Accounts Payable is a critical component in the engine that moves a business forward. Purchase orders, contracts, invoices and many other documents contain vital time-sensitive information, and have direct implications for revenue. The complications that slow down efficiency for Accounts Payable are often caused by a reliance on legacy systems and paper-based processes. Essentially, this is a data problem: businesses are required to deal with more and more data, and without the aid of digital transformation they may be trying to solve problems that their current solutions can’t fix.
As a result, most large businesses pay late - an average of 7.6 days late, to be precise. Accounts Payable is one of the first places businesses go to reflect the impact negative macroeconomic situations, as in China, where economic slowdowns this year have shown up in increased payment delays.
For all these reasons (and more), improving AP operational efficiency appears to be even more daunting an objective than constructing the great pyramids. But real change is possible in small increments. Take it one block at a time.
Great things are not done by impulse, but by a series of small things brought together.Vincent Van Gogh
Vendor lists require frequent cleansing in order to maintain updated records and reduce clutter. Duplicate and one-off project vendors should be cleaned up regularly, and out-of-date contact information or master agreements should be revisited.
By creating a list of all vendors and making it a habit to keep it up-to-date, Accounts Payable will have a solid foundation of information to work from. Make sure that vendor lists are centrally accessible, so the burden of maintenance doesn’t rest on one person’s shoulders.
As part of Master Vendor Management, AP departments should work hand in hand with Purchasing to vet new vendors, maintain a list of vendors and negotiate the best rates. When LOB's request new work, purchasing should come to the table as an adviser, rather than an order taker. With a list of approved suppliers that Purchasing and AP agree on, they can best serve the needs of the business.
Not all vendor situations are created equal. Some require immediate attention because what the vendor offers is fundamental to business operations, and payment may be past due. Other vendors provide peripheral or otherwise less critical products & services.
Prioritizing vendors by urgency allows you to arrange your payment schedule when necessary, in the interest of keeping the business moving forward.
Digitizing the accounts payable process can lead to increased efficiency and reduced reliance on paper - by up to 90%, as we saw in our work with New England Document Systems. The same work also demonstrated another benefit of digital transformation in AP: cost savings of nearly 70%.
Digital systems offer faster processing and simpler integration with other teams. AP teams can leverage a combination of web-based capture and automated information extraction to become truly streamlined in their work.
Increasing accuracy in invoice processing is a function of defining required and critical form fields, and automating systems to handle higher volumes of invoices.
The right tools offer substantial benefits to reducing handling errors, by learning from past intake of critical documents, identifying key fields and enabling automated extraction for future jobs. The result is an increase in accuracy and governance by placing the AP team in the role of overseers of the document capture process, rather than subject to it.
When working with large numbers of vendors, events marketing company EWI Worldwide needed complete accuracy in their complex Accounts Payable process. With the right suite of solutions, however, EWI Worldwide was able to increase efficiency and reduce processing time, all while enhancing document accessibility.
As great as it can feel to get documents out the door, it is important to follow up. By setting a policy for follow-up times based on the type and urgency of communication, you can avoid delays for critical documents.
Especially when pending invoices are involved, automated follow-up reminders are a fantastic way to make sure business is uninterrupted and all involved parties are happy.
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Businesses need efficient, dependable Accounts Payable teams in order to grow. In the digital age, and with a wide array of deeply embedded legacy systems embedded, AP teams face new hurdles that require new solutions.
But with the right imaging science and capture technology, Accounts Payable will be transformed into a vehicle for growth.