Barriers that have long existed between buyers and sellers are now being broken down by technology that automates day-to-day financial processes.
The evolution of the digital supply network is changing the way business is transacted. Technology that can automate transactional purchasing and payment processes is accelerating the access companies have to their working capital. As the speed, cost, and accessibility of procurement and accounts payable software such as e-invoicing and purchase-to-pay (P2P) systems have improved, so too has connectivity between buyers and suppliers. And with this increased digital connectivity comes a wealth of data that can support early payment models.
AP automation is knocking down common barriers
Even with the advent of e-procurement and P2P systems, one of the biggest barriers to improving working capital is getting buyers and suppliers on the same page. In addition, business silos within a company, such as procurement and accounts payable, can also impede the ability of all parties to “speak the same language.” Rising interest in AP automation, however, is quickly fixing this common issue. AP automation experts are helping to streamline this process and make supplier onboarding hurdles a thing of the past by minimizing complexity and speeding up the onboarding cycle.
Connectivity increases as a result of P2P digitization
Procure-to-pay systems have brought the whole purchasing cycle online. Everything from POs to invoices to payments are now capable of being done electronically, meaning there are instantaneous connections between all parties available at every step of the process, along with reams of supporting data and documents to validate transactions. Plus, next-generation approaches are adding in capability to offer early payment directly from P2P systems, on a case-by-case basis.
The amount of historical information now available with digitization leads to better management of buyer-supplier relationships, as well as working capital, through the following:
- Visibility into the status of invoices for prompt payment (or not)
- Ability to proactively identify which suppliers may be in distress (e.g., through delays in shipping seen in ASNs)
- Establish stronger negotiating positions for both procurement and AP, from better pricing to more advantageous payment terms to greater discounts for early payment.
For companies that need to compete and grow in 2019 while increasing productivity and profitability, building a digital supply network would seem to be an obvious move.
See how automating your entire transaction cycle, from purchase order to payment can give you greater control over your working capital.