Cash flow is a hot topic for buyers and sellers alike in 2019.
- On the buyer side, extending Day’s Payable Outstanding (DPO) – the measure of the average amount of time it takes a business to pay its suppliers – is a top priority.
- On the supplier side, reducing Day’s Sales Outstanding (DSO) – the measure of the average amount of time it takes for businesses to collect receivables – is a top priority.
And accounts payable sits in the eye of the storm.
In most businesses, accounts payable function is responsible for payment timing, per the Institute of Finance and Management (IOFM). Payables is the last line of defense against cash flow issues.
In order to effectively manage the business’ cash, accounts payable must:
- Provide real-time visibility into critical financial metrics
- Collaborate with suppliers and internal stakeholders
- Make timely and accurate payments to suppliers
3 ways digital transformation improves cash flow
Effectively managing cash flow sounds like a tall order.
But automating accounts payable with digital technologies makes it easier.
1. Control funds in real-time:
- Digital transformation solutions help buyers manage their cash better with intuitive real-time graphical dashboards. The technology provides instant visibility into invoice status and payment history. And real-time reporting enables buyers to forecast outbound cash flows with greater accuracy. Digital transformation solutions also eliminate information gaps that lead to cash management issues by aggregating all paper and electronic invoices onto a single platform and integrating seamlessly with the buyer’s ERP.
2. Collaborate with suppliers:
- End-to-end digital transformation solutions that include an online supplier portal help transform accounts payable into a profit center. Dynamic discounting, early payment discounts and supply chain financing satisfies supplier demands for earlier payment, while buyers benefit from discounts on the amount-due on invoices and/or revenue share from third-party financing companies. All of this is facilitated by faster approval of invoices and the ability to collaborate with suppliers via an online portal.
3. Fast, easy payments:
- Digital transformation solutions enable buyers to securely pay suppliers via ACH or card using a single file. Accounts payable staff simply upload an approved invoice file generated by the digital transformation solution and schedule individual and batch invoices for payment. The technology aggregates data on approved invoices from any office or subsidiary. And rich remittance detail is automatically transmitted to suppliers.
Managing cash flow can seem like a balancing act.
But digitizing invoice approval helps accounts payable departments from falling.
See for yourself how your business can benefit from digital transformation.
Contact IPS to arrange a no-obligation online demonstration of the IPS Productivity Wrx digital transformation platform.