Restarting and reinventing the U.S. economy will involve accounts payable (AP) automation. Count on it. “Buyers need upgraded AP tools that provide detailed views of their finances and outstanding invoices to keep their operations running smoothly,” according to the latest Next-Gen AP Automation Tracker® done in collaboration with Bottomline Technologies.
“These solutions enable them to see whether they can afford to more quickly pay suppliers — and potentially take advantage of early payment discounts — or if doing so would risk busting their budgets. The pandemic has left many companies short on funds, making it especially important for them to accurately project their cash flows and avoid making too many early payments. They also must avoid using sluggish AP processes that result in late supplier payments for the aforementioned reasons.”
The latest Tracker explores innovation in AP automation tools like three-way invoice matching, emphasizing the need to “rapidly pay and easily access data when making business decisions” in a business world radically changed by the COVID-19 pandemic.
Three-Way Matching, Savings and Control
Considering estimates that “… large-scale adoption of [eInvoicing] could collectively save U.S. businesses more than $100 billion” as PYMNTS has reported, the advantages have been clarified in a hurry by cash-strapped businesses fighting to survive the pandemic.
AP automation does a number of things well, and one of the most compelling of these features is three-way matching.
As the Next-Gen AP Automation Tracker® notes, “Three-way matching solutions compare buyers’ placed purchase orders, suppliers invoices and shipment receipts drawn up at distributors that detail received items, then send real-time alerts on discrepancies, such as receipts listing fewer products than specified in purchasing orders or billed on invoices. This enables staff to review and determine how to respond … quickly catch and address errors and avoid losing revenue or underpaying vendors — both of which would damage relationships.”
AP automation also allows users to fine-tune system controls to manage rounding errors in shipments, leaving humans more bandwidth to review orders with real problems.
“Running a business requires managing procurement and quickly and accurately paying for everything from major inventory shipments to one-off services. Uncaught overbilling errors can deplete buyers’ revenues, and mistakenly underpaying produces disputes that sour vendor relationships,” the report states.
“Both are significant problems in any economic climate, but it is even more crucial to avoid them during downturns like that resulting from the COVID-19 pandemic. Three-way matching automation solutions can catch and resolve these issues, minimizing AP and buyer-vendor relationship frictions.”
Data Nourishes Next-Gen AP Automation
PYMNTS’ research projects that U.S. accounts payable departments could save 19 hours each week if they used automated digital invoice processing. The pandemic has cast a withering light on such inefficiencies, and AP automation is stepping in with solutions.
“Eighty-eight percent of respondents [to one survey of financial professionals] said they had increased or would increase their cash forecasting efforts and work to extend such forecasts further into the future,” according to the May Next-Gen AP Automation Tracker®.
“AP departments can use data insights to provide more accurate cash flow predictions, including tapping records about sales histories and upcoming expenses to estimate revenue, costs and financing for desired projects. Companies seem well aware of the value in upgrading AP operations, with 65 percent of corporate respondents saying they digitized their payment processes since the pandemic’s onset and 78 percent reporting treasurers are involved in conversations about related responses.”