Areas where digital is being applied to drive profitability and efficiency
Cloud hosting of systems is a significant saving, sometimes up to 90% cost reduction for basic provision. Cloud technology has been vitally important over the last couple of years, and eInvoicing has increased substantially as a result. The reasons for this are:
- more efficiencies,
- being able to gain control,
- deeper visibility into the supply chain,
- automation of manual tasks.
As a result of these efficiencies, CFOs have been more willing to invest in areas where they can actually see that they will have an impact on the growth of the organisation. Linked to this is the move to the “paperless” process. During Covid, people couldn’t store the paper at home or rely on the postal service to deliver post to many different addresses around the country. In terms of duplicate invoice processing, electronic invoices and OCR’d invoices ensure that the warning of duplicates is far more reliable and actionable, compared to when an AP clerk would put an asterisk at the end of the invoice number!
Also as a result of being able to work remotely, through and following Covid, eSourcing has come to the forefront of people’s minds. In fact, anyone who didn’t have eSourcing during the pandemic, if they are still around, probably has it now or is looking to get it pretty quickly! Having eSourcing enables Procurement teams to respond more quickly and flexibly to changes, and able to identify risk at an earlier stage. There has been a growth in software that helps manage supplier risk, but if there is a problem in another country or a sudden change in requirements, Procurement can act faster.
And with risk, comes the possibility of fraud. The Purchase-to-Pay Network (PPN) found that over the last three year period nearly 50% of organisations spoken to reported some attempted fraudulent activity. No-one likes to think about having fraudulent activity within their own organisation, and we want to trust the people that we work with, but having technology and specifically that risk reporting technology reduces the possibility of fraud.
These are two areas where automation can improve processes, however, Proactis has seen that even when there is maturity of automation and control in one area, such as procurement, this isn’t always true across an organisation. For example, even though an eSourcing system is in place, often paper invoices are still arriving in the office for processing by the Finance function. This is where collaboration makes all the difference, looking at contract spend and transactional processes. Is the transactional process linking to the procurement process? Are people buying from the contract that Procurement are negotiating and want people to buy from?
With analytics and reporting within your system, you can better manage your cash and you’re better able to pay suppliers promptly. This in turn helps bring customers and suppliers much closer together. The whole electronic nature of the business has meant that searching for potential suppliers of goods and services has become instantaneous on a global basis. There has also been a huge increase in collaboration across the entire end-to-end Procure-to-Pay chain. PPN asked its members about collaboration, with 29% of people disclosing that their aim is to become one Procure-to-Pay department, in order to really collaborate internally as well as with suppliers.
Transactional procurement and the Accounts Payable department should work hand in hand as there are several key savings that can be made there, as well as visibility and help with supplier relationships. If an organisation’s top supplier is not being paid, they are unlikely to give you a better service. Everybody needs to work together.