Given the swathes of compelling evidence to support such a move, and the enormous market momentum driving it when it comes to AP automation the time to act really is now, writes Sami Peltonen, VP of Purchase to Pay Product Management at Basware. Indeed, there has never been a more opportune, or crucial, moment.
Live in the moment, they say. Focus on the ‘now’.
Good advice. But also a lot more easily said than done. Especially when the ‘now’ is subject to as much uncertainty and unpredictability as it has been over the last 12 months or so.
I guess all anyone can really do in the midst of that kind of disruption is try to make their journey through the ‘now’ as smooth, continuous, and pain-free as possible. To see where we’re going, however, it’s also important to think about where we’ve been.
Take the operational landscape in many finance functions during the lead-up to the pandemic, for example.
Their huge reliance on ‘ordinary’ everyday payment processes to keep functioning at even the most basic level; their tendency to take such processes almost entirely for granted. Both all the more concerning when you think about what those processes typically comprized – and often still do.
Slow, manual, and paper-based, with multiple checkpoints, lost or mislaid invoices, and time delays thanks to insufficient or non-existent process visibility. Poor integration with ERP and other key systems. Equally poor spend and transaction transparency. All leading to inadequate spend management, limited document visibility and, worse, misplaced documents, excess administration costs, and low levels of user and supplier satisfaction.
And so it goes on.
If we’re honest, such processes have always been less than adequate. All the more noticeably as the pace of business has increased over the years. But seen through the prism of today’s world, they start feeling not merely inadequate, but potentially detrimental and even damaging. Particularly when one considers even the headline benefits of Accounts Payable automation and digitization.
Change the AP game with digitization and automation
Submitting, processing, and paying invoices electronically is both easier and faster. It automatically means less paper, less physical document handling, and fewer manual interventions (a critical consideration in the current climate). Basware, for example, enables >95% of invoices to be processed without human intervention, the capture of all financial data, and complete transactional visibility.
The automation of associated workflows – routing, coding, matching, and so on – drives similar benefits.
Done properly, automation allows finance teams to work and collaborate from anywhere, at any time, on any device; the necessity of which has been clear for all to see in recent months. And with all processes kept visible throughout, and the entire documentation journey stored in the cloud, the audit trail couldn’t be clearer – all without the time-consuming, laborious trials of manual filing.
Then there are the technological benefits that have burst into commercial consciousness over that same timeframe. Machine learning (ML) and Artificial Intelligence AI for instance. Whose huge, but hitherto largely unfulfilled promise is now coming to practical fruition for all manner of business in all manner of circumstances.
In late payment prevention and early-payment discount optimization. In accelerating processes such as PO and invoice detection and management. In driving a range of intuitive new spend analytics. In improving e-invoicing rates and resolving process bottlenecks. In increasing spend under management and driving tangible reductions in costs and wastage.
Automation drives value, not only savings
Automation presents other, less easily quantified opportunities too. The chance for finance to step up and start contributing to the business at a more pivotal, strategic level for instance. To take the lead in driving and leveraging financial transparency.
At Basware, we call this transparent approach to business ‘Visible Commerce’, and it was echoed in a recent study from the Harvard Business Review Analytic Services wherein 90% of the executives surveyed said that increases in business transparency lead to better-informed decision making across the entire organization.
The ROI of AP Automation
It’s clear automation delivers a number of direct and positive bottom line impacts. What about the specifics? The numbers? How does the ROI stack up?
Pretty well according to a new piece of Forrester research. The analyst firm recently estimated the likely financial enterprise impact of an investment in Basware’s Procure-to-Pay (P2P) solution at a 315% ROI and a $3.8 million NPV (Net Present Value).
The resulting enhanced visibility of buying behaviors (i.e. who’s buying what, where) drives associated risk-adjusted savings of approximately $2.7 million over three years.
It generates similarly compelling productivity gains; in AP (almost $737k), in procurement ($679k), for end-users ($494k), $260k in early payment discounts, and $156k in legacy system maintenance savings.
The fact that all this – plus the obvious ESG (Environment, Social, and Governance) benefits – has seen Marks and Spencer, ASOS, and countless others saying goodbye to paper speaks volumes.
Hang on though, those companies are enormous. What if you’re ‘not big enough’ to go paperless? What if early adoption isn’t your thing’? Perhaps you just want to keep an eye on things and see what happens?
According to a recent Forbes article by the VP at Bayer Properties, Katherine Jackson, who oversees financial services for the company, such a mindset is one to be cautioned against.
While noting that she wasn’t advocating any particular system and strongly suggesting that companies should conduct due diligence and investigate their options, she said that the impact of moving to paperless AP had exceeded Bayer’s “wildest expectations”.
“In short”, she said, “I wish we had made the move years ago. I challenge you to take a long look if you think your organization is ‘too small’. Better is better, no matter the size.”
By way of starker evidence, according to a Board of Directors Survey by Gartner, 69% of directorial boards note that the pandemic – and the social and economic crises that have resulted – are accelerating their digital business initiatives. Are you among the one in three risking being left behind?
Not only should you never say never where AP automation is concerned then, you really do need to focus on the now.
To learn more, download the Forrester Study: The Total Economic Impact™ Of Basware’s Procure-To-Pay Solution.