by Navin Gupta, on Feb 21, 2023 8:51:53 PM
Estimated reading time: 4 mins
Key takeaways from the blog- Intelligent Automation institutionalizes a paperless office.
- It makes Accounts Payable automation a business reality.
- It builds trust-based supply chains through timely payments.
Accounts Payables is a sensitive area of a business. It not only influences vendor relations but is also responsible for customer fulfillment/servicing and business sustenance. It is a tricky balance. An inept management of this sensitive area can lead to havoc and result in reduced cash flow. Paper-intensive processes and manual handling in Accounts Payables further add to the daunting business challenges. Intelligent Automation helps achieve this critical equilibrium by integrating siloes, eliminating paper, and improving straight-through processing. Accounts Payable automation thus positively impacts timely payments of supply chain vendors and builds trust.
Drawbacks of semi-automated and manual Accounts Payable processes
A dynamic business landscape demands faster processing. Manual processes cause bottlenecks and dissuade the business from achieving the critical Accounts Payable balance. Some of the drawbacks of semi-automated and manual Accounts Payable processing include:- Loss of paper documents: Purchase orders and invoice payments go through multiple approval hierarchies. If any paper gets misplaced/fire-damaged, it results in repercussions and rework. It delays the process and causes irreparable damage to business goodwill.
- Delayed processing and payment, high cycle time: The manual protocols are long winding. In case any approver is out-of-office/traveling then the routing of the papers through the approval hierarchy causes delays leading to high turnaround time.
- Fraud: Paper-driven protocols are easier to perpetrate fraud. Deliberate repayments, wrong invoices, honoring invoice payments for services/goods not received, etc., are just some of the routes used by bad actors to breach processes and commit fraud.
- Errors and rework: Manual data entry between different siloed systems is not only time-consuming but also tedious and error-prone. In the case of rework, there are chances that the changes don’t get carried forward in all systems.
- Duplication of invoices and payments and missed payments: Erroneous duplication of paper invoices and payments causes revenue leakage and cash flow reduction.
- Lack of visibility about funds/liquidity: Manual processes have lengthy turnarounds and hence the book closures are late. As a result, the data about funds and cashflows are mostly dated. This hinders business decisions.
- Lack of real-time data for Financial Planning and Analysis: Lack of unavailability of accurate funds-related data hinders decisions for future business expansions. Real-time data about P&L, assets, and liabilities matters a lot for revenue forecasts and projections.
- Dip in working capital, operating margins: Without adequate data visibility, a dip in working capital and the operating margins goes unnoticed. This results in many repercussions at the nth hour. It also affects the strategic planning and investment for the corporate treasury.
- Implications on budgeting and supply chain planning: With low working capital and a lack of honoring of the payments, vendors tend to downgrade the business relation and lower the quality of delivery. It negatively affects just-in-time (JIT) manufacturing, which consequentially affects customer relations.
How does Intelligent Automation improve the Accounts Payable landscape?
Intelligent Automation integrates the business siloes between different horizontals. It institutionalizes automated workflows that enable the routing of approvals through the different hierarchies across the business even while the approvers are traveling. It expedites the approval processes from days to minutes by institutionalizing Procure-to-Pay Automation.
Similarly, the Intelligent Document Processing component of the Intelligent Automation extracts unstructured data from the paper forms, request for quotations, vendor agreements, purchase orders, invoices, etc., validates, and integrates it with the core processing systems. It improves the processing time by manifolds and releases payments to vendors within three working days.
Faster payments and integrated siloes provide real-time data visibility for Financial Planning and Analysis. The automated workflows eliminate the scope for fraud by external and internal stakeholders. Intelligent Automation institutionalizes connected ecosystems between all stakeholders for robust supply chain planning and just-in-time manufacturing.
Improve Accounts Payable efficiencies with Intelligent Automation
Intelligent Automation eliminates error and rework associated with manual processing. It steps up the processing by manifolds and positively affects vendor relations for sustained supply chains. It has a direct influence on the following aspects of the business:
- Paperless office: It extracts data from all paper assets, validates, and integrates it with the business systems. It automates the approval workflows and expedites processes.
- Faster cycle time: It drives straight-through processing, eliminates process bottlenecks, and improves the processing time by manifolds as compared to manual processing.
- Fraud elimination: It eliminates the scope for fraud usually associated with paper-based, manual processes.
- Data efficiencies: It boosts data accuracy and data management. It improves the data visibility that facilitates real-time decision-making.
- Elimination of duplications and misses: It completely eliminates deliberate and erroneous duplications of invoices and payments. It also ensures timely payments for verified orders.
- High data visibility: It facilitates scheduled and ad-hoc report generation for consumption of the leadership and management teams.
- Real-time decision-making for FP&A: It improves business decisions machinery due to the availability of accurate data about outflows and inflows/accruals in real-time.
- Robust operating margins and working capital management: It enables businesses to achieve a critical balance between payables and receivables.
- Accurate budgeting: It creates a robust framework for envisioning outflows and inflows and creating annual budgets.
- Efficient supply chain management: It establishes efficient supply chains to create a trust-based business ecosystem.
- JIT manufacturing: It enables businesses to maintain an optimum inventory of raw materials and finished goods for meeting the customer/market demand in time.
Simply put
Intelligent Automation improves the efficiencies of the Accounts Payable landscape. The Procure-to-Pay automation enables businesses to fulfill customer/market demand in a dynamic environment. It improves the trust between the business and its vendors to fulfill JIT manufacturing.
