Does Your AP Department Have Terminal Jet Lag?
Technological advances are surging ahead so quickly that many in the business world are experiencing a kind of jet lag. Those who have travelled between time zones know the feeling well. It disrupts your body rhythm, causing you to feel sluggish and sleepy.
Jet lag is supposed to be temporary, but it can become a permanent condition if sluggishness becomes a way of life. For a business, that can be deadly, because competition demands that you continually sprint forward in order to stay ahead.
Old attitudes and ways of doing things can both get in the way of the sprint. Both can cause a company to go static, losing pace with the rest and just managing to keep up, then finally falling back and dropping out.
How to Recover
The way to recover from terminal jet lag is to accept modern ways of thinking and continually adapt to them. For businesses today, that means automating your business processes as much as possible.
That’s because the trend of corporate competition is no longer local; if it was, automation wouldn’t matter as much. To really compete today you have to extend your borders outside of the country, and only automation can get you there as easily and quickly as possible.
What Dynamic Discounting Can Do for Your Sprint
Accounts payable is a good example of a department that wholly benefits from AP automation. If your business is surging forward, it’s likely that some of your suppliers may be outside of the country. Supplies and invoices are coming in from several sources. You have a lot of choices for suppliers when you are servicing the world market. How do you decide which suppliers are the best ones for your business?
The answer is electronic invoicing. Through E-invoicing, you can implement a tool called dynamic discounting, which allows your company to capture early discounts on invoice payments, resulting in less cash spent. This promotes a favorable relationship with suppliers, who are delighted to receive early payments.
Dynamic discounting goes way beyond the conventional discounting of invoices, which used the standard terms of 2% in 10 days, net 30. With dynamic discounting, you have more control over the payment terms used for each supplier. For instance, suppliers can be electronically categorized by such things as geographical location, size of company and credit rating. You can determine the best time to pay invoices early, based on fluctuations in your own working capital. Discounts can be taken on a sliding scale that benefits both the supplier and the buyer.
It also gives you an easy way to track exactly what is happening with each of your suppliers, especially if the procure-to-pay process is completely automated from end to end. This is because accounts payable automation allows both suppliers and buyers real time access to financial transactions. You can determine which suppliers give the best discounts, find out how fast goods are coming in and being invoiced, and identify and solve problems rapidly before they become a major financial headache. The end result is that you have an electronic map, guiding you to the suppliers who are doing the best for your company.
There’s no denying it; automation in all aspects of business is the wave of the future. Avoid living in a jet lag mindset and sprint forward into business automation.