Business disruption prompting business innovation
We’ve all heard the phrase, “Necessity is the mother of innovation”. And if 2020 has taught us anything, it’s that this is absolutely true. In the wake of the mass business disruption our global economy has seen recently, business leaders are experiencing this concept firsthand — witnessing as cultures evolve in response to unexpected circumstances and act as a catalyst for innovation and change.
Manual AP invoicing has been outdated and inefficient for years now, so when business across the globe encountered significant disruptions, companies with digital transformation still on their to-do lists felt the impact on their operations far more than those already using automation. Business continuity is now a top priority for most supply chain and finance leaders, causing fundamental shifts in AP functions and a need for innovation.
So, what does the New Accounts Payable department look like? What has changed, and what changes are here to stay? And most of all, how can organisations promote business continuity and create a more strategic AP?
Enabling remote work
Once seen more as a perk, the ability to work remotely has quickly become a key part of business continuity plans — making workplace flexibility a necessity, rather than just a perk. A surprising amount of AP teams are still manually processing invoices. This is shocking because, theoretically, AP is a department that can be 100% digital and have all processes done remotely. For AP departments already using a cloud automation solution, transitioning to a remote work environment can be relatively seamless when major business disruptions make it difficult or unsafe to work in an office space.
Finance leaders have to expect the unexpected and prepare accordingly for mass disruption, and the best way to enable remote work and bolster operational continuity is through a cloud AP automation solution. With workflows digitised and invoicing automated, AP operations can continue from any location uninterrupted and uncompromised in quality.
Eliminating manual processes
The cost of paper and time wasted on low-value, manual tasks have been key drivers behind the growing shift to digital AP processes as AI-driven technologies continue to advance. And most importantly, the ability to work from anywhere comes largely from cutting out those highly manual tasks like tracking down paper invoices, repetitive data entry, manual routing, and copying and following up on invoices. This in turn also makes staff more productive, gives them more time to spend on value-added tasks, and provides more visibility into the entire process.
Not only is eliminating paper processes now essential just to keep up with competition but automating AP processes with AI-powered solutions is the most effective way to empower remote workers, maximise efficiency and create more meaningful work for AP staff.
Optimising cash flow
Having unproductive cash tied up in inefficient AP processes poses a huge threat when economic disruption hits. The new accounts payable department has a more intense focus on cash flow and payment terms and takes a more disciplined approach to its financial processes to work toward optimising the cash conversion cycle. It must also have a more strategic spend management approach in order to combat overspending, lower compliance risks and strengthen relationships with vendors.
Looking ahead, non-digital AP departments will have an even harder time paying suppliers on time. The quickest, easiest and most secure way to pay suppliers is electronically. Given the importance of cash flow in uncertain times, companies should develop treasury plans for cash management as part of their overall business risk and continuity plans.
Improving supplier management and relations
Closely managing supplier relationships and ensuring suppliers are getting paid have always been crucial to preserving the integrity of supply chains and limiting disruption. And now, bolstering supply chains and supplier relationships have moved straight to the forefront of AP priorities, as being able to fall back on quality, long-lasting vendor relationships is a sound way to contain the ramifications of unforeseen business disruptions.
The new accounts payable department is one that strives to cultivate trust with vendors by consistently delivering accurate, on-time payments. With invoices processed, AP automation makes preserving a supplier-friendly reputation easy and leverages quality supplier relationships to help re-establish supply chains in the long term.
Having access to accurate AP data and Key Performance Indicators (KPIs) is the only way to get an accurate read on your real-time financial health to make informed business decisions, especially when navigating times of business upheaval. Without end-to-end AP visibility, keeping a close eye on cash, tracking productivity and forecasting trends can be complicated and time consuming. And because manual AP environments don’t allow for much process visibility — or any visibility for that matter — that’s one more fundamental reason AP digital transformation has become a necessity.
Creating a more strategic AP
Even though modernising AP has been imperative for years, the slow adoption of automation put many organisations in a highly vulnerable position when the economy experienced a sudden global slowdown. On the contrary, early adopters of AP digital transformation were able to strategically transition and adjust with changing circumstances and felt far less of an impact on their supply chains and bottom lines.
Accounts payable is in a different position today than it was only a matter of months ago. Business and financial leaders can either realise the changes that have created the “new normal” for AP and take the necessary steps to properly plan and prepare for them, or they can sit back and wait to see how things play out. Our advice? Automate AP processes and don’t look back!
What to dive deeper? Read the full white paper here!