According to the Institute of Finance & Management (IOFM), 53% of accounts payable managers believe that a Procure-to-Pay process improvement initiative should be initiated by their financial departments. Faced with an increasingly competitive market, this investment addresses productivity challenges and operational performance, the importance of which continues to grow each year.
The digitalisation of processes, in order to make them more efficient, is at the heart of all transformation strategies of the finance function. In this quest for performance, the most time-consuming and costly tasks are targeted first, including supplier invoice management, which tops the list. But the digitalisation of the Procure-to-Pay process is a source of benefits that go beyond the simple return on financial investment.
Technologies at the service of the finance function
The digitalisation of the finance function must meet many challenges: regulatory constraints, integration with ERP, ageing information systems, HR challenges… But today there are many solutions to deal with it and allow companies to integrate the their business processes through dematerialisation and automation:
- The document capture scans all on paper documents and thus facilitates processing
- The intelligent capture data identifies, extracts and classifies the data directly in the ERP client
- The automated Procure-to-Pay offers the opportunity to strengthen internal control and ensure the existence of a reliable audit trail, secure supplier payments reducing the risk of fraud, comply with regulations and payment periods.
- The AI and RPA can perform many tasks with low added value that once required human intervention.
- Cloud enables decentralised connection and data sharing, source of operational efficiency
The use of these technologies makes it possible to evolve the existing supplier management processes in companies, and to optimise them.
Challenges and opportunities
Increasingly complex processes
In its report on the future of supplier management, IOFM argues that more than one out of two accounts receivable managers believe that Procure-to-Pay processes are becoming more complex. These fluctuations can be attributed to the variety of channels used to send invoices, to the diversity of their format (paper or digital), the use of different ERP platforms and also the increasing complexity of applications. In addition, the interconnections between services are becoming increasingly diversified and this trend is not ready to reverse.
In this sense it seems essential for companies to choose an integrated solution, effective and especially agile that can adapt to all its future developments. Thus accompanied, the companies will be able to drive their digital transformation without risking to lose competitiveness and be ready for the challenges of tomorrow.
Faced with these challenges, the benefits of automating the Procure-to-Pay process (and its impact on all of the company’s operational and strategic services) are all the more noteworthy. These advantages include the opportunity of discount on early payment. In fact, thanks to the automation of supplier invoice payments, the company obtains financial benefits on the one hand, but also improves its supplier relationships while ensuring unfailing respect for the new regulations in force on payment deadlines.
Still in its infancy in Europe, the discount granted in the case of payment within 10 days, has largely developed in many countries such as Germany and the United States. According to the IOFM study, 80% of US companies regularly receive these rebate offers. With this process companies can save 1% on each order which allows an annual return of 18%, an amount well above any interest due to a bank investment.
But the opportunities for automating Procure-to-Pay processes are also strategic. Indeed, the information collected during the processing will allow the development of auditing, the further understanding of the supplier requests, the calculation of more accurate budgets but also the monitoring of optimised KPIs. The analysis of the company’s performance can thus be observed and controlled thanks to dashboards updated in real time. A real boon for all financial managers in their quest for strategic optimisation on the short as well as the long term!
Source: IOFM Special Report: The Future of Accounts Payable: Digital, Profitable and Strategic