As a CFO, it’s crucial to find a healthy balance between risk management, creating (business) value, and keeping costs under control. A clear vision, strategy, and optimal organization of the financial function are essential.
Finance transformation focuses primarily on creating a vision and strategy for the future finance function. Among others, mapping an optimal design and creating guiding transformation processes are essential factors for your success.
As per future predictions for the finance function by Deloitte, it describes the way the finance function will transform by the year 2025. The forecasts talk about more automation, becoming real-time, more inclination towards self-service, technology playing a more significant role, and the finance team playing a more strategic role.
Image: Finance in 2025 predictions by Deloitte
To achieve and successfully lead this transformation, CFOs need to make sure they first and foremost build a finance team with the right mix of skillsets to accomplish this transformation. Secondly, a laser-sharp focus on robotizing and automating primary processes (AP, AR, GL) and financial reporting are crucial.
Rethinking your finance transformation might mean that primary business owners will handle parts of the accounts payable and receivable processes. As a result, robust cloud business solutions (accessible securely by anyone, anywhere) can contribute to a culture of collaboration between finance and primary business functions.
Also, considerations like user interface and user experience become more and more important in financial application decision making, because these applications are not used by finance only, but are embedded in the whole organization and should, therefore, be easy to use and implemented with a focus on limiting errors in the process.
At To-Increase, we often have the CXO-level managers approaching us, seeking inputs on how they can accelerate the process of their digital transformation. We usually advise them to start with the automation of processes like accounts payable.
At the beginning of your digital transformation, you need some early wins, with a big impact, to achieve your digital transformation journey. AP automation is an ideal starting point for that.
In this article, we will explore how automating your P2P process can contribute highly to the digital transformation of your finance function.
A few characteristics any modern AP automation solution should provide:
- High levels of touchless invoice processing
- Easy approval, workflows, and compliance
- Full insights through dashboards in the complete P2P process to drive cost savings
- An incredible look and feel (UX) to make AP processing easy for everyone
- Seamless integration with ERP, resulting in fast implementations
Let’s take a closer a look at these characteristics
High levels of touchless invoice processing
Already more than a decade, AP automation is one of the top initiatives of any finance transformation plan. However, many organizations still have to initiate any automation, and for those that have started, they may be stuck with the first-generation solution with partly manual and paper-based processes that limit the success of touchless invoice processing.
With the current stage of technology, finally, the time has come to get rid of these paper binders or weak semi-automated P2P processes. Nowadays, industry leaders report levels up to 90% of touchless invoice processing through smart AI-based solutions.
These solutions also take care of contract and PO matching, matching (accruals) of cost in the right period, and automated approval allocation and follow-up (chasing late approvals). This degree of automation drives operational recording time and costs down significantly, but also improves the timeliness of reporting and saves the organization the headache of dull and repetitive tasks.
The average cost prices of invoice processing is calculated at 13 euros per invoice, meaning any company can save up to 1.170.000 euro’s when processing 100.000 invoices a year.
Easy approval, workflows, and compliance
A modern AP solution should pay attention to ease of use for end-users who take care of invoice approvals. Approval should be quick and easy; however, in line with company guidelines. Your AP solution should also be facilitating PO requests to control expenses before they happen so that your finance department has control over costs, and as a CFO, you can make sure that spend is in line with budgets and strategy.
The AP solution should provide real-time communication updates, so anyone can always be sure about the latest status on an invoice or PO. Your AP solution should make sure that everyone can see what is delaying the approval and payment on an invoice.
Clear audit trails, an easy to navigate archive with documented approvals should make sure your full P2P process is entirely auditable, so that you are solely in agreement with regulations and (external) audit requirements.
The solutions should provide the CFO with real-time insights, such as statistics, to analyze the bottlenecks in your AP department to improve efficiency. Average days until invoice payment (DPO), spend per vendor, company, unit department, project, CAPEX (budget spending) or program, helping CFOs to easily access financial data and identify risks or opportunities for cost savings or better contract terms.
With the right accounts payable automation solution, you have 24/7 insights on spending. This means you have more and quicker insights on spending and can make better-informed decisions. Never make a forecast and find out later that there still are lots of invoices waiting to be processed.
Because the data is always in sync with the ERP, management can make more accurate forecasts and create better financial planning for cash management.
An incredible look and feel (UX)
When you rethink your finance transformation, it is not unthinkable to move purchase decisions to primary processes instead of processing by finance only. This means that UI / UX considerations become more and more critical, because AP applications are not used by finance only anymore, but are embedded in the whole organization and should, therefore, be easy to use and implemented with a focus on limiting errors in the process.
Seamless integration with ERP, resulting in fast implementations
Current day AP automation solutions should easily and quickly integrate with your existing ERP system(s) and support integration packages suited to most common ERP systems and multi-ERP environments. P2P solutions are, therefore, mostly standardized, however highly configurable, so there’s no need for costly customizations and implementations should take weeks rather than months.
Here’s what you need to do next
The importance of accounts payable automation to help the finance function add strategic and operational value is clear. From the above, you will also be aware of what to look for. The next step is to talk to AP automation solution providers, check their testimonials, calculate the ROI, and make the purchase decision.