Supply chain problems and labor shortages are not going away any time soon, but that doesn’t mean businesses can remain stagnant says Shan Haq, Vice President of Corporate Strategy and Development with Transcepta. For companies of all sizes to grow and innovate in order to stay ahead of the competition, he shares a solution that could be in an unexpected place: automating the accounts payable (AP) and procure-to-pay process (P2P).
In our era of labor shortages and rising inflation, business leaders need to focus on doing everything they can to operate more efficiently and maintain margins and profitability. A key way to do this is by deploying automation that enables organizations to become less reliant on labor.
When it comes to automation, one of the lowest-hanging fruits is accounts payable (AP). By automating AP and digitizing the procure-to-pay (P2P) process, you can do far more with fewer people, and you can scale workloads up and down without having to bring new employees on board. This is a great way to counter inflation and rising labor costs.
But the benefits of AP automation and digital procurement don’t stop with just lower labor requirements.
Better Control Over Cash Flow
AP automation and digital procurement also give you more control over your cash flow.
Automating AP processes reduces the time it takes to move all supplier invoices through approval and ready for payment. Eliminating this delay gives you control over the timing of the payments you make. During an inflationary time, you can use that control to your advantage by paying early to take advantage of available payment discounts or holding on to payment until it’s due to further extend your cash flow.
With more cash on hand, it’s that much easier to invest in business innovation — whether that’s tapping into new markets, hosting an event, investing in new products or joining forces with new partners.
Increased Access and Visibility for Every Supplier
In an era of supply chain disruptions, updating your AP and P2P processes is crucial to establishing more efficient business processes, but it must be done in such a way that doesn’t leave your suppliers behind. Be sure to let your suppliers know how these changes will benefit them too, such as providing them with a feedback loop or visibility into transaction status.
With modern AP automation, you will establish a direct digital connection to all of your suppliers. This enables both you and your suppliers to ensure that invoices are processed securely, accurately and automatically so that payments are prompt. At the same time, this also reduces the chances of unhappy suppliers or a supplier that puts you on a credit hold — something that could further disrupt your supply chain.
What’s more, you’re going to have centralized visibility into every supplier’s account and the associated transactions. With this information, you can run analytics to make more informed, better decisions on when to make payments, which suppliers are offering discounts, which types of transactions are causing supply chain disruptions, and how you can make adjustments to build a more efficient operation moving forward, among other things.
Turning AP into a Strategic Partner
Ultimately, AP automation enables businesses to transform AP from a function to a strategic partner. Instead of needing employees in AP devoted to processing invoices by hand, you’re able to rely on technology to handle the bulk of the heavy lifting instead.
As a result, AP won’t have to research as many invoice exceptions, and they won’t have to manually code or approve invoices because it’s all automated. This frees AP staff to focus on other important areas of operations, such as researching new payment strategies, deciding whether to use P-cards or ACH deposits as payment tools, and working with finance to get a deeper understanding of overarching finance goals.
Additionally, because you won’t need as many employees in the AP department, you can reallocate them to focus on other important business goals. Maybe you need to hire more developers or add members to the marketing team, for example. Whatever the case may be, you’ll have the resources you need to send reinforcements where they can be most effective.
Accelerating Innovation With Digital Procurement and AP Automation
From optimizing cash flow and building a more efficient AP function to increasing visibility into payments and turning AP into a strategic partner, digital procurement and AP automation solutions can help your organization get to the next level.
Not only does digitization and automation put your business in a position to scale without adding people, but it also helps you save money, which can then be invested in other areas of operations — whether that’s people or technology is up to you.
It’s no secret we’re living through challenging times. Thriving in them requires making smart decisions that enable you to operate faster, more efficiently and with purpose.
While updating your AP and P2P processes might not be the first thing that pops into your mind when it comes to innovating, it can serve as a cornerstone of your broader digital transformation strategy. With the right tools and strategies in place, you can build a more resilient business — one that’s ready to fight off whatever storms come its way.