Why We Love AP Automation Services (And You Should, Too!)
Accounts Payable(AP) automation may be defined as the amalgamation of detailed complex process knowledge and advanced technology to automate and derive efficiency. According to a recent Hackett Report, the top performers are processing over 40,000 invoices per person per annum, whereas laggards are processing less than 10,000. With reduced cycle times, also comes the opportunity to earn early payment discounts.
Craig Vaream, Managing Director, J.P Morgan Treasury Services, had once stated that the movement to paperless receivables is being driven by the following 3 factors:
- The need to become more efficient, especially in a tough economic cycle
- The need for better risk management and business continuity program
- Advances in technology
As the Covid-19 stretched, consulting firm McKinsey & Company surveyed 900 business leaders about their digital transformation efforts. Those leaders said that the pandemic sped up the transformation of many of their internal operations by up to four years.
Thus shift towards automation is evident across industries and as per a recent Forbes article, warehouse automation software and systems are anticipated to become a $47.4 billion market by 2023. Thus, in simple terms, automation is redefining management.
However, as automation increases, many worry that the rapid adoption of technology to reduce manual work will result in significant job cuts, in a time when unemployment is already a concern. According to a report from the World Economic Forum, which draws from the surveys of 300 major global companies, increases in automation would make some roles redundant, but it could also create 97 million jobs worldwide. We have seen this already setting stage in industries like Healthcare and Banking & Financial Services.
P2P is one of the most complex business processes as it involves several levels of cross-functional collaboration including sales, finance and operation. It also takes into account the integration of these functions with the existing system(ERP). As a result of which, the user journey becomes complicated giving rise to inefficiencies at various touch points.
Disadvantages of an inefficient P2P process:
The impacts of an inefficient are a hindrance to seamless organizational functioning due to its strong impact across pivotal business functions. Some of them are listed below:
Cost Inefficiency:
Higher cost per requisition, invoice and expense claim processing
Limited Visibility:
Silo-ed systems makes managing spending, cash flow forecasting and cost savings unpredictable
Increased Risk:
Inefficiency in P2P value chain leads to more exposed risk across supply chain due to reduced visibility and inability to spot exceptions
Damaged Goodwill:
Goodwill is an intangible asset of an organization. Delayed and disputed payments leads to bad supplier relationship and this in long term impacts brand value
Organization Readiness
An interesting survey results show that, when respondents were asked the primary reason of not shifting to AP automation, the primary reason was Lack of Budget followed by Our current processes work well. So, while we understand the hesitancy of a drastic shift, a phased approach can be a suitable choice.
The first step in this strategic transformation is READ MORE HERE: https://bit.ly/3riO1kq
