Empowering growth through P2P automation.
When it comes to organizational change — and the many aspects of transformation — P2P is in a great position to take the driver’s seat through automation, or at least ride shotgun as finance takes the wheel. What follows are four strategies from a Corcentric webinar and IOFM white paper for procurement teams to focus on.
#1: Digitize processes to increase margins
The back office is often, unfairly, dismissed as a “cost center.” These critical functions may not necessarily be traditional revenue generators, but by digitizing processes to increase margins, reduce costs and increase efficiency they can contribute to profitability in a big way.
Three hallmarks of leading procurement departments are 1) Their level of efficiency, 2) Their approach to accounts payable automation, and 3) Their ability to efficiently and effectively manage cash and spending. What underlies all these advantages is the elimination of paper-based processes — e.g., P2P automation.
The steps in this automation cycle include:
- Efficiencies gained by digital purchase order approval
- The centralized intake of all paper and electronic invoices
- Virtualization — conversion of invoices into electronic data for matching and processing
- The digitization and aggregation of invoices into existing systems and databases
- Holistic payments disbursements from a single file to optimize discounts, rebates and payment times
- 360 degree visibility through seamless ERP integration
Highly automated procurement functions spend 3/4 less to process a single invoice and 60 percent less to pay a supplier. The impact on profit margins is truly something to think about.
#2: Deliver actionable insights to the enterprise
Situational awareness is key to solid decision making, and the achievable grail of organizational agility. But that means having airtight management of your exploding data overload. You can’t manage what you can’t see, so real-time data and analytics that provide total visibility is paramount. This is as true for procurement leaders as it is for the CFO and finance departments.
Automation provides the crucial visibility across the P2P cycle that gives decision-makers timely, comprehensive insight into cash and spending. This won’t happen if you’re using paper and manual processes.
P2P automation enables the analytics tools that empower procurement organizations to improve functions including data discovery, forecasting, decision support, financial planning and modeling, and exceptions detection. In other words, it delivers the actionable metrics and strategic insights that support business growth.
#3: Optimize working capital to free up cash
Digitization plays a major role in managing — and freeing up — cash. Cash that is vital to the smooth running of the business and helping power growth. Consider, that even just rebates and early payment discounts claimed by having more efficient payment processes (e.g., P-cards) and adjusting payment schedules can save departments 30%, and even single-handedly transform procurement into a profit center. That is seriously cashing-in on efficiency.
That improved cash flow is what will fund business growth — not to mention additional automation — which will mean even greater P2P value delivery to organizations in the future:
- 57% expect to earn more card rebates within the next three years
- 52% expect to capture more early payment discounts
- 34% expect standard payment terms to increase between 15 and 90 days
#4: Mitigate compliance risks
All your massive data growth brings not only opportunity, but considerable risk. Privacy, regulatory compliance, fraud considerations all increase exponentially with growing data. That risk can be mitigated with the data management capabilities that automation enables.
Data accuracy is the most important aspect of maintaining compliance, not to mention fueling better decision making. Without end-to-end P2P automation, there is no way to measure or control data veracity. And it has to be a holistic approach: fragmented or disparate procurement technology systems only exacerbate the problems of data governance and control.
Procure-to-pay automation is crucial to enabling finance organizations to conquer the challenges of reporting and risk management, while removing a potential barrier to strong business growth.
If you’re ready to take the driver’s seat and automate your P2P processes, schedule a personalized demonstration of our integrated, modular procurement solution on the Corcentric Platform.