Critical Steps CFOs Must Know in Procure-to-Pay Automation
Before the pandemic, strategies focused on saving time and bringing down expenses. But now budgets, methods, and business models are being developed every week as finance teams scramble to keep the business afloat.
To control spending, many leaders want transparency in all aspects of the finance process and recommendations based on trends and data. Hence, as a result, a growing number of CFOs are looking to modernize the procure-to-pay procedures.
Why Businesses Need to Automate P2P Processes
Automating the procure-to-pay method does not mean a complete ERP replacement is required. It is about leveraging new technology to optimize an organization’s purchasing and paying for goods/services. It is invaluable to businesses who are struggling to receive an overview of their functions. Plus, companies who have modernized their processes successfully are experiencing the below key benefits.
Saving Time
Procure-to-pay automation will take over manual tasks that consume staff’s time such as printing, scanning, filing, and manual data entry. Also, invoices are routed for approval saving workers from chasing people manually. More than 85% of invoices are matched three ways successfully so that the AP department only manages invoices with exceptions. It gives back more man-hours to the company enabling the staff to focus on more high-value activities.
Reducing Expenses
Modernizing the P2P operation provides senior management a complete understanding of how the company is performing. It gives procurement with pre-approved spending under various categories to have full control of outgoings and be able to buy items from preferred vendors to prevent maverick spending. Supplier performance details are easily available, and AP paid the statistics on how many early payments were captured or late payment fees. All these details enable the finance professionals to negotiate to price better, prevent suppliers from overcharging, and enable better strategies around the spend to be deployed.
Minimizes the Chances of Human Error
In addition to the cost savings, the risk of human error is minimized significantly. In cases where the procedure is completely automated, human error is entirely eradicated. Instances of human error within a traditional P2P process include paying an incorrect amount, duplicate invoices, and much more.
Transparency
Finance professionals often have less transparency in the finance process. Many of them have no idea where an invoice is at a given time or if a purchase order was fulfilled and received. It can be challenging to finish timely accruals or to resolve problems promptly. With the help of procure-to-pay automation software, a finance team can handle the complete P2P method on one system with a single interface. CFOs will have access to trends and the team’s progress towards goals.
Various Stages of P2P Automation
This method ranges from the request for the product/services to the issuance of the purchase order, goods receipt, finally processing, and payment of the supplier invoice. Successful companies are modernizing the P2P procedures by automating every step involved in P2P automation that can be acquired by changing these tasks.
Capturing Invoices
All kinds of invoices can be captured automatically via automation. Touchless processing for invoices via capture, matching, and approval results in the AP department only managing exceptions. Issues like missing purchase order numbers, unregistered suppliers, duplicate invoices, are stopped at source before creating major problems and more work downstream.
Approving Invoices
Automating approvals enable invoices to be electronically routed that minimize approval times. Complicated rules based on hierarchies, roles, and changeable approval limits can be configured to ensure adherence to business spending policies. Workflow automation can also enable approval routing across multi-entity companies.
Matching Invoices
Automated matching of invoices, purchase orders, and goods received notes removes manual paper-based processing. Modern technologies like OCR typically result in the straight-through processing of up to 85% of invoices.
Requisition
Requisition automation makes sure that a business is always in full control of an organization’s spending from the beginning. Finance professionals can generate predefined catalogs with the approved suppliers. Requisitioners can select products from the collection directly. This signifies that complete visibility is well-maintained over what is being bought and for what reason.
ERP Integration
An automated procure-to-pay solution seamlessly integrates with a company’s existing ERP solution. It ensures granular insight of the full P2P method along with an audit trail for each transaction. Reporting analytics allows the finance leaders to track and enhance the operational P2P methods constantly and increase the operational methods while delivering accurate and timely month-end reporting.
More than 75% of CFOs see automation and digital technology as the best opportunity to improve operational effectiveness, client experience, and innovation capability. But most importantly, in such times, technology can offer assurance and a strategy to rule in spending and contain expenses by providing insight. By understanding the various stages of procure-to-pay automation, senior professionals can spot procedures within the company that would greatly benefit, like others have, from implementing automation.
