Automated processes such as digital transformation yield benefits, but which ones will have the greatest impact and the widest reach?
Ramping up or starting digital transformation is not easy, but the exponential growth of corporate systems and data, coupled with the recent explosion in demand for work-from-home (WFH) solutions due to the COVID-19 pandemic, are factors pressing businesses to automate—and fast. Organizations recognize they have no choice but to digitally enable their operations if they want to compete in 2020 and beyond.
The question is: Where to start to achieve quick wins?
Should companies focus their energy and effort on the back office, front office or HR department? The answer is tricky, especially when every corporate leader demands to see concrete progress that:
- demonstrates value to the business
- reduces strain on employees
- improves customer and vendor relationships
- delivers positive ROI…
… all in quick succession.
For some, especially those in IT, this is a tall order. Automated processes yield benefits, but which ones will have the greatest impact and the widest reach? Smart organizations realize the right place to start is in their finance department, and more specifically, the vital Accounts Payable (AP) function.
Automate Accounts Payable first?
Business leaders have heard the reports from peers who have already made the leap—and they are impressed. Success stories include reduced costs, streamlined operations, fewer hours spent on the phone with vendors, and happier employees. That is why, in its 2020 survey, Ardent Partners found that 55% of the AP and Peer-to-Peer leaders surveyed believed digital transformation of the Accounts Payable process is exceptionally or very valuable.
According to the study, top-performing companies that automated the AP process achieved six times lower invoice processing costs. And while lowering costs is a major goal of AP automation, it has even more to offer in the form of actionable insights. With automation, best-in-class companies in the survey were also 1.6 times more likely to use AP-related data and intelligence to inform enterprise cash flow analysis and two times as likely to leverage data and intelligence to improve stakeholder collaboration.
Many accounts payable teams have a long way to go in automating paper processes. As of 2019, statistics from the Ardent Partners survey showed that just 50% of corporations processed invoices electronically. Although this was an increase over 2018 figures, most of the rise can be attributed to larger enterprises automating their processes. In contrast, 86% of SMEs and 65% of mid-market firms still entered invoice details manually, according to Level Research.
Future-proofing your Accounts Payable organization through digital transformation does not require throwing out your enterprise resource planning (ERP) software and starting over. Instead, you can automate critical processes in sync with existing ERP systems and focus on two seemingly tactical—but influential—efficiency metrics. Your priority should be to reduce the time employees spend processing invoices each month while increasing their ability to manage a higher volume.
The effect will be a transformation of their workday. Rather than spend so much time dealing with menial, tedious and paper-laden tasks, your employees will shift to higher-value projects.
Accounts Payable automation is the linchpin that centers and provides support for your ongoing digital transformation.
How AP automation saves time
- Enables a faster invoice-processing cycle. AP continues to be mired in paper, a problem that contributes to delays, mistakes and slowdowns in invoice processing. According to a 2019 Ardent Partners survey, 47% of AP leaders said elimination of paper and reduction of manual tasks is a top priority. Intelligent automation capabilities such as cognitive capture and process orchestration make transitioning away from paper and manual tasks possible. And there is another benefit to digitizing paper invoices: by capturing and processing data, you can leverage it across the entire organization for faster, more accurate decision-making.
- Improves cross-functional collaboration. Accounts Payable is the best place to start digital transformation because it impacts functions throughout the business, from procurement and business units to finance and suppliers. With AP processes automated end-to-end, key information flows faster and more easily between all stakeholders. Every decision and opportunity is optimized. It is the reason why almost half of the AP leaders surveyed by Ardent Partners said improved collaboration with key stakeholders is a requirement for taking AP performance to the next level.
How AP automation improves efficiency
- Reduces complexity. The average AP department receives invoices from multiple sources, in multiple languages and formats. This variety creates a number of complex downstream processes, which then require more time and expense to complete. Some AP automation tools are built to enable straight-through processing of even the most complex invoices, working with multiple currencies and layers of VAT taxes, and providing automatic payments to multiple tax authorities and vendors without human interaction. This alone can make AP teams exponentially more efficient.
- Ensures consistency even during a crisis. Whether a company needs to work around a global pandemic, a regional hurricane or any other unplanned activity, we all need a consistent and foolproof way to manage cashflow activities that are not reliant upon paper-based, location-dependent manual tasks. An organization’s ability to act, react and have visibility into any processes from any connected device is a core component of remaining nimble and efficient.
- Integrates AP automation with any ERP. AP teams that process invoices outside the company’s ERP systems face more delays and errors. When AP automation is integrated into the ERP, however, the entire process is streamlined, so they gain complete visibility and control over financial processes. That means they can leverage insights to take advantage of discounts and continually improve.
As IT teams face intense pressure to digitally transform their organizations, they should focus their initial effort where it counts most. AP automation is a prime place to start your digital transformation. You do not have to worry about the wheels falling off your IT department or wrecking your revenue.
Instead, you can be sure it will drive quick results across the business—and enable you to work like tomorrow, today.