Blog | February 21, 2017 | by Kate Freer

The Transformative Power of P2P Automation

The Transformative Power of P2P Automation

If you doubt that automating your procure-to-pay processes will significantly improve performance, check out the “before and after” facts by role.

People often discuss how automating AP and procurement processes results in overall savings in time and money, greater accuracy, and real-time visibility into spend. That is all true, especially when it involves indirect procurement. But when you look at the effect P2P automation has on the individual roles within the P2P continuum, it is quite striking how much of a transformation is taking place.

A recent PayStream Advisors white paper, sponsored by Corcentric, “Changing Roles When Automating P2P,” explains in great detail just what those transformations are. The paper is based on their own market surveys involving hundreds of procurement and AP professionals, tracking how automation changes the roles for procurement and accounts payable.

Indirect Procurement – Before and After

Before – Too much paper…too little control. When it comes to companies with more than one location, indirect spend is often decentralized, with purchasing of non-core products being handled at the local rather than the corporate level. This can result in excessive amounts of time searching for product and suppliers, overpayment for products, use of unapproved suppliers, lack of compliance with agreed upon terms, and an inability to follow, in real-time, the transaction from PO initiation to PO approval to receipt of goods.

After – An integrated solution enables procurement to immediately see approved suppliers, product pricing, and agreed-upon terms. A PO is required, approved, and transmitted all within the system and available for all stakeholders, including suppliers, to view in real time. This will enable those in procurement to spend less non-value added time trying to track down the right supplier and more time focusing on market changes that can affect pricing and availability of specific products. It also speeds up the entire transaction process by automatically “flipping POs to invoices after receipt,” which also makes procurement a strategic partner with AP.

Accounts Payable – Before and After  

Before – A flood of paper. As in procurement, AP also struggles when it comes to invoice approval and payment in a paper and manual-based system. Manual handling can lead to mis-keyed information and extended lengths of time tracking down POs, shipping notices, and receipt of goods (partial or full) that might be misplaced, still on procurement’s desk, or worse, lost. Once all documentation is together, then the invoice needs to go through the approval process, which can require mailing and/or e-mailing of documents and follow-up through the approval chain in order to either move the invoice on for payment or flag it as an exception. Since this is all dependent on a paper trail, and those trails often go astray, it’s extremely difficult, if not impossible, to track the invoice status in real time.

This lack of visibility can lead to AP processors spending too much time answering questions and requests for payment from suppliers, who are also in the dark when it comes to invoice status. If you think this is not a significant expense, PayStream Advisors estimates that it can cost companies thousands of dollars a year, if not tens of thousands, on damage control alone. The survey the white paper cites found that more than one-third of respondents indicated that their AP spends 4 to 8 hours a week resolving AP process issues.

After – All invoices are either submitted as electronic invoices (if the supplier is able) or as paper invoices which are then scanned and converted to e-invoices by the solution provider. All documentation, from PO to receipt of goods to invoice, is all in the system and ready to be matched to one another. Matching is done automatically and, if there are no discrepancies, the invoice can be processed straight through to the company’s ERP for payment with no human intervention needed. The savings a company can realize through implementing e-invoicing is significant. According to PayStream Advisors, “the average fully loaded cost per invoice under manual processes is $15.00, compared to $3.00 per invoice under a completely automated AP process.”

Automating P2P and implementing e-invoicing enables processors to focus on the exceptions and resolve them in a much faster timeframe which will also serve to engender better relationships with suppliers. The speed of payment can also lead to greater discount capture which can often be missed in a paper and manual-based process. In addition, most solutions offer an analytics component which, along with full visibility, will allow AP to develop a more strategic payment schedule on a supplier by supplier basis. Automating the entire P2P process also speeds up payment which can be handled through ACH, wire transfers, or virtual credit cards. This eliminates the cost of paper checks and postage and reduces the time from normal postal delivery to immediate electronic delivery.

Speed, efficiency, accuracy, visibility, and knowledge: all combine to create an environment where employees once relegated to back-office status now play a role that can actually help contribute to the company’s growth.

Discover how you can transform your company’s P2P roles by downloading the full white paper.