How to use E-procurement to overcome challenges in the Accounts Payable process
Let’s face it— to maintain efficient and profitable AP processes, organizations need to look for help from digital tools. The days of using paper invoices and inputting all supplier and buyer information by hand are gone. Now is the time to embrace ap automation and e-procurement platforms that facilitate global collaboration.
As businesses begin to see greater signs of recovery after a particularly volatile year, ensuring their AP processes can keep up with the increase in order demand is crucial. Below we break down the five main troubles that AP professionals face with their manual processes and how e-procurement tools can help to patch up the gaps in your existing strategies.
High percentage of exceptions
When it comes to AP processes, exceptions are the bane of your existence. But, they are a much more common occurrence than you might think. Exceptions occur whenever there is a communication error between your organization and suppliers. When information is incorrectly entered, it slows your entire process since all involved parties have to identify and rectify the situation. This leads to longer invoice processing times and added stress for your AP team.
With 62% of AP professionals saying that invoice exceptions are the biggest challenge they face, finding a solution that helps eliminate the risk is crucial. That’s where e-procurement comes in. By moving your invoice and procurement processes to a digital format, you can reduce the possibility of human error when entering information. With assistance from digital processing platforms, AP professionals can create digital connections with suppliers, creating a resilient process free from hurdles.
Lack of visibility into data
A lack of access to data and supplier information often is the culprit for many invoice exceptions. Facing delays in receiving (or providing) crucial information disrupts communication, which in turn creates barriers to identifying and solving problems from exceptions. And, as we’ve already discussed, any delay in timeline and invoice processing leads to issues with cash flow. When organizations make decisions based on inaccurate information and data, companies open the door to risks including:
Procurement challenges that impact your bottom line.
The good news is that this issue can easily be rectified by embracing a digital e-procurement platform. A unified e-procurement system centralizes your communication and functions, creating a simplified data management strategy.
Invoice and payment approvals take too long
Traditional invoice and payment approval processes are susceptible to delays. When companies opt to use paper invoices, it takes much longer for humans to review the information and process the invoice manually. The time it takes to review all the information means your timelines will be extended, ultimately resulting in later payment times.
Without payment, your suppliers will fall behind on deliveries, meaning your business will struggle with reduced cash flow. But, with an e-procurement platform, you can expedite the process to get you paid faster. With electronic access, buyers and sellers have instant access to available products, services, and prices and can centralize their transaction tracking. This leads to a more secure process, happier suppliers, and quicker approval and processing times for invoices.
Traditional methods take too much paper
Paper takes up space. And, with hundreds of invoices being processed at any given time, the mountain of paperwork your AP professionals have to sift through can quickly become overwhelming. When paperwork piles up, it becomes easier and easier to lose track of invoices and for errors to occur. These errors — you guessed it — impact your AP process, creating more headaches and delays for all involved parties.
Luckily, as organizations embrace digitization, the need for physical paper invoices is becoming a thing of the past. With digital platforms for e-procurement, such as our Tradeshift Network, buyers and suppliers can quickly interact, share information, and track the current status of invoices, all in one location. This enables organizations to shift their simple transaction processing to a strategic business capability.
High costs associated with processing invoices
The goal of your AP department is to create a functional operation. If you want this to be a manual operation, then you’ll need to invest in the infrastructure that supports it. This includes costs such as:
AP staff wages
Leasing or purchasing office space
Overhead for invoice processing
Added up, these costs create a slow and often expensive process that isn’t practical for everyone. For organizations facing high invoice costs, it often indicates that their manual workflow is inefficient and in need of extra support. Often, it can be difficult for organizations to achieve efficiency using manual processes. When they commit to switching to an electronic system, they can reduce the need for manual input, speeding up the process and creating a more secure transaction. By automating purchase requests and invoices, e-procurement digital tools reduce tedious work, giving your employees more time to act strategically within their roles.
Many of the challenges that organizations face with their accounts payable processes come from delays and errors with manual operations. As more organizations embrace digitization and rely on e-procurement platforms, the time and costs associated with processing invoices will decrease. Plus, buyers and suppliers will find themselves with a more resilient and beneficial business relationship.
Tradeshift is built for adaptability, offering you an opportunity to evolve and grow. With our digital network, suppliers and buyers can create a more transparent, reliable, and profitable relationship than ever before. For more information about how you can make shift happen in your organization, reach out to our team and sign up for a demo.