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Why CFOs Must Invest in a Paradigm Shift

Our COO, Julie Negrete-Anderson, sits down with PYMNTS' CEO, Karen Webster, to outline why CFOs must embrace AP Automation and enable business continuity.

How to Automate AP Series: Podcast #4

If you missed our third podcast, you can access it by clicking this link: Exploring the Path of Least Resistance to AP Automation.

This year we've all been forced to make abrupt changes to our operating procedures.

For some of us, the changes may have been relatively small, resulting in a shorter commute (i.e. a walk to the kitchen table or the home office in place of a 45-minute drive or train ride).

For others, the migration to a remote working environment was far more impactful. 

AP departments are typically still very reliant on paper and manual processes. Many businesses are still primarily paying their suppliers with paper checks, requiring AP personnel to print and mail them from the office. 

Many senior finance professionals agree that paper-based processes are no longer a viable business solution moving forward. And yet, paper remains a staple in finance departments due to the perceived cost of digital transformation. 

Speaking with PYMNTS CEO, Karen Webster, OnPay Solutions Founder and Chief Operating Officer Julie Negrete-Anderson explained that, contrary to what many chief financial officers (CFOs) assume, the cost of this AP paradigm shift might not be as high as once thought. Indeed, the costs of failing to act may be far higher, she said — and not all of those costs can be measured in dollars and cents.

"Sometimes, organizations don't account for those costs because it's baked into how they look at department expenses. It's hard to exact the cost of not doing something."- Julie Negrete-Anderson


Buckets Of Inefficiency

Manual workflows create problems, but Julie isolated three main areas where pain points can be felt the most when organizations fail to modernize. 

"Perhaps the most obvious is paper, and the physical act of moving documents between personnel, coding them, and filing them appropriately. The second bucket of inefficiency is in the financial cost of that paper, both in the form of processing physical invoices and printing checks, as well as the cost of labor associated with pushing paper. Finally, the third category is in the inefficiencies built into legacy workflows." - Julie Negrete-Anderson 

In the last category, Julie pointed to the persistent belief in AP departments that there's "no need to fix what isn't broken," keeping them stuck in the past. This creates even more problems down the road because manual workflow optimization cannot be solely achieved through an automation tool. 

"Sometimes, revisiting how things are being done doesn't resonate. They've got their mindset that, if things are 'working,' then they're OK with it."- Julie Negrete-Anderson

This was precisely the challenge for one prospective client of OnPay's, whose AP manager had explained that she had to physically take home the company's laser printer to continue printing checks, then bring those checks to the CFO's house to sign and mail off. Although not efficient, this paper-based workflow was functional for the company — until the pandemic hit, that is.

Finding The Right Fit

The impact of COVID-19 has led many CFOs to prioritize automation projects they've been talking about for years. 

Julie noted that it's important for businesses to factor into the costs of failing to embrace AP's paradigm shift when making these decisions. There are, of course, the costs associated with manual, paper-based workflows, which can mean a single invoice costs as much as $20 to process.

But there are other costs to consider as well, Julie said.

There's the cost of time that could be spent on more strategic initiatives, in addition to the cost associated with the lack of cashflow and payments visibility due to inefficient and siloed operations. 

On the other hand, Julie also highlighted the importance of understanding the true cost of digital transformation.

"What's missing is the understanding that a huge, six- or seven-figure project is not necessary in order to have a transformation." - Julie Negrete-Anderson

Technology today offers the opportunity for organizations to keep many of their existing systems in place, and to optimize workflows without forcing teams to ditch the tools they're familiar with that are working efficiently. At the same time, identifying and procuring technologies that can seamlessly connect to those existing systems and guide AP teams through an optimized workflow, allows firms to take a gradual approach to modernization.

This is particularly important for business continuity planning as firms continue to operate in a remote work setting. By minimizing the costs of digital transformation — both financial and otherwise — businesses are finally able to take actionable steps toward change they have been avoiding for years.

"It's really never been easier for a CFO to plan a digital transformation. The paradigm shift doesn't have to be immensely disruptive to your organization." - Julie Negrete-Anderson

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