Though automating the accounts payable (AP) process most directly benefits the AP team itself—such as eliminating manual activities and allowing for more strategic actions—it’s a mistake to imagine that accounts payable is the only enterprises function that profits from an automated AP workflow. In reality, the entirety of the enterprise stands to gain significant advantages from increasing the use of technology in the AP workflow. Among the many functional areas that AP touches, today we’ll focus on three: Procurement, Treasury, and Suppliers.
How AP Automation Benefits Procurement
From the procurement perspective, P2P has traditionally been about establishing and maintaining processes that reduce operational costs, deliver savings, and provide accurate data. Procurement (the first “P” in P2P) is focused on driving more spend under management, negotiating and capturing savings from the sourcing process, and managing supplier risk and performance.
An automated AP workflow grants procurement greater insight into the types of metrics that can simplify finding out this information. For example, an automated AP workflow may allow procurement teams insight into PO vs. non-PO spend, spend by supplier, supplier performance, and the supplier enablement percentage. These and other types of AP-specific data collected via the AP process has the ability to influence procurement’s goals significantly.
How AP Automation Benefits Treasury
Treasury is focused primarily on optimizing a business’ cash, so having a way to track the amount, accuracy, and timing of vendor payments is incredibly valuable in helping it perform its function. An automated AP process allows for this insight into the metrics treasury cares about. With an automated AP workflow offering more visibility into the invoice-approval process, treasury can gain more insight into metrics such as days payable outstanding (DPO), the amount of early payment discounts captured, invoice liabilities, and even overpayments.
As with procurement, increased visibility into the metrics germane to treasury’s goals via an automated AP workflow can simplify treasury’s work significantly. No longer would the treasury team have to constantly check in with AP for numbers or, for that matter, worry that the numbers wouldn’t be accurate because the AP team is pulling together everything manually. That has the power to be hugely game-changing.
How AP Automation Benefits Suppliers
The speed and complexity of business continues to accelerate, forcing enterprises to become more reliant upon the relationships and events that exist beyond their walls. As such, supplier collaboration has never been so important. One of the best ways to generate a collaborative discussion and drive engagement is through the deployment and use of technology. This holds true for internal collaboration and for supplier collaboration as well.
Take, for example, self-service supplier portals, which allow suppliers to review invoice and payment status through a web-based site instead of having to call an AP department for updates. When suppliers are able to reduce their collection costs and gain greater visibility and assurance around payments, they can redirect their resources towards more the more strategic areas of customer relationship management.
Final Thoughts
AP automation, while ostensibly only for the accounts payable team, actually has a much wider impact than the simplification of the invoice-approval workflow. Both internal stakeholders, such as procurement and treasury, and external stakeholders, such as suppliers, stand to garner immense benefits from the AP automation process. Knowing the benefits and communicating them are, however, two very different things. That’s why understanding the types of metrics that stakeholders are interested in can be tremendously powerful; the only tactic now is to find those metrics and understand them.
Check out these related articles:
Why Metrics Matter in Accounts Payable
Two Approaches to Building a P2P Process
The P2P Blueprint: Who Needs to Get Involved?
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