How to Automate AP Series: Podcast #3
If you missed our second podcast, you can access it by clicking this link: Buyers and Suppliers Tackle the Invoice-To-Pay Digitization Journey.
This year has thrown a massive curveball at every aspect of business operations. Perhaps none more so than B2B payments.
Regardless of which side of the business-to-business payments coin you look at (payables or receivables), abruptly changing the way accounting departments process transactions creates a large splash and a far-reaching ripple effect for an organization as a whole.
"The reality check is, the enthusiasm for digital transformation has not waned at all. If anything, it's even more top of mind." - Neal Anderson
While the timeframe for automation has undoubtedly moved up for most businesses, in some cases, the familiar trepidation towards change remains. Over the last six months, AP departments have had a lot of time to isolate their primary deficiencies and develop strategies for AP Automation.
Anderson offered insight into how middle-market and large enterprises should plan their automation journey to achieve the best results, while quickly and efficiently filling gaps in the current payments process.
Preserving The Bank Relationship
With traditional financial institutions (FIs) often unable to offer the agility of AP Automation that corporates now require, the logical path to follow is to consider collaborating with a FinTech.
This is an effective strategy, said Anderson, but can also threaten to add more disruption to the AP modernization process than is necessary.
"What a CFO needs to decide is whether they are comfortable with somebody taking possession of their money. If you've got $1 million in disbursements this week, are you comfortable having a FinTech pull that money, then disburse it to vendors?" - Neal Anderson
This may not be an issue for smaller firms as they're likely seeking a solution that outsources as much of the AP process as possible.
However, for larger organizations maintaining control of the cashflow at all times is critical. For this reason, Neal recommends finding an AP solutions provider that enables firms to maintain their longstanding baking relationships.
Neal believes that organizations with millions of dollars in payables and multiple, longstanding banking relationships will find the path of least resistance to AP Automation if a FinTech partner can work with their financial institution to move funds.
Finding The Right Fit
Maintaining existing banking relationships is key to limiting the disruption caused by shifting internal practices and procedures. But according to Neal, there are other best practices to consider when transitioning to an automated accounts payable process.
Finding an AP solutions provider that seamlessly integrates with existing enterprise resource planning (ERP) and accounting systems will also ease the migration to a modernized B2B payments process. Solution providers with proper fraud controls are also crucial, particularly as businesses increasingly recognize the importance of fostering strong vendor relationships.
Another critical area to consider is real-time reporting and instant 24/7 access to essential data. Some AP Automation solutions providers have the ability to automatically obtain ACH and virtual card transaction data, reducing the reconciliation pain of moving away from paper checks while also providing vendors with a secure self-service portal to download their remittance information and process payments.
"One of the most critical factors in any decision is how secure a system is. What's really key is being able to provide full visibility into the entire process, from who's getting paid to what dollar amounts are getting paid to how that vendor is getting paid. If a vendor makes a change and wants to be paid to a different bank account, having visibility into that change and being able to confirm it is key. - Neal Anderson
Minimizing The Disruption Of Change
Change will inevitably cause some disruptions to current workflows, whether an organization is considering transforming AP or another area of the enterprise. It's important to remember that disruptions are often a good thing for businesses, granting them the ability to replace or reshape broken and laborious procedures in favor of more streamlined operations.
In the case of accounts payable, working with FinTechs that preserve banking relationships and integrate into ERP systems is important. But it's also essential for firms to realize that change does not have to be drastic to be effective.
The migration away from the paper check, for example, doesn't necessarily mean a business must jump through hoops to collect transaction data and settle invoices. Instead, CFOs can work with their existing payment files and store that information digitally for seamless uploading to an AP Automation portal.
AP teams can start small, and through strategic FinTech collaboration, can make a meaningful impact in their accounts payable digitization journeys.
"We're trying to change the way business has been done for the last 70-plus years. Change is always a challenge. But if you can work within your existing environment and offer a solution that can enable an accounts payable manager to process payments from his or her kitchen table, and have the CFO approve a transaction from their smartphone, it's a much better process." - Neal Anderson
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