Organizations are facing increased cashflow pressures during these uncertain times. And it’s becoming even more challenging for small and medium sized suppliers who have limited cash on hand. Learn how organizations can leverage automation and accelerate payments to their smaller suppliers to protect and strengthen the supply chain.
Small and medium-sized enterprises (SMEs) often have limited cash on hand and rely heavily on revenue from customers to stay operational and profitable. Even small hiccups and minor delays in payments cause major strife. So, it’s not surprising that these suppliers are facing tremendous cashflow pressures during this global crisis. Which means that buying organizations will need to step up and pay their suppliers on time, or even early in some cases, to keep the flow of goods, services, and money uninterrupted.
Paper and Manual Processes are to Blame
Amid growing concerns around the current economic climate, businesses are realizing that their payables operations are not up to par. Paper-based and labor-intensive processes (which result in errors, exceptions, and a lack of visibility) are usually to blame for lengthy invoice approval cycles and slow payments.
What’s coming to light in today’s situation is that inefficient processes aren’t just resulting in late payments and penalties. They are also putting a lot of strain on suppliers that might already be strapped for cash and impacting their ability to deliver goods and services on time. Some businesses might even go out of business, which in turn impacts buying organizations and their ability to do business. Overall global supply chains are being weakened as a result of this vicious cycle.
Visibility is Critical to Drive Change
Now that businesses are seeing more clearly these challenges and the overall effects of slow payments on smaller companies and the greater supply chain, many are ready to change. Retailers like Morrisons, Aldi, and Sainsbury’s are setting the trend of accelerating payments to their smallest suppliers to ensure that they can keep their grocery stores stocked during a period of high demand and supply chain disruptions.
Visibility is the key factor driving change. The need for visibility into operations is increasing while finance and procurement are undergoing an equally significant transformation. Automation, digitization, and economic disruptions are coming together to upend the status quo. For organizations looking to eliminate inefficiencies from accounts payable operations, automation is the answer.
Eliminate Paper from your Process through Electronic Invoicing
Paper is the enemy of efficient payables processes and on-time payment performance. Electronic invoicing – even something as simple as emailing the invoice as a PDF – reduces the payables cycle significantly, firstly by removing mail time from the process. Eliminating manual data entry of invoice information also results in more rapid processing cycles. A recent study by Ernst & Young found that e-invoices were handled in three days compared to 15 for paper.
Enable a Remote Workforce through AP Automation
If paper is the enemy of on-time payments, accounts payable automation is its best friend. Especially, in the current scenario where most non-essential workers are working remotely, having a cloud AP automation solution that can be accessed from any browser means that your AP teams can continue processing invoices from wherever they are. This ensures that payments to suppliers can continue to be made with minimal disruptions.
Leverage AI and ML Technologies to Drive Touchless Processing
Artificial intelligence and machine learning capabilities available as part of most AP automation solutions further increase straight through processing of invoices – by applying intelligent logic to automatically route, code and match invoices. More invoices are then processed without human intervention, freeing up AP staff to focus primarily on more value-added activities such as resolving exceptions, spend analysis, and managing supplier relationships.
Gain Visibility and Control through Advanced Analytics
Analytics technology has come a long way over the last few years, and we are seeing trends in using analytics to actually predict outcomes based on transaction history. Organizations are now able to gain complete visibility into their spend and processes and use analytics to proactively “alert up”, instead of just “drill down” after the fact. Which means that payments to certain strategic or small suppliers can be prioritized, to protect the supply chain.
The more visibility you have over your supply chain, the more can you understand how vulnerable certain suppliers (and in turn you) are. You can then take necessary actions to support and strengthen your supply chain.
Get the full picture of how automation can keep supply chains moving and small suppliers secure. Take a look at the full infographic here.