AP automation is witnessing a paradigm shift as businesses struggle to move towards a touchless payment. Businesses automating accounts payable as an integral part of a larger finance and accounting transformation want to optimize beyond the outdated procure to pay method. Digital procure to pay software will allow business enterprises to unshackle the next-gen AP transformation.
Adopting Digital Procure to Pay
A digital P2P system is specifically designed to provide companies with complete visibility, control, and financial agility over the full life cycle of a transaction by linking payables and purchasing in order to maximize the return on invested capital. It makes a complete lifecycle for business to handle it’s procure to pay methods, turning the whole experience touchless.
Invoices are received via integrated supplier portals and routed for auto data extraction, duplicity check, 3-way verification, tax and data validations, interdepartmental approvals, and more. Once they are approved, the invoice is introduced into the ERP system and presented for payment. A fundamental business process management arranges this whole process.
Payment is made with the help of integrated virtual account number helping in early guaranteed payments to vendors and extended payment time to companies. Transaction details are embedded within the VCN such as cost center and tax, invoice number that simplifies reconciliations.
This digital procure to pay model provides several advantages to the companies as well as vendors, which include:
a) Cash Flow Management
Early payment discounts can offer an incredible return on investment if the vendors want to engage in the discounts to avail payments on time that leads to an extension of payment time for purchasers. With the help of virtual card technology, banks can engage in vendor discounting, aiding on-time payments for them. It ensures better cash flow management for purchasers leading to enhanced days payable outstanding and preventing late payments.
b) Supplier Self-Service
A procure to pay software relies on a web-based supplier portal providing easy and quick self-services to the vendors. The portal can be used to submit invoices. The primary BPM framework aids to align invoices submitted to the right procurement. Also, it provides complete visibility on invoice status. Suppliers can use the portal to redress concerns, communicate, and raise queries on their payments. It proves to be a great way to improve supplier management and increase supplier satisfaction.
c) Minimized Payment Costs
The average expense of processing an invoice with low-level of automation can be more than 20 times greater than the expense of processing with high-level automation. A P2P solution can minimize these costs by cutting down on time spent answering payment inquiries and at the same time protecting against fraudulent activities by eliminating duplicate payments virtually.
d) Touch-less Payments
The procure to pay framework cuts across the difficulties of manual or semi-automated accounts payable process. It streamlines the complete process from receiving of invoices to the final payment and reconciliation. Cycle times across the spectrum are minimized along with mistakes caused by manual systems. It makes efficiency throughout the process and brings down the expense as well as effort per invoice processed.
The Bottom Line
A digital P2P solution offers a platform to develop from traditional process to an automated one that offers complete visibility of spending to the company and highlights opportunities for cost reduction by linking people, technologies, and methods involved in a complicated network.