The Changing Landscape of Accounts Payable: Automating Payables to Create Business Value
From the traditional accounts payable (AP) viewpoint, AP’s role within the enterprise is often perceived as purely functional and administrative — invoice comes in, payment goes out.
But it’s not that simple.
In spite of the rise in automated accounts payable solutions — often referred to as ePayables, AP still remains an untapped resource in the value chain. Yet, if transformed to a real-time automated system, AP can augment substantial business impact to the enterprise by providing discounts on spend, deeper insights into analytics, improved reporting, and overall reduction of redundancies and errors.
We discovered the question that enterprises need to be asking is when, not if, ePayables should be deployed. In fact, based on the responses of over 50+ AP, finance, and business professionals, their top AP priorities included:
- Reduce processing costs — 63%
- Improve reporting and analytics around AP — 37%
- Improve visibility into invoice and payment data — 31%
- Improve collaboration/communication with procurement — 27%
- Better link P2P processes and systems –25%
- Generate discounts on spend — 23%
What’s most striking here is the top priority and the bottom priority: reduce processing costs and generate discounts on spend. While there is a some kind of cost reduction in eInvoicing itself, it is merely the first step in what could be ultimate value creation for your business. Yes, I’m talking about dynamic discounting, which is also part of Supply Chain Finance.
It makes sense that reducing processing costs, improving visibility into invoice and payment data and improving collaboration with procurement partners are the top priorities right now for AP professionals, because without these qualities, you simply cannot have a successful discounting or supply chain financing program for your suppliers. Traditionally AP has been considered as Cost Center, but now using tools and technology that can be turned into a Profit Center.
There are few Enterprise Application providers. Problem is most of them are now part of backend legacy system. UI design doesn’t favor great employee participation, and these tools do not facilitate the networking/collaborating ability with procurement partners. No wonder top challenges AP professionals find are:
- Delay in receiving (or lack of) matching information
- Invoice/payment approvals take too long
- High percentage of exceptions
- Lack of visibility into invoice and payment data
- Getting the budget to invest in automation
- Processing of an invoice takes too long
Looking ahead, ePayable solutions will become increasingly adopted by forward-thinking organizations. It’s the technology available today and tomorrow that will provide AP leaders with the analytics insights they need if they want to gain a deeper understanding around their invoicing and payment patterns, identify opportunities, increase efficiencies, and add business value to the enterprise.
Manual processes that include processing paper invoices, chasing down approvals, manually checking for redundancies, physically reconciling errors, and missing early payment discount opportunities all work together to inflate the cost of AP. Once these are addressed, enterprises have a myriad of ePayable solutions, and each has its own benefits to the enterprise’s business needs.
Added to that, especially in India, GST roll out made it mandatory for each company to process their incoming invoices to be uploaded to GST portal by next month. What it means is that now every organization is now looking for digital transition to have better collaboration with suppliers, more digitial touch points with them and automate various functions that reduce cost. We at DRGREP think this is the ideal time for organizations to adopt such technology like our’s more and more and stream line various supply chain processes.