In today’s difficult, inflationary economic environment, every department needs to be looking for ways to save money and manage cash effectively. After all, we may be standing on the precipice of a recession, and it appears as though economic uncertainty won’t be subsiding anytime soon.
When organizations think about saving money, they often look to the chief finance officer and expect that individual to develop strategies to weather the economic storm. However, one crucial part of the finance department that is often overlooked by those outside finance—even though it can play a significant role in steering a business in the right direction—is accounts payable (AP).
For example, by automating manual AP processes, not only does the entire AP department become a much more cost-effective operation, but it can also make life easier for the C-Suite and other stakeholders across the organization. Let’s examine how.
As we inch closer to a recession, C-Suite executives are juggling a slew of problems, including widespread labor shortages and significant pressure on earnings. To overcome these challenges, the C-Suite is laser-focused on doing everything it can to cut costs and drive profits to the bottom line.
When you apply automation to AP, you’re able to run the department as nimbly as possible. Rather than processing invoices by hand, let technology handle this critical process by itself. As a result, the AP department needs fewer staff members to function at optimal levels. In turn, the C-Suite can move employees away from repetitive tasks and redirect those assets to focus on mission-critical processes.
AP automation also gives organizations fast and accurate visibility into all of their payables, including whether any discounts are available. This gives the C-Suite the peace of mind that comes with knowing the AP department is taking advantage of every early payment discount available while withholding payment until it’s due to optimize cash flow.
Invoice exceptions and errors have long been a source of frustration for the AP department. When invoice exceptions materialize, AP usually has to track down procurement colleagues and call suppliers to determine how to solve the issue. This regular and unnecessary research project is slow and tedious.
When AP is automated, organizations drastically reduce or eliminate the amount of time AP needs to spend resolving invoice exceptions. This enables them to refocus that time on other important areas of operations.
What’s more, AP automation can streamline the supplier onboarding process, giving the procurement department the tools it needs to bring on new suppliers in a simple manner. This helps the procurement team set up strong relationships with suppliers out of the gate, increasing the chances of a favorable first impression that sets the ground for a lucrative, long-term relationship for both sides.
Since AP automation streamlines the supplier onboarding process and helps organizations share data digitally with their entire supplier ecosystem, every entity in the supply chain benefits too.
Not only are suppliers able to complete transactions electronically, but they can also quickly determine the status of payments by viewing information in a supplier portal. This enables them to keep track of when payments can be expected, which gives them more control over their cash situation. As a bonus, IT departments benefit too because they don’t have to manage the support for XML or EDI files, taking one more responsibility off their plates.
At the same time, the technology also helps ensure your suppliers are paid on time, which reduces the chances your organization ends up missing a payment and being put on a credit hold, thereby impacting your own ability to sell products.
Ultimately, AP is one of the easiest departments where automation can be a true game changer. By starting your automation efforts with AP, you grab a proverbial low-hanging fruit to start with, and you can use the success of your project as a case study on what you can do to bake more efficiency into workflows across the organization.
At the end of the day, AP automation represents a simple digital transformation project that delivers fast ROI and gives you a taste of how efficiently your company should be able to operate.
With the success of your AP project in the rearview mirror, it’s time to apply your learnings across the organization and build a more resilient company—one that’s positioned to weather the economic storm and thrive on the other side of it.