COVID-19 has accelerated a shift that had already begun: AP transformation. For reasons extending beyond practical or organizational considerations relating to staff working from home, today’s decision-makers must enjoy ready access to highly precise liquidity management data if they are to succeed in weathering the storm.
AP has become a key indicator. It is difficult to devise scenarios and create models when you do not know precisely what you owe or when payments are due. Additionally, in times like these, errors can severely impact a company’s financial position.
Hence today, it is more important than ever for companies to be able to model financials (cash flow, profit and loss. balance sheet, etc.) and identify triggers that could significantly impair liquidity. By doing so, they ensure that they stay ahead of the game and remain poised to develop scenarios and strategies intended to keep them afloat. AP automation is a great way to gain an accurate, overall view of company expenses and develop a focused financial scenario.
Following are several takeaways on how AP transformation can improve your financial position and enhance decision-making.
There are payable automation solutions that allow for improved productivity and enhances the internal control by the management. In fact, AP Automation has been the leading process that many companies start with on their journey towards more automation.
1. AP transformation: Adapting AP to remote work
AP digitization supports AP business continuity.
During the first wave of the COVID-19 pandemic, office workers found themselves having to work from home. Since they no longer shared the same space with fellow team members, they could not work with paper. As a result, companies had to adapt their processes. For those that had not digitized AP operations prior to the onset of COVID-19, the undertaking represented a massive shift. But there were no other options if they were to remain efficient. Ultimately, digitization spawned numerous benefits for many companies.
AP transformation: Saving time and trimming costs
With a digitized AP system, not only can you be certain that the entire team is working with the same information, it is also easier and faster to locate requisite information. As companies digitize their AP processes, they reduce manual processing which normally takes much longer but which is also considerably less reliable. They therefore find that they are better able to avoid late payment penalties, while saving time and trimming costs.
Enhancing data reliability
By digitizing AP operations, the finance department enhances data reliability and ensures that everyone on the team works with the same data.
With digitized invoices and processes, it is easier to establish verification processes, flag errors and detect potential fraud.
Another of the challenges brought to the fore by remote work relates to employees not being equipped to store blank cheques at home or to print or send cheques. By shifting to online or bank transfers, companies improved overall security while reducing the probability of lost cheques, late payments and so on.
Seizing additional opportunities
Once companies begin to digitize AP operations, it is usually not long before additional automation opportunities present themselves. The latter represent a natural next step in the process.
2. AP Automation for growth
Operating efficiency is viewed as one of the leading strategies for growth* in 2020. CEOs and CFOs consistently seek out ways to render companies more efficient and more profitable, especially since expansion can prove challenging in times of economic uncertainty. You might therefore wish to take another look at your AP operations.
Up to 40% of traditional day-to-day processing tasks can be automated. AP automation enables your team to focus on value added tasks, making it possible to enhance operating efficiency, reduce costs and errors, and render your financials more predictable.
Your team will, of course, require additional training to integrate new tasks into their duties. But employee training can prove extremely beneficial for a company. The investment in enhanced resource skills encourages employees to remain with companies for longer periods of time. Indeed, some 73% of interviewees in the LinkedIn Global Talent Trends 2020 survey indicated that they would stay with their company if there were more skill-building opportunities.
3. AP automation for enhanced decision-making
The finance automation movement began in earnest a few years ago despite reluctance by decision-makers to adopt technology intended to enhance their ability to make strategic decisions and gain, in just a glace, a clear understanding of their financial position.
As companies navigate the crisis at hand, the number one concern has become liquidity management. Never has the need been greater to be able to create different scenarios and models using the most accurate financial data available.
But how accurate is accurate given that manually processed data is inherently less reliable? What if you were to discover some unrecorded liabilities at the worst possible time?
Viewed as a transactional department, AP is typically one of the last functions to be automated. In the current context, however, decision-makers have come to appreciate the significant role of AP in developing financial strategy.
AP automation improves accuracy in payment reporting and forecasting, and makes possible quick, easy access to a company’s financial position. Available knowledge can provide leverage for negotiating better prices based on volume or, in a crisis context, for negotiating better terms, perhaps even a discount for early payments.
When operating in a crisis, time is of the essence. You require all requisite information as quickly as possible. Finance automation offers just that: reliable, readily accessible data on your company’s current financial position, data essential to making enlightened decisions and saving jobs, perhaps even your entire business.
4. AP transformation: Using artificial intelligence (AI) and machine learning to prevent errors and fraud
AP automation incorporates powerful artificial intelligence and machine learning tools.
Machine learning can help flag errors or detect potential fraud. Based on past transactions, the system reports possible anomalies such as duplicates or process irregularities for analysis. To prevent fraud, AI can be used to create a bundle of automated rules applicable to all invoices and payments. Any non-compliant invoice or payment is flagged for review by the AP team upstream of the transaction being completed.
AI and machine learning represent powerful ways not only to combat fraud but also to remain ahead of fraud by flagging it as it occurs. In times of crisis when control over cash flow and liquidity is crucial, fraudsters tend to be more active. Companies cannot, however, afford to waste time, energy and resources on preventable issues of the like.
Remote work came into its own as a direct consequence of COVID-19, forcing businesses to re-evaluate the processing of AP operations. Many have since discovered the power of AP automation as a tool for saving time and trimming costs.
AP Automation provides businesses with the opportunity to advance on the path to finance automation, and enables executives to prevent fraud, reduce errors and make decisions based on accurate, reliable data.
INTEGRIM can help move your organization forward through AP Automation. Contact one of our experts who will be pleased to assist you in choosing the solutions best suited to your specific needs.