In today's business environment, CFOs must find new ways to cut costs. This article offers CFOs tips on how to accomplish that by automating accounts payable.
Your company has a unique value proposition to its customers, that's why you're in business. Therefore the concerns of your CFO can be viewed differently from industry to industry and company to company. There are some, however, that seem to be universal. We're going to focus on three of them with respect to the Accounts Payable process.
Financial statements should reflect the work and activities that occurred in the time period for those statements. But if your invoices are still predominantly paper based or still delivered directly to the office or requisitioner of the goods or services, you may still be looking at a lag time (sometimes substantial) between the time the invoice arrives and the time you can evaluate and accrue the appropriate value.
This should no longer be an issue. One of the better approaches is to outsource the 'ingestion' of your invoices, electronic or paper. With the proper controls in place, this could streamline the entry and quality of the information associated with your invoice stream.
Much has been claimed, over the last few years, about increasing the number of electronic invoices over paper-based ones. Although there seems to be ample agreement that this will improve the speed and quality of your invoices, vendors in the US have lagged behind the rest of the world in managing the conversion. Therefore most of us have to consider an operation that will not only deliver electronic invoices but process the paper ones as well. Having them both validated and made available for both coding and approval online allows you to consider all invoices as 'electronic' because all of your information comes to you that way. Doing this allows you access to the following:
Most AP Departments are looking to increase the productivity of their workforce without the sometimes accompanied downturn in morale. As we said above, outsourcing the paper part of the operation alone will increase the accuracy and productivity of the department. Automating the workflow for your PO matching and approval based invoices reduces the burden on all those involved in the PO process as well. Providing the tools to oversee the movement of your invoices focuses the time and effort involved directly on the problems at hand, rather than spending their time 'running them down.' These tools and processes, now automated, provide the following benefits:
AP Automation, of course, cannot solve all of your working capital problems, but it can manage the outflow of cash as it pertains to most spend. Many companies today are trying to be proactive and strategic in their ongoing efforts to manage cost and working capital. Accounts Payable process improvements can be a source to realize some of the financial benefits associated with working capital.
Having full visibility over all invoices in the invoice approval to pay process gives the predictability necessary to manage cashflow. Since all invoices are visible, their payments can be calculated for each time period and historical data can provide the means to make month to month predictions.
With the appropriate information in your hand, immediately available, so that decisions can be made in time to affect the outcome, you can evaluate the opportunities that exist throughout your business. Small changes to your daily working capital can have a significant impact on available cash. This can have a substantial net impact to your bottom line.
In order to analyze key processes and identify opportunities for improvement, you will need the tools necessary to review the processes and transactional information associated with your invoice spend. A good AP Workflow tool in conjunction with good business practices can provide these.
The Four Steps to Going Paperless
Discover the concrete steps you can take to move your company to the paperless environment.Don't Let Your AP Automation Solution Pigeonhole You
This special report examines how to avoid being pigeonholed when trying to automate the accounts payable process.Accounts Payable Outsourcing Achieves Dramatic Results
Find out more about accounts payable automation.