Getting it done quickly vs getting it done right
If you’re a task focused sort of person, you’re no doubt keen to get a job done and get it ticked off your To Do list. But some operations are more about quality than speed. In most cases, it’s more important to get it done right the first time rather than just done. Of course, that also means you don’t end up having to do it all over again, so it saves time and money in the long run.
This is particularly true when you’re implementing an ERP system or are looking at how you can control costs through accounts payable solutions (AP). Too often, decision makers face the temptation to opt for a provider that solves a specific problem rather than looking at their long-term, holistic requirements.
The evolution of cash management
The cash management industry has changed significantly over the last few years. And businesses have had to evolve alongside it. How far along the journey has your company got? In terms of your ERP solution, do you have a holistic system or just have one or two parts that work in silos? And regarding cash management, are you still using an on-site paper-based accounts system, a hybrid model or have you fully embraced an automated AP?
CFOs often think it’s going to be enough just to implement an ERP and it will miraculously solve everything. But an ERP isn’t designed to meet the needs of a complex payables process and the seeds of success or failure are sown right at the start when selecting a spend management system. You need to look at a complete AP solution that will work seamlessly with all the other aspects of your business.
A mile wide and an inch deep
Most ERPs fall into this trap, they may have good overall functionality but aren’t great at tackling specific issues. So, if your business handles thousands of transactions and has complex invoicing procedures with a wide supplier base, it could run into problems with such a broad-brush approach. It’s important to not just look at speeding up the process but about eliminating errors and duplication as well. That way you’re making real improvements for the long term.
Companies also often just tackle one issue at a time. They simply want to ‘get it done’. So, if late payments are hurting their cash flow, they might address that by getting a vCard system. They think everything’s sorted. But a few years down line, they find they’re struggling to key in complex invoices, so they get a scanning solution. And then a couple of years later, something else again. By only dealing with one pain point at a time, they end up with lots of different solutions which don’t ‘talk’ to each other. There is no holistic system that caters for all the needs of the business and provides visibility across the entire invoice through payment process.
How an automated AP controls costs
By investing in a cloud-based automated AP system to tackle your cash management issues, you’re getting much more visibility and control over all your costs. You can see exactly where the bottlenecks are. You can tell who is taking longer to approve invoices. You can detect if one particular supplier is constantly asking for updates. As a result, you know where the inefficiencies are and you’re in a position to address them.
In addition, you can make sure the process of obtaining approvals and managing exceptions is quicker and more efficient. Greater visibility will mean you can see where money is being spent, so you can ensure you aren’t wasting cash on expensive suppliers or duplicating effort. The job is getting done right, not just done.
Statistics show that best-in-class enterprises have:
- 80% lower invoice processing costs
- -73% faster invoice processing
- 60% lower invoice exception rate
These figures are significant particularly if you’re processing a large volume of invoices each week. Less time spent hunting for additional information means a faster-time-to-process rate leading to lower costs and reduced exposure to payment risk.
Making a difference in the long term
You’re also in a position to take advantage of early payment discounts with suppliers. If you can get a 2% discount off the full amount by paying within 20 days instead of the normal 30 days on a regular basis, this equates to an annual interest rate of 36%, and the savings will soon mount up.
What’s more everything is under one umbrella. This is particularly useful in terms of scalability. If you’re going through an M&A, you can present your automated AP as the solution you’re using and bring everyone under the same system without having to increase your headcount. It can work seamlessly with any existing ERP system.
And finally, by automating routine tasks, you can be confident jobs are getting done while your time is freed up to focus on more important strategic projects that will make more of a difference to the business.
