Strategies for optimizing your Accounts Payable

In today’s business climate, organizations in every sector are under pressure to do more with less. That means businesses cannot afford to squander opportunities to free up their working capital. By giving you greater availability to the cash trapped on your balance sheet, a formal working capital strategy can deliver the added liquidity you need to fund growth, streamline processes, reduce costs, enhance service levels and seize new investment opportunities as they arise.

Common risks FOR AP Processes

A failure to adopt effective accounts payable processes can hamper a company’s ability to process invoices on a timely basis, take advantage of available discounts and set either longer or shorter payment terms with suppliers, depending on which are most favorable. These consequences can arise when businesses:

• Rely too heavily on error-prone manual processes to approve requisitions, scan supplier invoices, and issue payments
• Fail to issue purchase orders for each new order
• Do not confirm if order deliveries match contractual terms or cannot easily access vendor contracts
• Lose access to early payment discounts by over-extending payment cycles or simply accept discounts without calculating the cost of capital outlay
• Neglect to take advantage of maximum savings through volume rebates or trade spend initiatives
• Incorrectly load supplier and/or contract information into master data files
• Lack of processes and systems to prevent late payments, under-or over-payments, duplicate payments, or missed payments

While each business must adopt a customized approach to realize these risks, there are best practices that can guide the way.

Some strategies include:

• Centralizing accounts payable processing and reporting across the enterprise through a shared service environment to ensure all staff members adhere to common practices and standards and measure their performance against established business metrics. This has the added advantage of enabling you to accomplish more tasks in a faster timeframe and with fewer resources, ultimately reducing enterprise costs.
• Moving towards a paperless processing environment. Although EDI (electronic data interchange) is not for everyone, businesses that automate their accounts payable systems by enabling electronic communication with vendors gain significant functionality advantages and savings through available discounts or rebates. With an eProcurement system, for instance, you can communicate electronically with vendors and customers to automatically generate purchase orders (POs) for each new order, electronically validate and accept invoices, approve requisitions, track goods received, and pay invoices on a timely basis. Depending on the level of automation you select, you may even be able to scan invoices automatically, track delivery receipts and resolve disputes electronically rather than through manual follow-up.
• Adopting more robust governance practices, which can reduce the risk of manual error and strengthen internal controls around accounts payable processing, and contract review.
• Setting up supplier portals so that suppliers can electronically track the status of orders, delivery schedules, potential product shortages and payments received. In addition to reducing time spent on these processes, these systems also cut down on manual errors, improving order accuracy.
• Creating management workflows to enhance the efficiency of your accounts payable processes. Management workflows can help you identify and resolve system bottlenecks and streamline process handoffs to improve liquidity management in the most effective manner possible.
• Strengthening purchasing approval processes by defining the level of management authority required to make various-sized purchases.

Introducing Aavenir Invoiceflow

Aavenir Invoiceflow offers smart invoice data capture, data onboarding, and cognitive invoice processing capabilities to reduce human intervention by up to 99%.

Built natively on the ServiceNow Platform, Aavenir Invoiceflow enables enterprises to efficiently manage multi-vendor invoices with varied payment terms. Aavenir Invoiceflow captures electronic or physical invoices and automatically extracts invoice information using the most advanced ML-engine and automates invoice processing including a 2-way or 3-way match, which is further scheduled for payment based on business rules.