You can’t manufacture time. But you can create better payment processes that allow more time to focus on supply chains and other pressing issues in the manufacturing sector.
Read the headlines around manufacturing these days and you’ll find supply chain issues front and center. It shows that streamlining processes, gaining efficiencies and proper allocation of resources are critical. It also shows that as much as significant advances in manufacturing have come from using innovative technology and automation, there’s still a way to go. Automation should be able to free the workforce to have more time to focus on important things, like quality control. But even the most innovative manufacturing companies still have cumbersome and manual back-office processes in place…their version of the skeleton in the closet.
The biggest skeleton is made of paper. In fact, some estimates put the volume of B2B check payments at about 40%. And those paper checks are not cheap. It can take up to $5 to process each check. Let’s unpack that for a moment. A paper check requires printing, approvals, signatures, matching to the correct invoice, and then ultimately the expense of mailing and sending to the proper payee. And once it leaves the building, there is no visibility into its journey and no way to ensure a specific delivery date. And let’s not forget that paper checks are also prone to check fraud and human error.
That leaves manufacturers and their suppliers in the dark when it comes to knowing current cash positions and forecasting cash flow. That’s a dangerous game when crucial business decisions must be made, especially in times when global supply chains are being disrupted on a daily basis and informed decisions need to be made just as often to maintain business continuity.
Up to 84% of an AP staffer’s time is spent on manual processes. That’s time that could be better used building strong supplier relations, analyzing AP spend, and researching dynamic and early payment discount opportunities. Perhaps you can’t manufacture time, but you can save it by automating your accounts payable processes and eliminating the need for all of that manual paper pushing.
What does an automated end-to-end AP process look like? Here are three views:
- Capture and store invoices electronically – scan and capture invoices with OCR (optical character recognition), machine learning and integrated ERP validation technology that also stores and maintains the invoices
- Digitize workflows and approvals – with 2- and 3-way PO matching, GL code entry and approval of non-PO invoices you can set up approval chains with notification and reminders and allow approvers the flexibility of doing so on their mobile devices.
- Automate payment transactions – electronic payments can be sent domestically or internationally, which is a necessity for any business with global ties and especially for manufacturers – since many have extended networks that cross the globe.
With the visibility that automation provides, you and your supplier can track a payment from the time it leaves your bank account to when it’s deposited into their account. This results in less time your AP staff has to field calls from suppliers looking for their payment. Digitizing workflows also significantly reduces invoice processing time and minimizes the errors that can occur with manual matching and approval processes. Lastly, the move to digital payments allows you to make payments faster and more securely, in the format your supplier prefers – whether it’s ACH or virtual card – all while earning rebates on AP spend.
The secret is to find the right AP automation partner. That partner will complement its payment processes with a strong vendor authentication and onboarding system. This has the added benefit of not only getting your vendors set up in the network and readied to receive electronic payments, but also taking the burden of vendor enrollment, storing vendor bank information, and maintaining account changes away from your staff – freeing them up for more value-added projects.
Consider that in a recent report, Gartner identified ‘hyperautomation’ as a trend that will help manufacturers lower operational costs by 10%. The report goes on to explain that “exploiting maturing digital technologies will enable most enterprises to further automate their internal and external operations to support digital acceleration in identified phases.” While it’s easy to apply that trend to the actual process of manufacturing products, savvy AP departments will see the value of applying that trend to back-office processes…ensuring their contribution to the next industrial revolution.