Why make Accounts Payable Walk when it can Run a Race?
Have you been to the Eiffel Tower that is 986 feet or the Empire State Building which is 1,250-feet? If you did, you took the elevator. Now imagine if you had to walk that much. Yes. Back in 1818 when Sir William Cubitt developed the treadmill, his intention was make the poor convicts walk an average of ten hours daily covering anywhere between 5,000 to 14,000 vertical feet. Why? Just for punishment to challenge their sedentary living inside jails. But here it is, like all things touched upon by technology, the punishment machine evolved to become a necessary force. In 1969, William Staub re-designed it and came up with the first home based treadmill, Pace Master 600. It was known that individuals who ran a mile for eight minutes four-to-five times a week were in better physical condition than those that didn’t. Gradually people dropped their inhibition and embraced it as a fitness machine featuring Bluetooth enabled consoles, pre-programmed workouts, heart-rate monitoring and incline/decline levels.
The life of invoice management system is somewhat akin to that of the treadmill. It has come a long way. The way sourcing was a dreadful experience years ago, by mercy of technology, has now evolved to support so much that an Accounts Payable specialist today can simply sit back, and through automation get everything done in a jiffy, more systematically and by curbing all human-prone errors. Below are the five key reasons why you should welcome automated accounts payable practice in your business-
- Accounts Payable from a Center of Cost to a Center of Value
Automation transforms accounts payable function from a center of cost to a center of value. It can reduce manual intervention and indicate the human expertise only when required. This electronic method of invoice submission brings down chances of errors and helps in better forecasting of cash flow and overall predictability. Automation of AP also helps you keep a check on transaction level frauds and those that happen at supplier level through better insights into supplier analytics. This way automation of AP helps labor redeployment in more strategic initiatives (e.g., working capital management, payment terms, early payment programs/discounting, collection of more advanced supplier compliance information, etc.)
- Green is the Color of Automation
No matter how centralized and streamlined is your invoice processing, but complete elimination of paper in AP is the color of automation which has numerous benefits to brag of. There are numerous vendors who still continue to submit paper invoices through mail, fax or other mediums. An AP firm should consider migrating to complete digital submission of invoices by their suppliers. This way during audits, distributed teams can easily access all documents and simultaneously avail a great deal of cost savings.
- After Procurement Automation, Time for Centralized Payment Automation
Many organizations have already automated their buying of different types of materials and services through different systems such as ERP/MRP, T&E, E-Procurement, VMS and other specialized procurement systems. This has made capturing spend an easy part but when it comes to paying suppliers, it is certainly pretty challenging. Here, AP can enable effective payments across all these different categories, systems and transactions types and different buying channels while making sure all payments are within compliance and accurate regardless of where they originated.
- Automating Working Capital
Automation in AP processes has direct impact on the company’s working capital management strategies although the key drivers remain the treasurer and the CFO. From better monitoring and setting of early payment discount programs to enabling new types of working capital management strategies, AP automation has made way to the emergence of newer cash management models based on different early pay triggers such as POs, ship notifications, receipting, inventory, etc. In a way, proper AP automation is responsible for a firm’s cash flow statement.
Now that you know how automation can really enable your Accounts Payable for a race, would you still insist it on walking like how Cubitt had planned it? Or, like Staubb, have your AP professionals drop all inhibitions of working with fast-paced technology, knowing the benefits of keeping lean work load and efficient invoice processing, embrace automation to stay high on overall organizational excellence? Waiting to hear from you!