Contenders in today’s hyper-connected global economy need the edge that digital technology can provide. The majority of companies still tend to adopt digital technology in an ‘a la carte’ fashion which include a network here, an ERP or payables system there, resulting in a patchwork of processes. Digital transformation will need more aggressive action – supported by the finance and procurement partnership – to focus on identifying and closing process gaps and building the partnership.
There are also gaps around payments processing. Goldman Sachs identified that every new transaction requires a dozen or so unwieldy steps, causing 65 percent of CFOs to view the accounts payable process as costly and laborious. This is a driver for either establishing shared service centers or outsourcing accounts payable. Additionally, some systems automate purchase order and payment processes, but skip invoicing. In others, the payment process flows through their own ERP system, separate from both POs and invoices.
Spend management digitization
helps to reduce the risk of processing duplicate invoices, paying an incorrect amount, or paying the invoice to an incorrect supplier as the same data is shared in eInvoicing and eProcurement processes. An automated accounts payable process
removes possible financial exposure for the company since invoices are paid on time impacting the accuracy of accruals.
Connecting a buyer to a supplier with purchase order to invoice conversion technology allows a buying organization to send a purchase order electronically to a supplier and then allows the selling organization to convert the purchase order into an electronic invoice. The seller can then submit the invoice immediately back to Accounts Payable. This process facilitates greater accountability and visibility to supplier data for accurate and timely decision making.
The complexity caused by isolated and siloed solutions impacts spend management in two ways:
- There is a lack of data integrity.
- Processes can be overly complex and redundant.
Disconnected systems and departments create an environment of chaos where there is the inability to obtain timely and accurate buyer and supplier reports and analytics. Companies can reduce this complexity by considering the recommendations made above and understanding the value of the Finance and Procurement partnership which is also critical to the success of an organization.