In our previous post, we discussed centralization as one of the main benefits of AP automation technology to today's remote workforce. With a centralized solution, in-office and remote workers can access the same data, inboxes, workflows, and organization structure allowing the business to be more efficient and effective when processing invoices, quotes, and sales orders. Additionally, a centralized system can be more easily monitored and maintained by a single administrator or team ensuring maximum up-time and availability of all data and documents.
Coupled with effective automation strategies, this centralization of data and workflows also provides:
- Efficiency gains by reduced human touchpoints throughout invoice processing
- Accelerated turnaround time and payment cycle times
- Greater security features, such as anti-virus solutions and data backup options
- Reduction of redundant costs and errors including duplicate invoice payments
- Improved compliance with data and content regulations
- Efficient, real-time collaboration from anywhere
Now, let's consider additional benefits that AP automation technology can offer today's remote workforce. Two of these are in the areas of vendor relationships and maximizing cash flow and working capital.
AP Automation Can Improve Vendor Relationships
Strong vendor and supplier relationships can give your company a strategic advantage and preferred treatment compared to your competitors. However, this is not always easy to establish. It takes time, effort, and patience to build good vendor relationships. You can reduce or eliminate time-consuming manual tasks to strengthen vendor relationships by implementing efficient systems and processes with effective automation strategies. Here are a few examples.
Provide and Monitor Dynamic Discounting
Conceptually, dynamic discounting is adjusting payment terms and costs to encourage accelerated invoice payments. A common case is to provide a percentage discount if an invoice is paid within 10-15 days. With a large volume of invoices, the benefits to both sides are clear: the purchaser gets a discounted cost (often 1-2%), and the supplier receives payment much sooner. In traditional AP environments, dynamic discounting is a tedious, manual process that takes significant staff effort to monitor and evaluate when each invoice was sent, received, and paid. Advanced automated AP solutions empower companies to offer dynamic discounting with minimal effort, even allowing for a sliding scale of discounts depending on when payment is received. For example, if the payment is received in full within 1These time frames and discounts can be automatically applied with no additional effort. With effective discounting strategies, companies can offer business partners competitive options, improve payment cycles, and add incentivize top partners to maintain the good relationship.
Solutions like SAP Ariba offers dynamic discounting and supply chain financing to help strengthen partner relationships and manage your working capital more effectively. Implementing SAP Ariba in conjunction with systems like OpenText Vendor Invoice Management 7.6/20.4 will help streamline and shorten invoice life cycles, allowing companies additional flexibility to manage and leverage their working capital resources. Additionally, with OpenText’s advanced functionality, companies can take the advantages of VIM beyond the finance department to process order confirmations, delivery notes, sales orders, HR documents and more.
Improve End-to-End Collaboration with Suppliers
As with most relationships, vendor-supplier relationships depend on clear and complete communication. From initial quotes to the final contract signatures, it is vital to ensure that every detail and data point of each agreement is captured and available for all stakeholders to review. In manual systems, it can be easy to miss an email with an updated quote or forget to include costs for express shipping requirements. Properly configured automated solutions ensure all details of every order, delivery, invoice, and payment are managed and accessible throughout the process. More advanced portal solutions also automate the steps to add and update partner details, allowing each supplier or vendor to manage and update their essential information at any time.
By using advanced AP automation solutions, you can improve collaboration with vendors and suppliers and better manage your working capital and cash flow. SAP Ariba is one solution that provides customizable, automation tools that can be applied to workflows tasks to actively maintain and support supplier relationships. Once on the network, you can:
- Manage payables and cash with greater precision, control and visibility
- Expand discount capture across targeted suppliers, spend and invoices
- Enforce pre-negotiated contract and discount terms
AP Automation Can Help Identify and Reduce Vendor Risk
Purchasing departments in enterprise organizations are hives of activity. At any moment, there can be hundreds of thousands of invoices from thousands of vendors in process. Tracking and matching the multitude of details in play manually takes a lot of time. These tasks cause bottlenecks that can obscure details about your relationships with vendors, especially on non-centralized solutions. Without clear insights delivered with consistent metrics, vendor evaluations become a subjective exercise only done when more extreme issues occur.
Effective automation systems provide detailed insights on vendor activities, quickly identifying your most consistent and efficient partners and those who repeatedly consume extra time, effort, and resources. With this information on hand, staff can easily shift business to the best vendors, and retrain or minimize relationships with problematic companies.
AP Automation Offers Better Control of Cash Flow and Working Capital
Cash flow and working capital are vital elements that allow businesses to maintain operations and invest in future growth opportunities. Without a clear overview of capital and cash flow trends, it is difficult to manage these business tools effectively. By leveraging a centralized AP solution with efficient automation, your staff is freed from excessive manual tasks, and has the tools and time to uncover deeper insights to develop more efficient workflows, optimize cash flow, and increase profitability.
Additionally, today’s centralized solutions can perform ongoing supplier outreach, strategy reviews and updates to consolidate and standardize payment terms, including tailoring any terms required for individual supplier groups, regions, or times of year. Advanced solutions like OpenText Vendor Invoice Management and SAP Ariba Capital Management can easily optimize a remote team's efficiency and improve a company's bottom line.
Clearly, COVID lockdowns have caused businesses to reassess how they work. Fortunately, there are substantial benefits and efficiencies that can be gained while providing the flexibility required to remain productive during these challenging situations. The reality is that to stay competitive, organizations will need to support remote office workers at some level. Rather than approach this as an additional burden, it should be seen as a positive opportunity to make changes that can increase efficiency, improve vendor relationships, and provide greater insight and control of your cash flow and capital.
Take this opportunity to investigate how AP automation tools and solutions can benefit your business. It doesn’t have to happen all at once–competitive firms keep their edge by developing a flexible digital transformation strategy that applies the right technology to achieve their business goals both today and as they continue to grow and evolve. Best-in-class solutions like OpenText Vendor Invoice Management, SAP Ariba and others are specifically designed to solve these challenges and can help deliver a new era of efficient collaboration and efficiency. If you’d like to learn more about starting your own automation strategy, please contact us.
How Optima ECM Can Help
Optima ECM Consulting team understands how to maximize the value of invoice and document management processes within enterprise SAP environments. We are an SAP Gold Partner focused on implementing best-in-class solutions like SAP Invoice Management by OpenText (VIM). In fact, we have implemented the most successful SAP Invoice Management projects in North America, and apply our unique experience to a diverse range of organizations and industries.
To help clients get the most from their system, we developed a unique VIM Health Check as part of our proprietary Optima Accelerate™ methodology. This initiative is specifically designed to evaluate your VIM implementation's unique configuration, integration, usage, and storage health. We then deliver a comprehensive report outlining current risks, required maintenance, and system improvements to boost short- and long-term ROI. Finally, we can help you prioritize your needs and establish effective timelines and budgets to align your system with your business goals.
This detailed analysis will provide essential insights into your current solution and ensure the long-term success of your company's intelligent infrastructure. Download the program overview or contact us for more details.
Through digital transformation and expert enterprise information management, Optima ECM can help consolidate your payables platform and create automated processing to streamline and accelerate your business.