As global and economic conditions evolve rapidly, organizations must seek ways to improve spend control in order to stay agile. Companies must update their financial spending processes and simplify operations to control business spend. One area that can benefit significantly from moving away from a manual process is Accounts Payable (AP). According to Michael Daley, our in-house expert, companies must reposition their AP department from a manual process to a strategic asset to gain better control and cost savings.
The Age of Invoice Automation
Leveraging invoice automation and spend control technology is key to creating a more effective AP department and finance team. About two-thirds of the webinar attendees polled revealed that their processes were either a fully manual process or only partially automated. Such dependency on manual work opens the chance for errors and inefficiencies, as well as limits the potential to control spending.
One significant best practice highlighted was transitioning to an automated system that includes digital routing of invoice processing and automatic spend data entry. For effective spend management to take place, invoices must take the digital leap and centralize receipts, which provides a solution that increases overall efficiency without the burden.
Turning Accounts Payable into a Strategic Asset
However, to implement automated spend control, businesses must simplify and optimize traditional spending processes before transitioning. It's crucial to ensure that the changes are embedded within a systematic approach instead of ad hoc, piecemeal upgrades. Using an intuitive and ubiquitous approval system is an absolute must for true transformation. Systems, like spend management software, provide simplicity and deliver overall control to each finance team, allowing expense expenditures to be tracked more accurately.
However, to optimize these benefits fully, organizations must go beyond automation and engage in strategic spend controls. These practices include maximizing the utilization of a purchase request or purchase orders (POs) to save processing time and improve cash flow management. Attention here highlights another issue: managing long-tail company spending or a large volume of low-dollar transactions. Businesses can control these potential issues by embracing pre-approved programs and smart purchase card programs.
Early Payment Discounts and Virtual Credit Cards
Another session poll asked attendees which areas in their organization automation could have the most impact, and the top answers were:
- better access to spending data
- reducing the cost of invoice processing
- receiving more payment discounts
- improving payment security
- increasing purchase order utilization
As new technology emerges, relying on traditional payment methods could replace innovative and more secure approaches such as a virtual corporate card. While switching to a newer technology could present an initial challenge, the benefits of modernizing corporate spend management exceed the initial hurdles. Involving vendor and supplier relationships in your spend control transformation journey, rather than imposing changes on them, could boost their participation and foster better relationships. For example, businesses could take advantage of early payment discounts, which have the potential to affect 10% of your overall company spending.
Advanced Analytics
Now, we come to the crucial point of expense data. Real-time analytics are the most potent weapon for informed decision-making. Small businesses can particularly benefit from dashboard visual analytics, empowering them to optimize their business goals. However, the journey to becoming data-driven isn’t just about adopting spending data analytics —it’s about shifting your organizational culture to make decisions backed by data.
The Way Forward
Despite the initial investment, organizations must begin moving towards new, more efficient spend control technologies backed by analytics and effective spend control processes. Only then can you fully unlock the potential of your AP function and the significant, positive impact it can have on your bottom line.
Watch the entire webinar here.