AP Automation: Making Procurement Stark Raving Fans of Your Systems
The procurement and accounts payable functions at most businesses have traditionally operated as silos. But the functions are becoming more closely aligned as businesses look for ways to improve control over spending, strengthen contract compliance, and gain leverage in supplier negotiations.
As a result, procurement has become a strong ally in the accounts payable department’s automation efforts. Procurement benefits from accounts payable automation in three important ways:
1. Lower purchasing costs: Automation reduces costs across the procure-to-pay lifecycle. Electronic purchase order requisition eliminates labor-intensive back-and-forth phone calls and e-mails between purchasers and approving managers. Integrated catalogs help ensure that purchases are made with preferred suppliers at pre-negotiated prices and Service Level Agreements. Electronic purchase order presentment accelerates purchase cycle times and reduces manual paper handling. The ability for suppliers to convert (or “flip”) electronic purchase orders into electronic invoices eliminates downstream exceptions and streamlines improve approval. All of this significantly reduces an organization’s purchasing costs.
2. Fewer invoice exceptions: Invoice exceptions are as much of a headache for procurement as they are for accounts payable departments. Invoice exceptions result in phone calls and e-mails from suppliers regarding invoice and payment status, late payment penalties, and poor supplier relationships. Automation reduces exceptions by eliminating the manual keying and paper handoffs that cause mis-keyed or lost data, validating extracted invoice data against information stored in downstream systems, providing fast online access to supporting data, and identifying “problem” suppliers using reporting. Electronic invoicing solutions also provide suppliers with self-service capabilities for checking the status of invoices online.
3. Greater control over spending: Automation provides authorized users with instant access to purchase order and invoice data via a single system. Integration with systems such as general ledger and enterprise resource planning platforms delivers a 360-degree view of invoice data. Fast access to aggregated spend data enables businesses to resolve supplier inquiries more quickly, gain better visibility into enterprise spending, proactively manage budget variances and “maverick” spending, provide enhanced reporting to decision-makers, help ensure that spending is being directed to preferred suppliers, and gain leverage in supplier negotiations.
Learn how to make your procurement department stark-raving fans of your accounts payable automation initiatives.