific invoicing processing
Compliance adherence is an aspect that has to be error free as different countries have varied, stringent norms pertaining to Invoice Compliance. A slack in complying with these norms may lead to criminal penalties and loss of reputation for the company. AP Automation can make compliance adherence a simple hassle free process and also ensure fraud free functioning.
To know how Accounts Payable can transition into a key contributor to financial visibility and forecasting thereby an integral part of the organization’s financial vision read the whitepaper titled “What CFOs Need To Know About AP Automation ROI”
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