If it feels like you never know exactly where your payables stand, you are not alone.
A lack of visibility into invoices and payables documents is one of the biggest accounts payable challenges cited by controllers, per research from the Institute of Finance and Management (IOFM).
Poor visibility into invoices and payables documents makes it difficult for businesses to manage:
- Finance operations
- Working capital
- Corporate spend
- Fraud and compliance risks
For instance, without a clear picture of where invoices stand, businesses cannot assess their cash position or make informed decisions about whether to accept an early payment discount offer. They also may not be able to identify spending patterns or spot out-of-budget purchases until it’s too late.
The root of the problem is the manual and semi-automated invoice approval processes on which most accounts payable departments rely.
In a manual or semi-automated accounts payable department:
- Key information is not captured
- Data is poorly organized
- Information is not timely
- Systems are not well-integrated
- Decision-makers do not have access to key variables
It is hard for staff to track the status of invoices and other documents in a manual or semi-automated environment and to ensure that the right person has approved documents in a timely manner. Paper invoices can sit for days on an individual’s desk, get stuck in inter-office mail awaiting approval, or become lost or misfiled. Similarly, electronic invoices can be e-mailed to the wrong person.
These are the reasons 41 percent of controllers surveyed by IOFM cited “improved visibility into invoices and other accounts payable documents” as the top benefit of payables automation. Businesses with a high level of accounts payable automation have more than four times greater visibility into their overall organizational cash flow than other businesses, per Aberdeen Group.
How accounts payable transformation improves visibility
Digital technologies provide the transparency accounts payable leaders need.
Dashboards provide accounts payable staff and other stakeholders with a real-time look at staff productivity, the status of invoices, the source of exceptions, accruals and liabilities, late-payment penalties, early-payment discount capture opportunities, percentage of early-payment discounts captured, enterprise spending, and other metrics from any PC, laptop or mobile device. Business intelligence enhances dashboards by analyzing current data and historical trends and patterns for more dynamic decision-making, such as uncovering bottlenecks and the root cause of exceptions.
Digital transformation also makes forecasting fast and accurate. Some payables solutions can scan and analyze unlimited amounts of data, from any paper or electronic invoice for any defined time, to forecast cash, spending, and other data based on historical patterns and trends. For instance, users can mine information stored in a solution’s digital repository to detail cash flow trends. The insights these solutions glean from historical data such as recurring invoices helps businesses determine spending patterns or when it is best to release cash or to take advantage of early-payment discounts.
Contact us to arrange a no-obligation consultation with one of our digital transformation experts.