According to a recent survey from Oxford Economics and sponsored by SAP, finance leaders are twice as likely to report market growth over the past year. These leaders also rely on automation to improve efficiency and collaborate regularly with business units across the company.
Make collaboration a priority
Break up the silos and recognize the business payback from effective interaction with procurement, treasury, and other key business partners, including your suppliers.
When it comes time to process invoices, too many organizations can’t guarantee that what was purchased has followed clearly defined procurement policies. And it can be a mystery determining how much you’re buying of one item or commodity, and from whom. Aligning finance and procurement is key to enabling procure-to-pay excellence, so you can ensure that the invoices you process are for preferred suppliers at negotiated prices, and that you can capture data from those invoices to better manage your spending.
Transform the accounts payable function
Don’t restrict the role of AP to just paying the bills. AP can play a vital role in driving suppliers to transact electronically, supporting procurement efforts to enforce compliance, and working with treasury to better manage cash through dynamic discounting. But your AP team won’t have time for these higher-value activities if they are heads down performing data entry, troubleshooting invoices, and answering calls from suppliers about the status of a payment.
Closely examine the timing of your payments
Payment terms can grow out of control when there’s no strategy for managing them. Combine that with an inefficient invoice management process, and you may be paying suppliers faster than your peers. If practical, extending payment terms can free up valuable working capital that you can use to pay down debt, open a new store or manufacturing plant, increase R&D, support mergers and acquisitions, fund a new product line, or support some other activity to grow your business. By combining payment terms rationalization and extension with an early-payment discount program, you can also increase your returns on cash while helping your suppliers to improve their cash flow.
Tap the e-commerce potential of business networks
The ability to manage business commerce over a global network is a major advantage in a digital economy, enabling you and your suppliers to transact at Internet speed. With new potential for collaboration over the network, you can achieve “perfect payables” by allowing suppliers to flip a purchase order into an invoice via PO-Flip, invoice against contracts when there’s no PO, or invoice off service entry sheets for complex services. There’s also the opportunity for self-billing via evaluated receipt settlement (ERS) from a goods receipt. Processing transactions in this way eliminates the time, cost, and effort associated with paper invoicing. By accelerating the processing of valid invoices over the network, you can focus your efforts on payment timing to better manage your cash and optimize working capital.
You may start a digital transformation effort for finance within a region, but eventually you’ll want to expand the reach to all those locations where you do business. So factor this into your strategy early on. You’ll want to align with a partner that has the resources to help you enable global suppliers for e-commerce and offer configurable templates for tax invoicing, long-term archiving capabilities, and support for digital signatures and real-time audit integration as required by country-specific tax regulations. Together, these will help you and your suppliers meet country-specific requirements for invoice content, integrity, authenticity, legibility, and archiving.
For more information, read Oxford Economics new survey report: How Finance Leadership Pays Off: Effective Payments of Procurement Boost Performance. The report presents the results of a global survey of 1,500 finance executives across a broad range of industries. You’ll learn about six traits that define financial leadership, as well as best practices of procurement and payment management that lead to financial excellence.