AP Automation: Helping Organizations Run Smoothly
It’s no accident that the word “corporation” derives from the Latin word “corpus”, meaning “body”. A business, in fact, is in many ways like the human body. It’s a living, breathing, functioning entity that is energized when it’s running smoothly, and sluggish when it’s running poorly.
Similar to the human body, every part of a business affects every other part, and there are some parts that are more critical for its smooth operation than others. A human body may be able to continue running efficiently without an appendage, but it won’t last long if something critical happens to the brain, heart or other major organ. The blood pumps life into every major organ, and for a business, the life blood is in its suppliers. Keir Walker explains this vital relationship in his article, “Keep Your Business Bloodline Flowing — Exercise strong with AP Automation” https://bit.ly/3kUQaO9.
How Suppliers Affect a Business
The quality of suppliers a business has, as well as how often and how well supplies are distributed to the business, can greatly affect how the business itself can run. A corporation may have many customers, but if the supplies that are distributed to customers are limited or inefficient, the business can quickly stall. Like the human body with a clogged artery, even if the body of the business continues to run, it will not run well.
It makes sense, then, for an organization to pay close attention to the relationship it has with its suppliers. According to Keir Walker, paying suppliers correctly on time every time is one way to allow this relationship to flourish. Suppliers notice when a business is prompt and exact in payment for services rendered. It is the positive reinforcement that encourages them to exceed normal expectations.
Mr. Walker believes the best way to be sure supplier needs are met on a regular basis is to fully automate accounts payable functions.
Electronic Invoicing Can Increase Effectiveness at Every Level:
- Smooth transition between purchase order and invoice payment
- Establishment of payment priorities
- Complete capture of early payment discounts (Dynamic Discounting)
- Timely and correct payment of invoices
- Spotlighting of discrepancies for easy problem resolution
One of the major benefits of E-invoicing is that all functions, from receipt of purchase order to final invoice payment, are directed to a single source. Instead of being transferred from one department to another for human interaction at each level, the routine functions of accounts payable automation occur electronically. Human error and slow interdepartmental interaction are virtually eliminated as a result. In addition, one of the costliest mistakes in accounts payable is almost completely eradicated: paying on duplicate invoices.
Invoices are correctly matched to both purchase orders and receipt of goods, making exact verification of the process simple and quick. All transactions are organized and archived electronically for easy data retrieval if an inquiry is made, or if an audit is ever needed.
AP automation is particularly efficient when it comes to problem resolution. Where matching is inexact, the specific discrepancy is identified and invoices are routed to the company for issue resolution. The job of issue resolution is easier because the specific deviation has already been highlighted electronically. Anywhere deviations are found, a correction can be made smoothly, without snags or hold-ups at individual locations.
Time previously wasted in the human matching of invoices can now be used to send out invoices early, in order to take advantage of dynamic discounting. An additional perk given to suppliers is that they are notified electronically upon the receipt of goods or services. This facilitates work at their end, and provides an additional means of verification for both supplier and company.
Keir Walker’s comparison to the human body holds true. The human body works best when vital organs are kept healthy. The business organization works best when attention is paid to its very life blood — the product and service suppliers it pays to do what only they can do. Accounts payable automation is what sweetens the deal for everyone concerned.
Keir Walker: “Keep Your Business Bloodline Flowing — Exercise Strong with AP Automation”: https://bit.ly/3kUQaO9: Oct. 22, 2015