The Industrial Revolution is responsible for so many advances that we could spend an entire article just listing them. It goes without saying that for manufacturers, it changed everything.
The Accounts Payable Revolution, as we’ll call it here, won’t have quite the same scope and thankfully doesn’t come with the same degree of difficulty or cost. Yet it still has the opportunity to modernize and improve so many things that have been vexing manufacturers for years — and there’s a reason we’re going to talk about it the way the British did the need for the Industrial Revolution back in the 18th century.
Evolution never stops
The latest manufacturing advancement is the Industrial Internet of Things (IIoT), which incorporates wireless connectivity into networked devices and sensors that are used on manufacturing floors and throughout supply chains. Used this way, the IIoT is transforming traditional supply chains from linear ones into interconnected, optimized digital supply networks that are once again revolutionizing the way manufacturers conduct business. This has a host of downstream effects on efficiency, supplier relationships, and the ability to adapt to a rapidly changing world.
We’ve touched on it in recent articles, but that changing world is becoming a bear for manufacturers in particular. Heading into last year, 20% of businesses said they were seeing a major impact from supply chain issues, a number that would probably be closer to 100% today. With staff trying to keep the lights on while putting out fires, the kind of long-term strategic thinking the industry needs right now is hard to come by.
Yet universal adoption of the same innovative thinking and process automation that have made supply chains and manufacturing floors more efficient overall, hasn’t carried over into accounts payable. In the industry, half of all payments are still being made via paper check, which rely on AP professionals manually handling checks by keying in data, printing, and routing for approval and posting. When you add in sorting, processing and handling paper invoices, you likely have a team of finance professionals with expertise and bright ideas who are spending their days handling the most demoralizing, tedious tasks imaginable.
Aside from the fact that this is an inefficient way to process payments, a manual process is also prone to potential errors, late payments and fraud exposure. In an industry and in a moment where maintaining a healthy supply chain is crucial to preventing business interruption, paying suppliers on time and in their preferred format can make a huge impact when it comes to strengthening those relationships and ensuring a continuous stream of necessary supplies and equipment.
So, it’s time—past time, really—for an AP revolution.
What are the benefits of embracing change?
Costs and time
Nearly 50% of businesses admit that at least 1 in 10 payments to suppliers goes out late, leading to increased processing costs and inefficiencies internally as well as added stress on supplier relationships. Additionally, 61% of companies cite rising supply chain management costs as their number one challenge.
Add those two together and the potential for automation becomes clear. Being able to efficiently process invoices and send payments while setting rules for approvals frees up considerable staff time and can help ensure you don’t poison key vendor relationships by paying them late when they also need to maintain an effective cash flow. The cost savings you get from not having to handle and process checks can go toward addressing supply chain challenges, while the time savings allows your AP team to be flexible and tackle the big picture financial challenges your business is facing.
The easiest revolution you’ll experience
We’re calling it a revolution, but the truth is that what we’re talking about can be simple and straightforward with the right partner. At Paymode-X—as it should be everywhere–it’s a priority for us to have your AP department leverage existing accounting systems and bank relationships to make timely, secure electronic payments to the vendors in your supply chain, meaning you don’t have to start over with a new bank or ERP and introduce that massive change and cost into the equation. We also work to ensure suppliers will benefit from the convenience of electronic payments, whether by virtual card or ACH, with enhanced remittance information and easier processing. This saves both manufacturers and suppliers the time and cost associated with manual paper check processing.
With all your ducks in a row on the assembly line and the right partner in place, you can realize the time-and-cost savings benefits—and add key advantages like fraud protection and rebates—in as little as 45 days. As we like to say, you can’t manufacture time and cost savings, but AP automation can give you both at a level that is tangible and impactful for the business.
If your company is being pressured to lower supply chain management costs, remain competitive with suppliers through more efficient processes, and save time—and it is—then it’s time to embrace the AP revolution. Fortunately, it won’t take a half-century of work and massive technological advancement to make this one work for you.