No one likes to scrounge around for spare change, but we’ve all been there. Another quarter to bump your order up to a venti.
A few more pennies and you won’t have to break out the card. Unfortunately for CFOs, there’s no couch or desk drawer big enough to squeeze out the kind of extra spend they’re tasked with coming up with.
While sending their direct reports off with an edict to do more with less sounds like the next best thing, an even easier cash-finding fix is available: taking invoice approval digital.
The paper side of invoice approval is cumbersome enough. Manual data entry is time-consuming and error-prone. Paper processes add a costly layer of complexity when it comes to making changes, catching errors and responding to vendors. And, the soundness of financial decisions based on data collected, stored and retrieved here, there and everywhere is iffy at best.
All paper processes aside, the biggest loss for companies who haven’t yet digitized the entirety of their invoice approval process is the missed opportunity to take their accounts payable department from invoice processing plant to profit center.
So how exactly can deploying digital invoice processes make money appear? It’s not magic. It’s access, ease and ability.
Access to Electronic payments.
Accounting departments that use AP Process Automation software are taking advantage of the comparatively low cost and high speed of processing electronic payments over paper via the Automated Clearing House (ACH) network. And it keeps getting better. CFOs are also mining the digital AP environment for additional cash flow management strategies including extended payment terms that help them keep more working capital on hand.
Ease in capturing early payment/dynamic discounts.
In addition to the ease at which digital AP departments can capture standard early payment discounts (getting a 2% discount for example, on the face value of an invoice paid in 10 days as opposed to the required net 30), dynamic discounts offer an even greater opportunity for return. These discounts are offered on a sliding scale from day 1 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.
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 (a full 30 days, for example as opposed to losing the time it takes to physically route the check) by leveraging electronic expense management solutions.
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.
Taking accounts payable digital has quite a few perks--avoiding the icy stares of auditors is one. Want one better that your CFO will love? The ability to turn AP into a profit center without crawling under the couch or digging through another drawer.
If you’d like to find out how iDatix can help you turn your AP department into a profit center, check out our free white paper below.