How automating AP can help high-tech firms gain a competitive edge
As Gartner explains, “in a world where digital acceleration is the name of the game, business leaders are clamoring for digital operational excellence.” By automating AP, you can optimise your P2P process and outperform your competitors.
In an ever-evolving, hard-driving industry, high-tech organisations cannot afford to be impeded by inefficient processes that take too long, cost too much, and can’t be tracked, analysed, or optimised. But that’s what happens when you rely on antiquated paper-based approaches to paying your suppliers. For many high-tech businesses, manual procure-to-pay (P2P) and accounts payable (AP) processes chip away at profit margins, strain supplier relationships, and hinder strategic decision making. In 2021, this could be the difference between world-class status and complete collapse.
Meanwhile, boards of directors and CEOs have issued a “clear mandate” to “use technology to speed the enterprise faster to its business goals” and have “signaled they will put real resources behind digital acceleration,” according to Gartner. “The need for action is urgent” — and those that increase their “funding of digital innovation” and “hyperautomation” are 270% more likely to “be a top performer than a trailing performer.”
So, what is hyperautomation? And how can automating and optimising your P2P and AP processes help you outperform your competitors?
Hyperautomation first took center stage in 2020, when Gartner listed it as the year’s leading strategic trend. “Hyperautomation refers not only to the breadth of the pallet of tools,” Gartner argued, “but also to all the steps of automation itself,” including discovery, analysis, design, automation, measurement, monitoring, and optimisation.
In its Top Strategic Technology Trends for 2021, hyperautomation appears again, “further accelerated by COVID-19” and new requirements for “remote, digital-first options.” To adapt to country closures and rapidly changing government mandates, high-tech organisations “had to digitise their documents/artifacts and ensure their business and IT process workflows were digital.”
For Gartner, though, hyperautomation is not only “the key” to operational resilience amid a global pandemic but also to long-term “digital operational excellence.”
High-tech organisations are often hindered by what Gartner calls “organisational debt,” which creates “an extensive and expensive set of business processes underpinned by a patchwork of technologies that are often not optimised, lean, connected, or consistent.”
Hyperautomation allows organisations to automate more complex and complete businesses processes — and not merely parts of them.
According to Brian Burke, Research Vice President at Gartner, this end-to-end automation toolchain is “irreversible and inevitable.” With hyperautomation, “everything that can and should be automated will be automated.”
Today, as more businesses shift their strategic focus from cost cutting to enterprise optimisation, there’s no doubt that hyperautomation will remain a critical component of business strategy in the months and years ahead.
Three ways for high-tech firms to reach world-class status through automation
Recently, Tungsten Network performed a study with the Institute of Finance and Management (IOFM) to determine the primary causes of P2P inefficiencies, and how high-tech firms can elevate to world-class status through automation. We identified clear concerns among leaders at high-tech firms that their current P2P processes may not be aligned with industry best practices.
Almost half (42.9%) of the survey respondents do not straight-through process any of the paper invoices they receive. More than 25% spend between $6 and $9 to process a single paper invoice, 21.4% spend between $9 and $12, and 14% spend in excess of $15 for each invoice. Meanwhile, half of all respondents spend more than six days to process a single paper invoice, while 25% spend between nine and 25 days.
Conversely, of the businesses that have adopted e-invoicing, the vast majority spend less than $3 to process an invoice, while another 14.3% spend less than $1 to process an electronic invoice.
So, why are paper-based processes so time consuming and costly?
Without automation, AP departments must manually key header and line-item information from paper invoices, validate these invoices against data in an enterprise resource planning (ERP) or general ledger (GL) system, match invoices against a purchase order and/or a delivery receipt, determine the purchaser if no purchase order exists, physically route paper invoices for approval and exceptions resolution, and input data on approved invoices into an ERP or GL system for payment.
By automating your AP processes you can significantly reduce duplicate or erroneous payments, cycle times, payment terms, and invoice processing costs, as well as supplier enquiries, payment fraud, and the inability to capture payment discounts. This will enable you to:
- Pay your suppliers more quickly, accurately, and cost-effectively
- Improve your reporting and analytics
- Increase profit margins and net income
- Strengthen relationships with key suppliers
- More easily identify and act upon financial opportunities
As Gartner explains, “in a world where digital acceleration is the name of the game, business leaders are clamoring for digital operational excellence.” With AP automation, you can optimise your P2P process and outperform your competitors.
Download our ebook for three ways to reach world-class status with P2P optimisation.