From the traditional accounts payable (AP) viewpoint, AP’s role within the enterprise is often perceived as purely functional and administrative – invoice comes in, payment goes out.
But it’s not that simple.
In spite of the rise in automated accounts payable solutions – often referred to as ePayables – AP still remains an untapped resource in the value chain. Yet, if transformed to a real-time automated system, AP can augment substantial business impact to the enterprise by providing discounts on spend, deeper insights into analytics, improved reporting, and overall reduction of redundancies and errors.
Taulia participated in Ardent Partners’ 2014 report, ePayables 2014: The Quest into AP Innovation. The whitepaper uncovers the industry-wide view and future of AP, as well as provides performance benchmarks and strategies for AP success.
We discovered the question that enterprises need to be asking is when, not if, ePayables should be deployed. In fact, based on the responses of over 190 AP, finance, and business professionals, their top AP priorities included:
Reduce processing costs – 63%
Improve reporting and analytics around AP – 37%
Improve visibility into invoice and payment data – 31%
Improve collaboration/communication with procurement – 27%
Better link P2P processes and systems –25%
Generate discounts on spend – 23%
What’s most striking here is the top priority and the bottom priority: reduce processing costs and generate discounts on spend. While there is a slightly valuable cost reduction associated with eInvoicing, it is merely the first step in what could be ultimate value creation for your business. Yes, I’m talking about dynamic discounting, which coincidentally happens to be the last of the priorities found in this report.
It makes sense that reducing processing costs, improving visibility into invoice and payment data and improving collaboration/communication with procurement are the top priorities right now for AP professionals, because without these qualities, you simply cannot have a successful discounting program for your suppliers. And you certainly are less likely to save millions in early payment discounts.
Notwithstanding these concerns, AP leaders keep on facing challenges with their legacy systems that rely heavily on manual processes. It comes as no surprise that this year’s top challenges included:
Delay in receiving (or lack of) matching information – 44%
Invoice/payment approvals take too long – 43%
High percentage of exceptions – 40%
Lack of visibility into invoice and payment data – 27%
Getting the budget to invest in automation – 24%
Processing of an invoice takes too long – 23%
Looking ahead, ePayable solutions will become increasingly adopted by forward-thinking organizations. It’s the technology available today and tomorrow that will provide AP leaders with the analytics insights they need if they want to gain a deeper understanding around their invoicing and payment patterns, identify opportunities, increase efficiencies, and add business value to the enterprise.
At present, there are a number of automated payment solutions available, but finding the right partner is essential. When looking at options, AP leaders need to understand the goals and priorities important to the organization, such as:
How important and what return in value are we getting from our supplier relationships?
What savings will we – the buyer – achieve by paying invoices early?
Manual processes that include processing paper invoices, chasing down approvals, manually checking for redundancies, physically reconciling errors, and missing early payment discount opportunities all work together to inflate the cost of AP. Once these are addressed, enterprises have a myriad of ePayable solutions, and each has its own benefits to the enterprise’s business needs.
In the coming weeks, we will continue to explore the whitepaper’s findings, including today’s state of AP and real, practical solutions, AP performance and metrics for accelerated business value, and how enterprises can effectively transform AP for bottom-line success.
About the AuthorMore Content by Markus Ament