Accounts Payable
Manual Processes
Payments

Thriving Through the Pandemic

March 5, 2021

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5 min read

Summary

With the pandemic now in its second year, what can companies do to improve their accounts payable processes? We look at five steps to maximizing your cash flow and protecting your AP team through better payables management.

    The Pandemic Bite

    Last March, when the pandemic reality came to a crescendo and the global shutdown became reality, businesses everywhere took steps to protect their organization’s survival. This meant office closures, “remoting” employees, and taking many other steps - in some cases drastic - to ensure enough cash on hand to open their doors in the days and months to come.

    With the economy coming to a grinding halt, leaders with work that required employees to be physically co-located had to take stock. While some positions were deemed “essential” to be in-person - utility workers, critical retail, etc. - other roles, like accounts payable teams, were not. For AP departments that were still processing vendor invoices manually, this presented myriad problems, such as :

    • Placing employees in harm’s way - having to go to the office to collect invoices, manage data entry, cut checks and drive around obtaining approvals in-person while the pandemic raged on placed undue stress on key employees.
    • Paying past vendor due dates - pandemic cash flow concerns aside, manually managing this process when remote places a negative impact on cash flow as well as vendor relations, resulting in unfavorable pricing or future payment terms with DPO/DSO being too long.
    • Inability to optimize cash flow - too-long expense cycles and an even greater lack of spend visibility makes things like forecasting profitability, determining your firm’s fiscal health or even being able to negotiate better discounts/terms with your vendors an even harder task.


    A Way Forward

    As the pandemic starts its second year impacting our businesses, this above situation presents employers a huge motivation to investigate how technology, like accounts payable process automation in the cloud , can drive productivity and tackle these challenges head on. To maximize cash flow and optimize accounts payable functions, organizations should:

    1. Centralize & digitize -invoices should no longer be delivered directly to the individual buyers. Centralize delivery, digitize immediately - no more printing the PDF - and automate capture of key data efficiently with an OCR tool or B2B scanning service bureau.
    2. Cloud-enable an automated approval process - with a software-as-a-service solution, web-enabled vendor payment fulfillment programs means employees can stay remote while vastly improving both visibility and control over their operation … and business leaders can better optimize their cash flow with full liability visibility 30 to 60 days sooner than with a manual/paper-based process. According to a recent study by B2B payments and AP news platform PYMNTS, these above steps combined with additional automation has been found to reduce the average price to process a vendor invoice by up to 78%.
    3. Eliminate paper check payments - according to a recent Goldman Sachs report, small to mid-sized firms shared that over 80% of invoices are still manual and paid by check. The average cost of printing and issuing checks is about $6, but the range extends as high as $20 per check. Transitioning these check payments to ACH - or even better, to virtual cards - cuts per-payment costs by over 50% and can be managed 100% remotely. Beyond these operational savings, virtual card payments are completed instantly, optimizing Days Payable Outstanding (DPO) and maximizing company cash flows. What’s more, with the rebates these cards provide to the company,for the first time in history, this cost center turns into a profit center!
    4. Capitalize on spend data access - The many operational wins and productivity gains achieved by automating an AP program represent only a few slices of a bigger pie. Additional and on-going wins come from the real-time access to richly detailed spend data points. More than just tables and charts, this gives you immediate and actionable intelligence that has immediate impact right to the bottom line.
    5. Remote can be the new normal - According to a CFO survey conducted by PwC in 2020, 54% of CFOs plan to make remote working a permanent option. With this “new norm,” organizations are re-evaluating their office space needs. While many will return to in-person, as more and more firms shift to supporting remote work, CFOs are asking themselves, “How could we use that rent money to further the goals and mission of our organization?”

    The Takeaway

    As the pandemic enters its second year, remote work will be here to stay throughout 2021, and will become the new normal for many organizations. To protect AP staff, taking these above steps will not only provide for their safety but they will also quickly improve cash flow, drive working capital optimization, and assist with transition from “survival” to “thriving” mode.

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