Accounts payable (AP) automation is a sure way to improve the finance function in any company. By eradicating paper documents, leveraging tools to automate information discovery and achieving real-time visibility of purchasing and invoicing processes, organizations can improve control and save time.
Time saving is, however, just one part of the equation. Indeed, many companies make the mistake of only focusing on this element of the AP process yet, arguably, the most valuable part of a digital transformation project is saving money for the business; and that is where AP automation can really make a difference. How much is the business spending? Who with? Are they getting the best deal?
Automation enables finance teams to take the time to truly understand expenditure throughout the business and gain insight that supports a strategic approach to purchasing that can result in major cost savings.
In this blog, we examine how firms can use AP automation along with spend analytics software to not only free up time for the finance team, but also save money.
Accounts Payable Automation
Accounts payable and purchasing automation software can transform the finance function. With digital invoice capture and automated workflows, there is no need for manual data entry, tedious invoice matching or time-consuming manual approval processes. With end-to-end visibility, the finance team are notified of errors such as duplicate invoices that can lead to over payment. They can also highlight possible fraud – a key issue as fraud is estimated to cost UK businesses up to £193bn per year.
AP automation also delivers benefits throughout the business – not least for budget holders struggling to get approval for time critical purchases. With AP automation, purchase approvals can be streamlined: approval requests are automatically routed to the correct individuals and can be approved via any device, ensuring there is no delay because individuals are working remotely. By avoiding costly and frustrating delays to the approval process, the business minimizes the risk of orders being placed without authorization – or purchase order number – while finance automatically has complete and up-to-date visibility of committed spend.
With AP automation, firms can embrace a zero-touch approach, managing only the exceptions that require human knowledge and intervention flagged up by the system. The time saving is considerable – but it is the way companies leverage the expertise of highly skilled finance teams that is key to driving significant additional financial savings. Once released from tedious manual processes, the finance team can undertake far more interesting and valuable activity – like working with internal or external spend management specialist to review suppliers and identifying better deals to deliver the business significant and sustainable savings.
Use Time to Save Costs
With an accurate and up-to-date view of the AP process, finance teams can explore spend analytics software to better understand the entire procurement model. Spend analytics provides the chance to delve deeply into company expenditure, opening the door to a new set of cost management processes.
Analysis of the supplier base, for example, can reveal trends in expenditure and highlight areas of possible savings or out of contract activity. Are all departments and budget holders following the same procurement processes and ensuring suppliers are complying to agreed costing? What about supplier performance? With complete process visibility, it is easy to identify which suppliers are failing to hit procurement performance metrics, for example. This insight can be invaluable in supporting on-going contract negotiation.
Spend analytics software also allows firms to define suppliers in different ways – by category, type, size, area and vertical market – making it incredibly easy for the finance team to prioritize specific areas of spend. Want to identify and address trends in procurement spend in certain areas? Spend analytics tools can immediately highlight the key opportunities and enable meaningful comparison with market benchmarks. Combined with supporting performance metrics, finance teams now have the detailed and accurate spend information required to embark upon a meaningful supplier dialogue.
Want to consolidate smaller supplier contracts into one large contract? Again, information about trends in purchasing across the business, plus costs and performance, will provide accurate insight to support contract negotiation and determine potential ROI.
Essentially, by freeing up time for teams to use the tools specifically designed to investigate purchasing in absolute detail, AP automation in tandem with spend analytics software will deliver those significant and sustainable savings.