Four sustainable practices for a paperless supply chain
Gartner’s 10 IT Cost Optimization Techniques for Private and Public Sector Organisations report highlighted that the implementation of shared services, standardised applications and optimisation of the workforce to streamline costs should be explored by CIOs. One initiative which aligns with a paperless, cost effective strategy would be to automate the Accounts Payable process – particularly the automation of supplier invoicing through e-invoicing.
Millions of invoices are sent and received globally each year, and the number of invoices sent is forecasted to quadruple by 2025. Whilst necessary for profit and growth, the invoicing process takes time and resource. Given the current state of the economy post pandemic, organisations now need to maximize as much of their limited resources as possible.
With this in mind, let’s highlight the benefits of adopting a completely automated supplier invoice process:
1. Significant labour savings: Huge financial gains and decreased labour costs can be achieved through streamlining the supplier invoicing process. Manual tasks like downloading PDF attachments, scanning documents, manually keying in data or coding invoice information, searching for lost data, reconciling supplier and PO information, and much more are some of the biggest contributors to high accounts payable (AP) processing costs. Up to 80 percent of these costs can be saved when adopting a software that streamlines the invoicing processing (Billentis 2019). Automating the entire AP process journey therefore means achieving huge cost savings and processing data quickly and automatically.
2. Increased productivity: Without an automated AP process, 84 percent of staff time is spent on transaction processing, leaving only 16% for value-added activities (Ardent Partners, 2020). Adopting technology to automate the supplier invoice flow means the amount of human time to process an invoice in reduced substantially. Increasing the overall productivity of staff, more time can be devoted to further enriching tasks such as ensuring contract compliance, mitigating compliance issues, rationalising supplier spend, and managing cash flows and budgets.
3. Faster cycle times: Ardent Partners reports that the average time to process an invoice is 8.3 days based on the fact that approximately 75 percent of the suppliers still submit invoices on paper. This explains why only 4 percent of businesses pay their invoices on time. Slow cycle times can have an adverse effect on business and unplanned cash flows while invoices with inaccurate data delays further processing. This means using more human resource and time and often effects the relationship with vendors which may cause you to miss out on early-pay discounts. Automating the AP process allows you to achieve quicker cycle times and accurate processing of data.
4. Fewer errors: An automated AP process helps eliminate payment errors because:
Invoice headers and line-item data is captured without manually keying, ensuring data accuracy; and
Invoice data is validated against ERP information early in the AP process, quickly calling out duplicate payments
Data accuracy is vital. With a completely automated system, all the relevant data points are validated against supporting documents such as POs and delivery notes. This results in a seamless flow of accurate data into the ERP system, meaning fewer payment errors as invoice duplication and data validation/manual errors are avoided.
Automating your supplier invoice process is huge step in the right direction on the journey to digitalisation. Working in line with government initiatives to reduce waste and create efficient processes, organisations in the Middle East can benefit from the value that supplier automation through electronic invoicing.