The impact of AP Automation beyond Accounts Payable

Autonomous invoice processing tools offer multiple benefits, including increased productivity, improved local and global compliance, and cost and time savings. In this blog, we focus on how the use of AP Automation technology software is benefiting not only Accounts Payable (AP) but the entire procure-to-pay (P2P) cycle.

How P2P and AP are different

The terms “AP process” and “P2P process” are often used interchangeably, but there are important distinctions between the two. 

AP processes refer specifically to the tasks involved in paying for goods or services that a company has already received. These tasks include activities such as matching invoices to purchase orders, verifying invoice accuracy or initiating the invoice approvals.  

P2P processes encompass the entire cycle of acquiring and paying for goods or services, from the initial identification of a need to the final settlement of invoices. It includes all of the AP processes as well as other actions such as requisitioning or purchasing.

The benefits of AP automation in the P2P process

Modern AP Automation solutions can have a positive impact on the P2P cycle, extending beyond tasks that fall under Accounts Payable. Workflow functionalities, combined with a supplier portal, often play a crucial role in enhancing the efficiency of the P2P cycle. We explore some examples below.

• The requisition and PO processing steps. In certain instances, companies may require flexibility in placing orders, bypassing the standard requisition process. In cases where the invoice precedes the creation of a purchase order (PO), the AP team may spend extra time investigating. AP Automation tools such as Cevinio’s offer a solution by enabling a specific workflow which efficiently directs the invoice to those responsible for creating the PO, saving valuable time.
• Receipt processing. Ever received an invoice before the goods? Often, suppliers send invoices while goods are still in transit. Without AP automation, the team must manually check goods receipt notes (GRNs) and contact logistics. Automation changes this—P2P teams can relax as a workflow monitors GRN status daily until it is in the ERP system. If the expiry date nears, automation triggers an escalation, preventing late payments. 
• Supplier master management. Ensuring accurate supplier information is crucial in the P2P cycle for smooth invoice processing, timely payments, and positive supplier relationships. However, mismatches or missing data can lead to lengthy interactions between the AP team and other responsible department(s). Cevinio addresses this by notifying the teams when the details are not right, improving the efficiency and accuracy of the process.
  
• Discrepancy resolution. Price and quantity discrepancies lead to a flurry of communication between the many stakeholders of an order which often results in delays and late payment fees. Cevinio resolves this with workflows that support delegations and escalations, preventing additional expenses for the company. 

Cevinio’s AP Automation ensures timely payments through efficient invoice processing, and our supplier portal reduces vendor queries by allowing them to check invoice statuses. Additionally, our Analytics Suite supports continuous process improvements, enhanced vendor management or data-driven decision making, all contributing to an optimal P2P cycle. 

Modern AP automation software makes a positive impact that extends beyond the AP cycle, influencing various departments and functions. Let’s begin by exploring its effects on the procurement function.

AP Automation and Procurement

AP Automation not only streamlines different AP processes but also has a positive ripple effect across the organization, particularly in the procurement department. By improving efficiency, accuracy, and data visibility, AP Automation empowers procurement to make better decisions, strengthen vendor relationships, and optimize the overall procure-to-pay cycle as we just saw. Below we list some of the main potential impacts of AP Automation on procurement.

1. Impact on vendor relationships and negotiations: Reach better payments terms and conditions as AP Automation streamlines the invoice process, eliminates manual errors, reduces the time it takes to process invoices, and helps avoid time-consuming communications and lack of visibility. This leads to improved accuracy, timeliness in vendor payments, and higher transparency. Prompt payments and efficient communications channels strengthen relationships with vendors, enhance your reputation, and may encourage suppliers to provide better service and pricing.
2. Data-driven insights for strategic procurement: AP automation generates dashboards with valuable data on vendor performance or invoice accuracy, to name but a few advantages. This data can be leveraged by procurement teams to identify areas for cost savings, negotiate better deals, maintain good relationships with suppliers, and make strategic procurement decisions.
3. Enhanced collaboration and process integration: AP automation can integrate with other enterprise systems, such as ERP and procurement platforms, enabling seamless data exchange and collaboration between departments. This integration streamlines the overall P2P process and improves efficiency.

Furthermore, when AP and procurement work together closely, they can ensure that invoice processing improves over time, for example by defining internal policies that enhance compliance. By minimizing exceptions in this way, you reduce costs, and improve cashflow leading to a virtuous cycle of faster and more efficient AP invoice processing. This may then help you initiate discussions with suppliers for better prices and/or terms. 

AP Automation and the Supply Chain

P2P processes have an important role to play in the supply chain, ensuring a smooth and efficient flow of materials and services from suppliers to your production or distribution processes. In order to promote a healthy ongoing collaboration between AP and your supply chain, there are some best practices: 

1. Supplier communication: Advanced AP automation tools provide additional functionalities to contribute to enhanced relationships with your vendors. For example, Cevinio provides a supplier portal where suppliers can log in to check the status of their invoices. This has many benefits. It saves time on the supplier side as well as for your AP team; it improves productivity; it enhances process transparency; and it deepens mutual collaboration. Such a scenario is a win-win for all parties as your AP team sees a sharp fall in the number of supplier queries, and your suppliers are more confident about the invoice handling process. Your supply chain will benefit from solid provisioning.
2. New supplier, no problem: Do you recognize this? An invoice is received before the vendor is created in the ERP system. What’s next? In fast-moving global supply chain teams, it is not unusual to start receiving invoices from new vendors before the vendor record is created in the ERP system. This causes invoices to be blocked in the process for further processing. To prevent this from happening, the Cevinio AP Automation system provides you with a workflow to route these invoices to the person or team responsible for creating vendors in the ERP system. The task will automatically be directed to the right person to action, saving manual handling and chasing on the AP side.

Conclusion 

Incorporating AP invoice automation technology requires a holistic consideration of benefits for the entire company and functions beyond AP. Eager to explore more about our autonomous invoice processing solution? Connect with our sales team today and learn how we can support your needs and requirements.