A fire in a building is a very dangerous thing, but building codes and precautions are set up to avoid it and alarms are installed to make everyone aware of its earliest signs. Significant damage can be done in a matter of minutes so these precautions and alarms are critical.
In a business, events happen that may seem more benign on the surface, but can do much damage over time. One of them is stalled payment of invoices. These delayed payments can injure relationships with valued suppliers and even downgrade the credit rating of a business if taken too far.
Delays in payment can come from simple human error, such as a lack of attention to detail. They may also be caused by a complicated or unclear approval processes for the invoices. And in some cases, delays can come from a company not having the full visibility into their spend, causing over-speding. Errors like this in a business can cost it thousands of dollars a year and deteriorate supplier relationships.
Keir Walker calls suppliers the bloodline of the business in the 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 is that is 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 these common business problems. For one thing, electronic invoicing is a high-visibility approach. The guesswork that used to exist between management and accounts payable need no longer be a problem with the advent of automation. The entire process of supply from the creation of the order to its final payment is easily discovered online. Duplicate orders can be virtually eliminated because each step is recorded electronically. This allows for better evaluation of the ordering and payment process. Troubleshooting is in the moment instead of over time.
Better Definition of The Payment Process
Parameters can be set up electronically to align the payment process to real-time financial status. Alerts and highlights can be set up electronically that act like a smoke alarm, warning of adjustments that need to be made in the payment process. Discrepancies stand out, so that they can be found quickly when they don’t conform to the standard.
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 spend daily revenue. Payments can be toggled to reward suppliers with quicker payments, while at the same time offering a distinct advantage to buyers with early payment discounts.
Accounts payable automation benefits the relationship between the buyer and the supplier in the procure-to-pay process, and it acts as a lifeguard to make sure that a business does not drag itself underwater with harmful payment practices.