The true competitive advantage for any organization is access to data, and nowhere is this more true than in the finance department. However, translating data points into action remains less clear for CFOs and VPs of finance looking to solve payment challenges. Cross-border business, an ongoing pandemic, and narrowing margins in an uncertain economy only accentuate the need for change.
Many CFOs have struggled to change their processes by eliminating manual tasks for nearly a decade, with the pandemic accelerating the adoption of accounts payable software and invoice processing. Back in 2017, only 14% of CFOs believed their technology was efficient, while 76% thought that implementing artificial intelligence and data systems was too challenging. Only a few years later, the onset of COVID-19 and extended period of remote work prompted organizations to invest in automation. It was estimated that by 2022, 60% of companies would adopt AP automation.
Still, there is more to a successful digital transformation in accounts payable than the vague notion of automation. The challenges AP leaders face today extend beyond the basic need to automate manual invoice processing and data entry. But with nearly a third CFOs linking cost as the primary obstacle to adopting new and better technology, they will need a data-driven approach to convince other stakeholders to invest in accounts payable automation software.
Top Challenges for CFOs Today
There are two dominant challenges in digital transformation in the AP department.
The cost-investment debate among the c-suite is essentially a catch-22. The management team wants to see savings, so there is no money for “optional” AP software. However, a lack of automation makes room for duplicate payments, fraud, and costly corrections. There is a lack of true visibility into the organization’s finances, but it’s likely the company is spending more due to poor oversight.
The other issue is that many finance professionals feel that they need to automate everything at once, without considering if the foundation is strong. For example, a McKinsey report found that CFOs believed that more value could be derived from revenue forecasting, case-flow forecasting, scenario management data, and automation. All of those things may be true. However, it’s impossible to forecast accurately without 100% transparency and visibility into cash flow movement.
The savvy CFO will then need to make a case for AP automation on two fronts: To the rest of the management team and their department. The good news is that there is plenty of data to support their cause.
5 Data Points for AP Automation
Ardent’s reports on the State of ePayables in 2020 and its Key AP Metrics in 2021 both provide insight into how a best-in-class AP software can revolutionize the finance department.
1. AP Automation provides a cost-savings of 80%
The right payable automation software reduces errors and processes properly-formatted invoices without human intervention. The savings from automating the AP process is far more than a few pennies combined with spending fewer resources and employee hours on manual invoice processing and other data entry tasks.
2. Invoice processing is 74% faster
Since automation, particularly intelligent automation, can process invoice data at a greater volume, faster than any human can achieve, AP professionals save significant time in invoicing processing. This allows them to spend more time on mission-critical activities.
3. A whopping 60% of AP professionals say they have more control over payments
Every CFO knows that having the flexibility of when to pay an invoice allows the team to manage cash flow strategically. Since automation rapidly scales the payable process, it can be easier to decide who to pay first. For example, vendors that offer an early payment discount should likely be paid first, as there is a bigger benefit.
4. 54% of vendors will submit electronic invoices if you use automation
Another critical factor in optimizing your AP process is onboarding vendors to the new platform and encouraging them to send e-invoices. Using best-in-class AP automation software does precisely that.
5. A greater than 95% accuracy rate
Intelligent automation uses artificial intelligence and machine learning to self-optimize. Both process large data volumes and do so with greater accuracy than before. A high accuracy rate safeguards against error costs and potential fraud cases.
Implementing Your Transformation
Once you get buy-in from your management team, it’s time to implement changes. With nearly eight out of ten digital transformations leading to failure, it’s critical to go slowly.
Successful transformations in and outside of AP have a few commonalities:
- They get buy-in from the management team and the AP department.
- Typically, one process is automated at a time.
- AP leaders carefully evaluate software and get the funds for their required software.
- The team is tracking clear KPIs at the beginning of the implementation.
In other words, lasting change only comes with an organizational commitment to data-driven practices.
A Data-Driven Solution for a Data-Driven Approach
These quantified benefits to transforming the accounts payable process are about more than just data entry into different financial systems or paying supplier invoices on time. CFOs and AP leaders can leverage intelligent automation to reduce costs, save time, reduce fraud, and gain better visibility into their payments. As the cornerstone of their cash flow operations, the AP data gathered from their automation solution can be used to forecast revenue better and make more informed decisions.
Itemize streamlines AP workflows through compliant intelligent automation and integrates seamlessly into all major ERP systems. Request a demo with us today to learn more about how we help organizations reduce costs, save time, and maintain compliance with data-driven AP automation.