What makes a supply chain successful?
Is it efficiency through every step of the product/service development and delivery process from your company to your customer? Is it effectiveness and consistency in deliveries for your customers and improving your financial position with positive cash flow? What about maintaining good relationships with your suppliers who provide your company with the raw materials and components you need for your products & services by paying your bills on time?
Of course, the answer is all of these. The condition of your Accounts Payable (AP) processes has a direct impact on achieving these objectives. By automating your Accounts Payable, you will improve the opportunities for success for your company, customers, and suppliers.
Common AP Problems
AP processes and practices impact your day-to-day business operations and eventually impact your organization’s financial success. For example, errors introduced through manual processes increase unnecessary costs. Bad data requires further manual intervention to correct.
Spend Matters notes, “Labor costs typically consume 62% of total AP costs, according to APQC research, and data errors are the main culprit. What’s more, bad data can, and often does, lead to bad decision-making. When supplier or contract data is incorrectly entered into master data files, AP teams can accidentally issue overpayments, duplicate payments, or even undue payments, unnecessarily straining working capital.”
Bad data and delays in invoicing further impact associated receivables. This causes a cascading effect, eventually threatening the lifeblood of your company and supply chain – your cashflow. Reduced cashflow can create problems with procurement teams who need to purchase components and raw materials for production. Manual, paper-based processes for handling invoices, issuing payments and entering supplier data frequently lead to unnecessary errors and delays.
Improving Supply Chain Efficiency and Performance
A poorly performing supply chain creates unnecessary delays and costs in delivering products and services to customers. This not only affects the company but also its customers and suppliers. Harvard Business Review notes, “Only supply chains that are agile, adaptable, and aligned provide companies with sustainable competitive advantage.”
AP Automation can make your supply chain management more efficient and predictable, resulting in lowers costs, improved cash flow, and better supplier relations. When your company is in a better financial position, its management of the supply chain can more quickly respond to changes in the marketplace.
Improving Effectiveness with Customers
The health of your supply chain depends on the accuracy and availability of its data and can directly impact the customer experience. Inaccurate information and purchasing delays cause frustration and jeopardize trust in the company’s ability to meet orders. Customers will always go where they can get good prices and great service. Sudden changes in your operations and ability to deliver on customer expectations can quickly send them away to other providers.
When your AP processes are automated, your managers have the current status of every point in the workflow at their fingertips and can make immediate changes as needed. Using the latest technology is important for being able to provide premium service to your customers.
Improving Supplier Relations
Supplier relations is at the heart of your supply chain’s success. Without suppliers you are without parts and raw materials to keep the “line” running. By over-relying on legacy manual and paper-based AP processes, procurement teams often face extending payment terms for their suppliers beyond the normal net 30 days they expect of their own customers. Extending terms out to 90 or even 120 days may become an immediate fix for the company’s cashflow shortfall but seriously harms the success of its suppliers.
Suppliers who do not get paid on time are not happy and for good reasons. Losing your best suppliers can break your supply chain, creating all sorts of havoc for your customers and employees.
Work with an AP Automation Specialist
To ensure the health and success of your supply chain and ultimately the success of your company, you need an expert in AP automation who has knowledge and experience integrating AP automation with supplier networks, and who can maintain the systems needed to fuel that workflow.
NEdocs Vision360 Enterprise Accounts Payable automation (AP Automation) solutions optimize the process of receiving, processing, approving, matching and integrating the payables process with supply-chain systems. Vision360 Enterprise creates a touchless, paper-free environment that eliminates error-prone processes, enforcing business rules and reducing costs.
Feel free to contact us today at (603) 625-1171 for further information about how NEdocs can improve the AP side of your supply chain management.