Accurate and relevant data directly impacts business success. That may seem like an obvious statement, but when you think that many companies don’t have visibility of basic transactional data, it’s very relevant. These organisations can’t rely on the accuracy of their information, so they make assumptions or rely on intuition to guide crucial decisions.
Digital data is less prone to manual errors, which makes it the cornerstone of successful automation. Once businesses can automate processes, they can create insights that lead to meaningful improvements.
But the business benefit, as we will see, does not come just from collecting accurate data. This is the first step. Businesses need to analyse, put data into action and build an instil a driven management culture if they’re to make the most of their opportunities around their buying and financial functions.
Companies have a huge opportunity to improve their buying processes with better data towards data driven procurement . From my work in the medical industry, I observed how hospitals bundle products together so surgery staff have everything to perform an operation in one package. These products have a limited shelf life, but clearly they need enough stock – so putting data into action to enable Just in Time ordering can transform their buying processes.
Many supply chain solutions are designed to help manage indirect spend. However, less focus is put on optimising direct spend and data driven accounts payable automation. The right data enables you to feed a planning system with real-life transactional information, instead of estimates. This improves business processes, AP and procurement processes at their core, in a sustainable way.
If you’re not moving forward, you’re moving backward
Basic automation founded on accurate data can achieve some quick-hit savings, but these benefits get eaten up quite quickly if you don’t keep moving forwards. By continually building more analytics and more action on top of the current situation – however advanced – new benefits will be uncovered.
For example, maximising the value of spend is a crucial, on-going project. You may get spend down from $100m to $90m, but how do you get more value from that $90m? Additional value may come from further cost reduction, lower headcount, revenue increases, or process improvements.
A huge advantage can be had from maximising your financing power
Having cash on hand, for example, allows you to pick specific suppliers. If you have restricted cashflow, the big suppliers, with their long, drawn out payment cycles, are the only option. But there’s less room to negotiate on costs or procedures.
Cash poor companies might be charged 12% interest, for instance. Or, they may be stealth-charged a higher price for the product – without analytics in place, these companies won’t notice the increase.
Many businesses solve this problem by making use of flexible financing tools that allow them to resolve cash flow crunch points in the short term and avoid hefty interest rates that can slow down growth.
Making the most of data driven business opportunities
When you get all data into one place, analyse it and take action based on it, you can start to layer even more value-add services on top such as discounting, card payments and innovative financing. We see this as an exciting opportunity area for businesses.
The most intelligent companies have accurate data, which they analyse to optimise the P2P process. And yet, there are bigger opportunities out there to create a healthier, more balanced treasury statement and proactively manage cash flow. Whether it’s finding the right financing tool for the specific situation, or implementing dynamic discounting to speed up cash-flow, companies that put data into action find and capitalise upon opportunities to make their businesses better. And as time goes on, more and more services will become available to those with accurate, analysed and actionable data.
Laying the foundations for success
Implementing automation systems is not the end of the journey, it’s the first step. There is always a need to integrate data, analyse it and put it to action. The early steps pick off low hanging fruit, then later you can maximise your opportunities and your return on investment in more impactful ways.
Data is power. Those who have better data have a competitive advantage when it comes to planning, forecasting, optimising cash flow and negotiating with business partners. Whatever stage your company is in, it is never too late to get serious about your data and harness the potential it holds for data driven AP and procurement automation, cash flow management and, more generally, the success of your business.