The emergence of Covid-19 has affected supply chains across the world. According to RapidRating’s State of Supply Chain Survey, after COVID-19, only 29% of businesses remain fully operational, with 57% of them being partially open.
In the absence of raw materials, businesses fail to manufacture goods and meet the demand of their customers. What starts as a small delay in a single component, snowballs into a huge disruption in the supply chain itself.
Many elements of supply chains are interlinked with accounts payable. Unsurprisingly, one of the major reasons behind these delays is the lack of timely payments to suppliers. In the midst of quarantine, staff can no longer work side-by-side, causing unnecessary delays in payments.
Needless to say, improving accounts payable processes fast-tracks the procurement of goods and has a positive effect on the supply chain. At the same time, aligning AP and supply chain helps departments communicate effectively and enjoy greater visibility in their overall operations.
In this article, we will discuss how you can streamline supply chains using accounts payable automation software.
7 Ways Accounts Payable Software Streamlines Supply Chain
Linking sourcing to any other department aside from procurement and supply chain might seem a bit strange. However, AP automation software plays a key role in providing companies with invaluable insights regarding budgets and financial aspects of the supply chain.
In an uncertain business climate, having access to in-depth reports is necessary to make better decisions. Reports from AP automation software can reveal underlying problems with certain vendors and their payment terms.
According to a Deloitte survey, 50% of respondents agree that analytics can benefit procurement and supply chain departments in terms of cost optimization. At the same time, 48% of participants see it as an essential tool for process improvement, while 45% consider it important for management reporting.
Insights from AP reporting and analytics help companies in reviewing contracts and utilizing data effectively. Consequently, they can negotiate better terms for their businesses with new and existing vendors.
In order to reduce person-to-person infections, many businesses have turned to virtual payments. Accounts Payable automation software allows companies to leverage virtual payments and pay their suppliers on time.
This means that they no longer have to send their staff to cut checks. At the same time, they can earn cash-back rebates on any spending they do use a card. A virtual card carries out payments once the team uploads an approved invoice file to an automated AP solution.
End Labor-Intensive Tasks
Businesses nowadays lack the manpower for labor-intensive tasks such as data entry, validation, exception handling, invoice approvals, and posting. Companies can make the most of their staff by using AP automation software. AP automation solutions are not only more efficient at handling these labor-intensive tasks but also result in significantly fewer errors.
Nowadays, data serves as a strategic asset for companies. Finance leaders need to rely on data to forecast their cash flow position accurately in times of as part crisis. As data continues to fuel decision-making, utilizing it has become even more important.
However, unless you align your supply chain processes with Accounts Payable, there putting financial data into context is difficult. Joining AP processes with the supply chain helps businesses gain qualitative data related to their P2P processes.
Integrating AP automation software with the supply chain adds context to financial data and helps senior managers monitor spending ventures more effectively. As a result, it enables managers to cut unnecessary costs and deal with suppliers who offer better discounts.
Vendor Relationship Management
For businesses, developing a strong relationship with their suppliers is critical for success. However, amidst a global pandemic, maintaining good relationships with suppliers has become even more important.
Levvel Research reported that 32% of suppliers agree that payment errors are the third biggest payment challenge, which is followed by data management. To establish good relations with your vendors, you need to implement seamless communication and leverage technology to enhance the organization of data. This means that you need complete information and avoid duplicate, incomplete, or fraudulent, supplier data.
Digitizing vendor information and storing invoices, tax records, and payment details in a centralized location can help businesses create a seamless archive. By making AP automation software a part of your supply chain department, you can benefit from a comprehensive supplier portal for all your vendors.
A supplier portal lays the foundation for an inclusive business relationship and lets you maintain trust with your vendors. Through the portal, your suppliers can select their favorite payment method, input or modify payment or contact information, and see payment information at any time or place.
Vendors are not only aware of their payment status, but they can also reduce payment errors by using self-service supplier portals. Since vendors enter and update all information by themselves, there is no space for guesswork in these processes. Ultimately, Accounts Payable automation software improves your relationship with your vendors.
Providing a Paperless Workflow
Although paper-based processes are known for being inefficient and error-prone, many distribution centers and warehouses continue to rely on them in some capacity. From facility gate management, transportation management, and yard management to inventory and payment management, paper dominates the supply chain industry.
Errors or inefficiencies in any of these areas ripple throughout the entire supply chain. A good starting point for rooting out these inefficiencies is to automate payments and reduce manual payment methods.
According to some estimates, resolving errors on paper invoices alone can be as high as $53.50 per invoice. Since industries like trucking firms and warehouses accept payments on the fly, they need a more accurate system with faster processing time.
Unless you have automated invoice processing, managing the burden of real-time invoicing and payment in these businesses can become error-prone and inefficient. With the help of AP automation tools, companies enjoy a faster and more efficient system for handling payments.
Better Transparency and Security
When supply chain processes depend on cash and manual processes, they are not only prone to errors but are also less transparent and secure. Cash payments are difficult to trace, as they are anonymous. This is why lacking a transparent system in the supply chain hurts supplier profits and increases the cost of the buyer.
As Better Than Cash Alliance points out, digital payments reduce the risk of theft and corruption by increasing accountability and tracking. AP automation software gives businesses a secure and transparent system. This allows businesses to gain insights into their working capital and carry out transactions transparently.
Accounts Payable automation software provides procurement and supply chain departments with a reliable system for ensuring timely payments and ending unnecessary disruptions. Using these solutions, we can streamline our supply chain processes and carry out transactions successfully during a global pandemic.