Digitalisation in organisation: A brief look at procure-to-pay process

As a result, your Accounts Payable (AP) Assistant is bombarded with phone calls from suppliers, chasing for payments to be made and the poor assistant has to politely explain that payments were delayed because one of her signatories was out of the country.

Business owners are often too caught up on driving revenue, often failing to plug another hole which can potentially result in losses to them - the inefficiencies and lack of control which might result in duplicate invoicing, paying incorrect amounts and paying the invoice to an incorrect supplier.

The common question asked is ‘Why should I invest to pay my suppliers faster?’

‘Ironically, the AP process is the easiest to automate and bring about Return on Investment (ROI) in the shortest time ’

Automation of the AP process can result in better cashflow management, reduced errors and unauthorised spend and reduction in manual repetitive AP tasks, all indirectly contributing to higher cash savings.

Instead of spending time to print manual payment vouchers, prepare cheques and remind the signatories to approve their payments, AP staff can focus on providing spend analysis and improving working capital, e.g. by taking advantage of early settlement discounts.

A brief picture of an automated AP process would be:

Requisition is typically the first gatekeeper for all purchases of an organisation. Organisations can create predefined catalogues of frequently purchased items with approved vendors, which requisitioners can directly choose their required products or services from.

Once the product or service is selected and is confirmed to be budgeted for, the Purchase Requisition (PR) can be routed to an approver for approval via an automated workflow.

Rules based on roles and approval limits can be configured to ensure adherence to the company’s spend policy.

This approval process can be further enhanced by mobile applications which allow the approvers to approve purchase requisitions on the go.

An approved purchase requisition can be automatically converted into a Purchase Order (PO). Instead of emailing the POs one by one to each supplier, automated systems can email these POs directly to all your suppliers, with just a click of a button.

Your supplier may select to receive their POs by email or via a vendor portal, where the status of their POs and invoices are clearly listed.

The improved transparency of this ‘self-service’ portal can hugely reduce the daily phone calls received from suppliers.

Suppliers often choose to send their invoices through email to reduce manual paper-based processing. Instead of printing out these invoices, RPA can be configured to extract invoice attachments from your inbox.

The invoices are then scanned through Optical Character Recognition (OCR) and 3-way matching can be performed by the system for the PO, GRN and invoice.

Pay cycles and vendor reconciliations hold huge potential for automation. AP staff still run batch payment processing manually by inputting the relevant payment parameters, waiting for payments to load, sending the payment report for approval before producing output files which are uploaded to the bank’s B2B platform.

Alternatively, bots can be configured to run the payment cycles at specified times and uploading the payment output files.

With the usage of OCR, time spent on data entry is greatly reduced. On the other hand, RPA eliminates the voluminous and repetitive tasks of downloading and saving invoice attachments.

While constructing your Cost vs Benefit Analysis of taking the plunge to automate your AP processes, do also consider the intangible benefits of the implementation such as a more motivated workforce (as a result of being able to contribute by performing high value added activities) and better supplier relations which benefits your business in the long run.

Ultimately, always assess your organisation’s readiness before implementing automation. A big-bang implementation may not necessarily yield positive results without proper change management.

The effort to implement change may seem difficult and impossible initially but the outcome is guaranteed to be rewarding.

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Joon Teoh CEO of AGOS Asia, a company pecialising in Finance, Procurement and HR transformation and trying its utmost to ensure Finance and Accounting is an emerging career of the future.