The three key accounts payable processes that are essential in the drive to digital finance.
If you’re planning to automate your financial processes to increase productivity and reduce inefficiencies, success will depend on careful planning and orchestration. You will also need in-depth understanding of your Accounts Payable (AP) and Accounts Receivable (AR) processes and how they operate within your organisation's wider financial ecosystem. Finance is a complex machine with many moving parts. To help guide you, we highlight the priority processes within the business-critical area of Accounts Payable where digital finance is making a real difference.
Finance functions that digitise their Accounts Payable functions can process four times as many invoices as a result, as well as halve their payment processing time and capture data accurately on first entry 95 percent of the time*.
So which Accounts Payable processes should businesses automate in order to realise these benefits?
1. Invoice Ingestion
Document imaging and content scanning can now extract payment data from the invoice upon receipt - be it in paper or digital form. The invoice can also be automatically matched to its corresponding purchase order and then processed, both automatically.
2. Invoice processing
Automation can centralise and standardise invoice management processes and workflows across business units. Invoices can be automatically matched to receipts. And streamlined workflows increase the number of invoices that can pass through Straight Through Processing (end-to-end automation of invoice receipt, validation and authorisation). Dashboards make the entire process more visible, so payment can be tracked accuracy, alleviating bottlenecks and reducing enquiries. Managers can be alerted automatically when their approval is needed, and the relevant staff-member can be notified of errors and exceptions, avoiding incorrect pay-outs and preventing inaccurate information flowing downstream.
3. Document control
With secure and central storage of digitised invoices, information can be easily located and referenced. This allows for a comprehensive transaction audit and promotes compliance with payment policies. It also introduces greater transparency into your supplier relationships, which can help in negotiation of better terms.
The key benefits of automated Accounts Payable processes are:
- Accuracy – by eliminating error-prone manual processing and allowing for the automation of invoice processing. It also removes the risk of losing paper invoices.
- Consistency – Through the removal of silos with centralised processing.
- Time savings – The number of external and internal queries, is reduced, for example by issuing remittance advice automatically to suppliers.
- Cost Savings – By speeding up payment turnaround, early payment discounts can be applied. Some systems offer deadline alerts to secure those discounts.
- Supply chain improvements - prompt payment strengthens supply chain relationships.
- Productivity – Transaction volumes increase so more invoices can be processed using fewer staff and resources.
- Integration – Once Accounts Payable data is integrated with other business systems, a wider range of stakeholders can access real-time data, mitigating risks related to financial decision-making and producing more accurate cash flow projections, which in turn can help prioritise and control outgoing payments.
Digital finance, and the drive towards digital more broadly, delivers significant strategic benefits for businesses of all sizes. Today’s businesses are looking to improve their ability to adapt to market changes and operational challenges with minimal disruption, in other words to develop an agility advantage over their competitors. Maintaining competitiveness in the long term will therefore require maximum efficiency and accuracy of business-critical financial information, which can only be achieved through digitisation.
- When planning your digital finance transformation, it is important to understand how its processes affect one another and integrate with the wider financial ecosystem.
- Understanding where digital finance can deliver tactical gains – such as increased productivity, enhanced efficiency and cost-savings – will help you prioritise your programme.
- The ability to identify the strategic advantages of digitisation will help you make the case for where your digital transformation should focus.
*Aberdeen Group Survey, 2016
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