How to Automate AP Series: Podcast #2
If you missed our first podcast, you can access it by clicking this link: What it Will Take to Kill the Paper Check.
In the wake of the pandemic, businesses need to adapt to drastic changes in their work environment. Many of the older manual and paper-based processes that have been staples in AP and AR departments for decades are no longer viable long-term solutions.
"In accounts payable and accounts receivable, if it's still a paper-based or manual process, it must be scrutinized heavily. Any strategic CFO will recognize the need for digital transformation." - Neal Anderson
For many Chief Finance Officers and AP personnel, recognizing the need for digital transformation and putting it into practice may seem like two very different things. We can all agree that shifting away from paper processes in B2B payments is good for business operations, but figuring where to start can be challenging at times.
As Neal explained, it won't be easy for accounting departments to digitally transform all of their processes at once. Finance leaders will need to isolate the low hanging fruit to quickly and efficiently automate accounts payable (AP).
The Rise of the Virtual Card
One of the most glaring issues brought to light by the shift to home working environments is the incompatibility of paper checks in remote AP teams. Payers need the ability to issue payments to suppliers from their kitchen table, making the printing and mailing of paper payments obsolete.
Fortunately, automating AP payments is the easiest way for finance departments to initiate digital transformation, and reap the rewards of more secure - and revenue-generating - electronic payment methods
While ACH payments are an acceptable way to pay suppliers, the use of virtual cards (vCards) is crucial for both payers and payees.
“The ultimate B2B payment is really a virtual card. From a payer standpoint, this generates revenue in the form of cashback to the payer, and for any company that's looking to offset the negative impact they've experienced from the pandemic, such as loss of business, this is a great way to do that." - Neal Anderson
For suppliers, virtual cards offer maximum security without requiring any alterations to their typical card acceptance procedures. Virtual cards are also one of the fastest ways to get paid, improving incoming cashflow and reducing day sales outstanding (DSO).
For both sides, the transaction data available through vCard payments allows for unparalleled remittance and reconciliation information - available at any time in our cloud-based AP Automation platform.
“To be able to provide that information in a specific file format that can be ingested into an accounts receivable system is a great motivator for an AR department to accept those payments." - Neal Anderson
The eInvoicing Challenge
Digital transformation is often perceived as a daunting project, requiring years to fully implement and tens of thousands of dollars. Fortunately for finance leaders looking to make the shift to AP Automation, it's never been easier than it is today.
For many vendors, the shift to working from home has forced AR departments to email invoices out to their clients, if they weren't doing so already, creating a false sense of digitization for AP departments.
"There's a misperception that receiving an invoice as a PDF document attached to an email is an electronic invoice. That's not the case. That PDF is probably still going to be printed out at some point." - Neal Anderson
Without advanced automation technology to scan the required data fields on a "digital" emailed invoice, AP professionals are forced to complete the invoice approval process the same way they would with a paper invoice.
Additionally, manually entered or scanned invoices without the utilization of invoice automation won't have the necessary data for a streamlined reconciliation process, even if the payment is made electronically.
One of the reasons why transforming invoice workflows is so tricky is that every business has different criteria they need to meet to push invoices through the approval process. Most companies, especially larger mid-market and enterprise organizations, need customized workflows created to suit their needs.
Invoice processing is connected to so many other areas of the business, like inventory management, procurement, purchase order tracking and payments processing. Any disruption to legacy processes will likely impact other areas of business operations.
However, according to Neal, the potential "disruption" to legacy workflows could actually be a good thing, further automating other manual processes as a side effect of shifting to eInvoicing, thanks to the ability to integrate data across platforms.
Prioritizing Buyer-Supplier Benefits
Not only are AP and AR departments looking for ways to improve their current systems and procedures, they're also seeking long-term solutions that streamline processes and enable remote AP and AR functionality for the future.
That could mean opening up new lines of revenue from virtual card payments, reducing the cost of paper invoice generation or strengthening buyer-supplier relationships through enhanced data connectivity.
For the growing number of businesses intensifying their efforts to cut costs, this opportunity is incredibly valuable for both AP and AR departments.
"When you look at the return on investment of a digitized, no-touch invoicing and no-touch payments process, it really lowers expenses. Anything that can help both the AP and AR department mitigate risk with this pandemic has got to be evaluated, and action must be taken."
Regardless of how complex your organization is, AP Automation is only a few weeks away.
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