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Digital transformation of accounts payable

August 29 2018

Digital transformation of accounts payable: The well-kept secret of companies that dominate their industry

Digital transformation is critical to the success of today’s companies. Integrating technology into operations is no longer an option for those seeking to gain a competitive advantage in the 4.0 industry. Several areas of business are already well advanced in their digital transformation, particularly human resources, operations and marketing. However, many companies are slow in improving their accounts payable processes, which have a tremendous optimization potential.

It’s high time for accounts payable to join the digital revolution

According to a 2015 study by Aberdeen Group, the average cost to process a single invoice is $15.61 and the average time is 9.7 days! Financial directors rank accounts payable at the top of the list of the most time-consuming, laborious and paper-intensive functions, ahead of accounts receivable, payroll management, tax and audit.* The often manual processes of accounts payable are simply too slow, ineffective and costly to generate value in the modern working environment.

A solid financial data management infrastructure can eliminate up to 25% of a company’s** workload and create a clear competitive advantage. By equipping your accounts payable department with an innovative high-tech system, you’re giving it the means to generate value for your company. You’re also providing decision-makers with quick access to accounts payable data, enabling them to respond swiftly to opportunities.

“Every company is a software company.”

Satya Nadella, CEO of Microsoft

According to the McKinsey Global Institute, nearly half of all remunerated activities in the global economy can be automated with technologies that already exist. Professionals working in accounts payable departments would be wrong in fearing this troubling reality—it’s the perfect opportunity to replace those difficult, irritating tasks with fulfilling responsibilities that can generate sustainable value for their company.

What it means… in practical terms

Electronic management of accounts payable enhances financial services with the following principal benefits:

  • With invoices digitized and indexed automatically, manual data entry is eliminated. Now you can conduct a search in the index and quickly obtain relevant results.
  • Workflows built into the software automatically send invoices to the appropriate person for validation, approval and processing. Automatic reminders are sent via email to flag any upcoming payment deadlines, which help to avoid late payment charges.
  • Integration into a company’s existing financial systems allows you to access all data from the accounting ERP.
  • Archived documents can be viewed and processed from anywhere without having to take them out of the system for validation or processing.
  • Archiving is secure and standards-compliant, and documents are deleted at the expiry of regulatory retention timelines.

Three good reasons to automate your accounts payable

  1. Increased productivity

With a digital process, most invoice processing steps are automated, including receipt, validation and approval. A report by Aberdeen shows that digital technologies allow invoices to be processed 3.9 times faster than when handled manually and reduce the cost of processing an invoice to $3.34 (vs. $15.61). Your staff can now focus on the invoices that require more attention.

This increase in productivity affects not only the accounts payable department, but the entire company. The entire lifecycle of a payable invoice does not only involve the accounts payable department. Several people and departments put time into making a purchase decision and communicating with each other about it. With greater access to, and better use of, the available information, your accounts payable department will go from an administrative cost centre to a strategic asset for your company’s financial operations.

  1. Better tracking of invoices and greater visibility

Locating paper invoices and providing data in real time are major challenges for accounts payable. Also, a lack of quickly accessible data makes it difficult for a company to evaluate its accounting operations, optimize its cash position and develop financial strategies. Responding to information requests from auditors is a colossal task under such conditions. Having a fluid digital process tightens up quality control and minimizes human errors. It allows you to detect duplicate invoices automatically, verify amounts against purchase orders, report missing purchase orders, etc.

  1. Cost savings opportunities

Digital processes enable accounts payable to become a source of cost reduction for companies. The arduous business of manually tracking, processing and approving invoices can lead to loss of discounts with certain suppliers, penalties for late payments and sometimes even deteriorating business relationships. The digital transition of accounts payable allows you to quickly benefit from remittances or discounts and do away with late payment charges.

The keys to success

For a successful digital transition of your accounts payable, it is critical to carry out an audit to analyze the flow of documents in your business processes, from purchase decision to invoice payment. Choose an intuitive, well-designed automation software that is receptive to human behaviour. A good program with a simple and elegant user interface makes approval and verification tasks easier. Plan your transition efficiently and choose the right solutions—those are the secrets to a successful digital transition.

 

CONTACT US TO LEARN HOW TO GET STARTED ON YOUR ACCOUNTS PAYABLE DIGITAL TRANSITION

 

* 2017 survey conducted by the Institute of Finance & Management (IOFM) with financial controllers

** BCG, November 2017, “How digital CFOs are transforming Finance

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