Intelligent AP Automation and Cash Management

Intelligent AP Automation and Cash Management

Follow these tips and stop leaving money on the table

“If you can’t measure it, you can’t improve it.”
“Leadership is doing the right things.”

– Peter Drucker

Follow these tips and stop leaving money on the table

When it comes to quotable business advice that stands up to the test of time, you can hardly do better than Peter Drucker. Both of Drucker’s most famous quotes are particularly timely and relevant when it comes to finance and accounting and the business processes they support . And when you look at the new, exciting opportunities presented by intelligent process automation today, there may be no better time to take Drucker’s aphorisms to heart and challenge the status quo within your finance organization.

Interestingly, some of the best sources for improvement to the financial performance of companies today may come from operations typically viewed as cost centers: accounts payable, accounts receivable and sales operations. All too often, these departments are not only cost centers, they’re also (through no fault of their own), bottlenecks that prevent their organizations from more effectively managing cash in a way that promotes better planning, analysis and budgeting.

Recent industry studies bear this out. According to a survey from Ardent Partners, over 33% of respondents said that gaps in the visibility to invoice data and payment processes was their biggest challenge.

Up until recently, traditional approaches to overcoming the issue of timely access to business data and process transparency for high-volume, high-velocity processes like accounts payable had limitations in terms of flexibility, which meant additional overhead in terms of IT resources, and additional time/cost/effect to modify systems to go beyond the general rules and address process exceptions. Often, this meant living with the Pareto Principle — allow the system to deal with 80% of the invoices that come from your top 20% of vendors, and handle the rest manually.

In essence, this meant tolerating inefficiency as a cost of doing business and leaving money on the table by failing to capture vendor early pay discounts, or making smart decisions about managing cash.

Why process transparency matters more than efficiency

Why process transparency matters more than efficiency

In most cases, cost justifying traditional AP automation was simple enough, particularly for companies faced with adding headcount to accounts payable just to spend most of their time/effort filing paperwork and entering data manually. The efficiency and scalability from implementing automated systems, even with costly implementation and maintenance overhead, usually delivers a quick ROI.

But absent that scenario, companies faced a tougher time justifying AP automation based on cost savings, without an added strategic or top line benefit.

That’s unfortunate — because AP automation has always delivered the benefit of more timely access to accurate data. But all too often, Drucker’s advice didn’t trickle down to functional managers, who failed to perceive and sell the benefits of timely data up the chain of command.

Consider that Gartner cited data analytics as an essential competency for competitive organizations, and without timely access to accurate data (by automating things like data entry, document filing and approval routing), data analytics is at best ineffective and at worst, fatally flawed.

For most companies relying on manual processes means that staying on top of document handling and data entry remains a fundamental challenge. But those sorts of challenges can be tolerated by companies willing to accept inefficiency in process cost centers as a cost of doing business.

It’s harder in today’s competitive environment, however, to tolerate a blind spot related to G/L accruals, open invoices and cycle times. Without data, metrics and process visibility, companies lack the ability to balance the cost savings from vendor early pay discounts and the benefits of optimized cash management.

The fact that staff members focus much of their time and effort on data entry and document handling means less time for vendor contract negotiation, analysis, budgeting and planning, leading to even more missed opportunities for optimizing the financial health and wellness of the organization.

That’s aside from the time and effort spent dealing with process problems. In fact, a recent analyst survey suggests that AP staff members waste almost a quarter of their time dealing with errors and exceptions, greatly inflating invoice processing costs and cycle times.

Illuminating AP Processes

How can companies overcome this cycle or inefficiency, error and lack of insight? Intelligent Process Automation makes cost justifying a solution and putting it into place efficiently, in a way that solves problems for the long term, an easy decision.

What’s so different about intelligent AP process automation? The biggest difference is that these systems aren’t as rigid and inflexible as their predecessors — which translate into faster and in simpler implementation, less IT involvement, and greater power/control for process owners.

Machine learning, applied to document handling, data extraction, approval routing and transaction entry, means that a process owner can handle a process exception ONCE and teach the system on the fly what to do the next time. Teaching/learning in this context simply means that human process owners manually correct issues using the system, and the system records/analyzes their keystrokes and mouse clicks to determine what to do next time, on its own. That means IT doesn’t have to get involved to re-analyze the process and recode or reconfigure the rules that determine next steps.

From an efficiency standpoint, IPA-driven AP automation solutions reduce payment cycle times by 71 percent, while reducing costs by up to 80 percent by capturing vendor early pay discounts and refocusing team members on more value-added work.

These are well-established metrics that can easily cost justify the investment. The challenge becomes selling the project up the chain to business leaders who need to prioritize projects like AP automation against other business priorities. At that level, ROI is table stakes.

Securing budget AND elevating the role of AP as a strategic contributor, finance leaders and AP managers need to sell the benefit of empowering leaders to make more timely financial decisions with greater confidence in a way that leads to mitigated risk, reduced costs, increased profits and greater competitiveness.

From that perspective, few company leaders leave money on the table due to the cost and missed opportunities without at least considering their options.

Take action today!

To learn more about how to evolve your processes from manual to automated to intelligent, contact Artsyl Technologies and request a demonstration of the ActionSuite of intelligent process automation applications for accounts payable, accounts receivable, claims management and more.

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