Automating your procurement processes can often feel like an overwhelming task. It’s true that it’s a big change that can take time, money and effort. However, taking it step-by-step makes it far more manageable and means you should start seeing the benefits much more quickly.
Breaking it down
Two of the main reasons that projects fail, or don’t get implemented to their full potential, are a lack of resource planning and unclear goals and objectives.
A project that is too large or too broad can easily get muddled as more people and processes are involved, leading to ‘scope creep’. Think of those major Enterprise Resource Planning (ERP) implementation projects that have either lasted years or failed completely. An ERP touches several processes and departments, creating plenty of points where it could fall apart or stagnate. That's why it's important to assess and see where current needs lie and how to prioritize. Sometimes an all-in-one approach will cause more harm than good.
A better approach is taking it step-by-step, and conquering automation by prioritizing greatest return on investment, followed by one area at a time.
Think about it this way: you don't have to overhaul or implement an entire Source-to-Pay solution to be successful. Start small with one part of the process and proceed from there.
One step may solve an immediate challenge compared to another step in that process that is less of a challenge at that time. Completing the first step is the sensible option, not only for the benefits themselves, but for the psychological boost to help you keep going, and proof that the project itself is worth pursuing.
The precise steps and the best order to automate finances will depend on your specific situation. Going through an assessment to understand where the most pain and costs occur is crucial to identifying where to start. That said, in our experience, manual and paper invoices have been by far the most painful and costly process for an organization, especially when processing up to or over 30,000 invoices per year. We've seen AP professionals focus all their time on entering invoice data in multiple systems and storing paper invoices in filing cabinets.
Seeing the big picture
Imagine you’re trying to find the best route to a destination. You might ask for directions. You might look at a map. You might use GPS satellite navigation. But no approach works without details of your current location.
Similarly, the path to digital transformation is much more efficient when you know your current position. You can do this through an assessment of your processes. Don’t be afraid to take some time to ask yourself key questions and gather the answers together in one place:
- What does your current purchasing and AP process look like?
- How are invoices managed?
- How long does it take to process each invoice?
- Do your staff have any insights into where your processes fall short?
- Do you experience duplications, redundancies, or delays?
Cut your costs
This may seem obvious, but sometimes it can be a blind spot. Often a business has greater immediate control over its spending than over its revenues. Break down the different types of goods and services you purchase and double-check whether you really need to buy them and, if so, are you buying from different suppliers and could you consolidate and negotiate a better deal? Remember that this isn’t about false economies, so don’t lose sight of the benefits that each purchase brings.
Automation is key
As a guiding principle, automation is usually the right answer when it saves time and cost and improves reliability and accuracy. As we mentioned before, invoice processing within P2P is usually a great first candidate for automation as it reduces risks such as duplicate payments, misplaced paperwork, and fraudulent invoices, as well as removing delays when one person in the paper chain develops a backlog.
Remember that AP automation doesn’t have to be a replacement for labor. Usually companies that automate tasks such as invoicing find they can use their staff much more strategically by freeing them up to concentrate on tasks that require human skills and expertise.
Harness the power of knowledge
Once you’ve automated an area of the P2P process, such as AP, the closer you are to gaining a holistic picture. You gain the ability to bring together data from that process and analyze it to learn more about your business and its activities.
For example, one of the biggest limitations of manual invoice processing is that information about your activity becomes accessible at differing points depending on your payment schedules and invoicing terms.
With AP automation, you generate data about each transaction at the earliest possible point, regardless of when the relevant payment is due or when it actually completes. Not only do you get a better insight into your future cashflow, you have real-time data on how your spending breaks down. This acts like an early warning system for potential over-spending, poor value or unsustainable margins, tipping you off before the problem is irretrievably out of hand.
Greater than the sum of its parts
By breaking the task of automation into these steps - and even breaking those steps into smaller actions - you’ve always got a manageable task to concentrate on. Yet by the end of it, those manageable tasks have combined into a transformation of your business: you know what you are spending and receiving; you’re operating more efficiently; and you can make smarter, more informed decisions about your business.
We can help on your journey to procurement automation. Contact us today to set up a consultation to help identify those all-important first steps.