Payment Delays: The Electronic Payment Alarm
In a business, events happen that may seem simple on the surface, but can actually do critical damage over time. One of these slow but potentially devastating instances is stalled payment of invoices. These payment delays can injure relationships with valued suppliers, and even downgrade the credit rating of a business if taken too far.
Payment delays can come from simple human error, such as a lack of attention to detail or, they may be caused by complicated or unclear approval processes for invoicing. In some cases, payment delays can even come from a company not having the full visibility into their spend, causing over-spending. Errors like this can cost a business thousands of dollars a year and deteriorate supplier relationships.
Keir Walker calls suppliers the bloodline of the business in the Aberdeen article, “Keep Your Business Bloodline Flowing – Exercise Strong with AP Automation”. A certain symbiotic relationship exists between businesses and their suppliers that cannot be understated. No matter how on-target or popular the product or service offered by a business, it will quickly dry up without continued access to good suppliers.
The Answer: AP Automation
E-invoicing offers several solutions to put an end to payment delays. One way that electronic invoicing does this is by providing a high-visibility approach: the entire process, from the creation of the order to its final payment, is easily tracked online. Duplicate orders can be eliminated thanks to duplicate invoice flagging and other fraud prevention measures. This allows for better visibility and management of the purchase and payment processes. Plus, flagging and correction of errors happens in the moment, instead of over time, allowing for a simpler process and fewer critical errors.
Better Definition of The Payment Process
Electronic parameters can established to align the payment process to real-time financial status. Notifications and alerts can be set up electronically to warn users of adjustments that need to be made in the payment process. Discrepancies are made to stand out so that they can be found quickly when they don’t conform to the standard.
Accounts Payable Minus Delayed Payments Equals Discounts
Perhaps one of the best perks of ridding your accounts payable department of late payments, is the opportunity to capture early payment discounts. The genius of dynamic discounting in the automated process is that it offers sliding scale payment of invoices. This allows a business more freedom and less limitation in how to allocate its spend. Payments can be toggled to reward suppliers with quicker payments, while at the same time offering a distinct advantage to AP with early payment discounts.
Improved Processes and Relationships
Accounts payable automation benefits the relationship between the buyer and the supplier, and it acts as a safeguard to make sure that critical errors don’t overwhelm standard business processes or strain supplier relations. Ridding accounts payable of payment delays opens the door to improved processes, relationships, morale, and discount opportunities. Accounts payable automation makes this kind of improvement possible, and is the key to a successful department.