No one likes to be rummaging around for spare change, but we’ve all been there. Another 30p for an extra caramel shot in your latte?
Unfortunately for CFOs, there’s no sofa or desk drawer big enough to squeeze out that kind of extra spend if tasked with finding it. While sending off direct reports with the edict to do more with less, sounds like a great idea, an even easier cash-finding fix is available: taking your invoice approval process digital.
The paper side of invoice approval is cumbersome enough. Manual data entry is time consuming and prone to error. Paper processes add a costly layer of complexity when it comes to making changes, catching errors and responding to vendors. Equally, making a sound financial decision based on data stored everywhere and nowhere is a risk in itself.
All paper processes aside, the biggest loss for companies who haven’t yet digitised their invoice approval process is the missed opportunity of taking their accounts payable department to a profit making centre.
So how exactly can digital invoice processes make money appear? It’s not magic, it’s access, ease and accessibility.
1. Access to Electronic Payments
Accounting departments that use Accounts Process (AP) Automation are taking advantage of the comparatively low cost and high speed of processing electronic payments over paper. It gets better in that CFOs are able to easily monitor the digital AP environment for additional cash flow strategies including extended payment terms, allowing them to keep more working capital on hand.
2. Ease in capturing early payment / dynamic discounts
In addition to the ease at which digital AP departments can capture standard early payment discounts, dynamic discounts can offer an even greater opportunity for return. These discounts are offered on a sliding scale from day one until the actual due date and have entire e-commerce solutions build around them – helping AP departments act quickly on sophisticated calculations and interface with suppliers easily via self-service models.
3. Ability to extend DPO and free up cash
CFOs know that by stretching days payable outstanding (DPO), profits will follow. Digital AP departments are able to to keep reserve cash on hand longer than manual processes can by leveraging electronic expense management solutions.
4. Access to supply chain financing and the analytics that go along with it
A lot of fiscal good can happen when you link buyers, suppliers and third-party funders electronically. Buyers get extended terms, sellers get early payment and all coexist peacefully in a transparent digital environment. Understanding supply chain financing and how it might benefit your company’s AP profitability isn’t easy for everyone. You can thank PwC for this one: Demystifying supply chain finance.
If you are keen to realise the benefits of quicker payments via automaton and optimise your Accounts Payable department, you can download our free white paper ‘Empower your Accounts Department’.