Merging Invoice Automation with Digital Payments to Generate New Sources of Revenue
Payment and early-pay discounting and supplier enablement solutions have fundamentally been disconnected from invoice automation, however all these solutions are essential to today’s modern accounts payable (AP) automation initiatives. Particularly with payments, AP departments face significant challenges managing supplier data, payment processing and programs to effectively move suppliers to electronic payments. As a result, they are routinely missing out on substantial cash-back rewards and cost savings that only today’s new breed of AP Automation Platform solutions can offer.
In the past, Accounting and Finance have been overlooked when it comes to the latest business transformation innovations. However, today technology is revolutionizing the procure-to-pay process, providing the requisite velocity and transparency to support payment automation and early-pay discounting (where suppliers proactively offer early payment discounts on invoices awaiting payment). Forward-thinking Finance executives are taking advantage of payment automation and early-pay discounting for fierce financial impact—tapping into new sources of cash and streamlined processes that are changing the finance game.
Payment automation—along with early-pay discounting—allows businesses to dramatically increase payment efficiencies, cash-back rewards, and early pay discounts by increasing automation, reducing the labor burden on both AP and IT, and providing more “immediate” cash returns. By automatically processing payments based on the scheduled pay date (since invoices were already approved during the invoicing process) and moving all supplier payments to electronic forms of payment, organizations can see a quantum leap in process efficiencies, reduced costs cash-back rewards and discount capture rates.
In addition, setting up pre-negotiated early pay discounts and allowing suppliers the ability to request early-pay discounts (when they need cash), enterprises can expedite processing of discounted invoices and see a marked improvement in supplier adoption and cash returns. Arming the enterprise with early-pay discounts coupled with electronic payment monetization fundamentally changes the game by delivering faster payments for suppliers, while maximizing discount returns for customers—especially when compared to traditional legacy investment alternatives notorious for their slow time-to-value.
Payment automation and early-pay discounting are fast becoming critical tools of today’s new breed of forward-thinking CFOs who are discarding the outdated practice of sitting on cash, delaying payments and writing checks—which has proven to deliver inadequate returns and tremendous inefficiencies (in terms of process, resources and cost).
AP automation is the foundation for these next-generation strategic finance moves, and they also are the salvation for AP departments plagued by inefficiencies. PayStream Advisors Payables Insights Report surveyed more than 400 employees across several industries and market segments to evaluate trends in payables management in North American enterprises. Top pain points identified by survey respondents who had not fully invested in AP automation were manual data entry and inefficient processes. According to the research, 54% of respondents were plagued by having to manually enter invoice details into AP systems. Accentuating these challenges further, survey respondents cited these two areas as the top workflow processing challenges, along with lost or missing invoices, paper-based invoice processing, and manual routing of invoices for approval. These same issues were also cited as some of the top reasons why organizations miss early payment discounts.
According to The State of ePayables 2018: The Future of AP is Now report by Ardent Partners, “… tasks such as invoice matching, supplier inquiries cutting paper checks, and any manual- or paper-led processes within invoice and payment management, erode the potential value of AP by reducing the amount of staff time available for more strategic activities.”
In contrast, organizations leveraging both payment automation and early-pay discounting are surging ahead of their peers by generating real and significant sources of cash—capturing $5 per payment in benefits and up to 2% of corporate spend directly back the bottom line and optimizing cash management in real-time. As a result, CFOs of these organizations are blazing a trail for the “new normal” in corporate finance where the accounting department is now a profit center.
By monetizing payments, CFOs are transforming AP functions from cost centers to profit centers by unlocking the value trapped inside payables, payments and supplier relationships. To maximize the potential of this paradigm shift, organizations need speed, visibility and agility. Payment automation and early-pay discounting needs to be coupled with next-gen invoice automation and supplier enablement to ensure that the procure to pay process is a high-performance, well-oiled machine; this enables enterprises to quickly capitalize on cash-back rewards and every early-pay discount available, properly nurture their supplier networks and substantially reduce invoice processing and payment costs.
To realize this new finance nirvana, it’s critical to take a holistic and optimized approach where these capabilities along with invoice automation and supplier enablement are combined and deeply integrated into the ERP system into a single, unified solution—known as the AP Automation Platform. Anything less creates undue complexity, risk and lackluster results that ultimately undermines automation and business performance goals. The industry is rife with examples of failed or underperforming projects due to fragile, piece-meal integrations of disparate solutions. The AP Automation Platform delivers a truly innovative approach that maximizes the value and performance across the entire AP invoicing process and value chain—delivering new and compelling levels of automation and sources of cash.
Other key enablers of this transformation are cloud and mobile technologies. Together, these technologies dramatically accelerate time-to-value and enable processing work and approvals to be done anytime, anywhere and via any device—eliminating traditional processing bottlenecks and enabling Finance to securely bring other key stakeholders—suppliers—directly into the payables and payment process. Providing a supplier portal provides the self-serve means for suppliers to easily check the status of payments, see purchase orders for all their sites, quickly flip POs into invoices—and most importantly, easily request early-pay discounts. Bringing suppliers directly into the process enables suppliers to create invoices that are validated and exception-free from the get-go. And by creating valuable frictionless experiences for suppliers, companies can see a tremendous boost in supplier adoption to drive an equally impressive increase in early-pay discounts and new process efficiencies.
Taking a strategic and optimized platform approach to AP automation can offer immediate and long-lasting savings, revenue streams and business success by automating the entire invoice to payment lifecycle—as one contiguous uninterrupted process. Combining invoice automation, payment automation, early-pay discounting and supplier enablement creates more control over the AP process, yields higher savings and new sources of cash to the organization. As a result, today’s leading companies and progressive CFOs are establishing a new “value creation” benchmark for the account payables operation and its leadership—thus elevating AP to a core strategic function within the organization and ensuring maximum results from digital transformation efforts.
About the Author
Chris Preston is Executive Vice President and Chief Strategy Officer of Inspyrus. He has over 25-years of experience developing market winning solutions and go-to-market strategies for Oracle, EMC, Lantronix, FileNet, McCann Worldgroup & Kodak. He is a Codie Award recipient and a prominent speaker for Content Management, Business Process Transformation, Compliance & Digital Experience for Argyle, AIIM, PEX/Process Excellence, TAWPI, BAI, CMSWire, Forrester & Gartner forums