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P2P as a Strategic Weapon for CFOs

Ask anyone who manages accounts payable and they’ll tell you that ‘procure to pay’ describes the process

March 16, 2017
P2P as a Strategic Weapon for CFOs - Artsyl

Ask anyone who manages accounts payable and they’ll tell you that ‘procure to pay’ describes the process by which companies buy and pay for goods and services, from the initial decision to make a purchase to approving the supplier invoice and submitting payment.

For those responsible for executing and/or managing this process, P2P automation relieves them of the burden of inefficient, routine manual tasks like document sorting/filing, PO/invoice/receipt matching, data entry, approval routing, G/L coding and ERP transaction entry. Often, the cost savings associating with these efficiency gains are enough to make a solid business case for automation.

From the perspective of the CFO, however, P2P automation offers a whole other world of benefits, including improved cash flow, the opportunity to build up working capital, extend and manage credit, and perform analytics on spending.

At a rudimentary level, P2P automation replicates the manual procure-to-pay process. Intelligent automated procure-to-pay systems, on the other hand, learn and adapting to understand what people do and do not need to approve, either formally with business rules -- e.g., if certain conditions are met, the invoice will be approved -- or informally by identifying patterns in terms of what requires approval and what can be processed automatically.

For example, relying on simple P2P automation, looking at one requisition at a time, managers can't always determine if an employee is overspending. Procure to Pay software can uncover the pattern of the employee's spending to flag or alert a manager when spending limits are exceeded.

From Compliance to Counseling

Beyond compliance to policies like spending limits, however, advanced P2P systems can take a broader and deeper view, so that policies that enforce spending limits to control waste can take a smarter approach to supporting better decisions, along with more efficiency proceses.

For example, rather than looking at spending limits, intelligent P2P systems can identify items expensed by employees that should have been part of a contract or purchased via purchase order to benefit from better pricing.

A classic example is the admin who purchases bottled water for the office from a retailer and expenses it, instead of realizing that purchasing via contract from a service provider could save thousands of dollars annually. Intelligent P2P systems are capable of identifying those potential cost savings to advise rather than just police policies.

From Early Pay Discounts to Dynamic Discounting

From a financial perspective, intelligent P2P systems allow CFOs to go beyond capturing basic early pay discounts to take advantage of dynamic discounting, where the size of the discount can vary according to when the supplier wants to get paid. This allows CFOs to manage cash flow while taking advantage of discounts to varying degrees depending on their cash flow situation at any given time.

From Cash Flow to KPIs

Beyond greater flexibility to time payments to optimize cash flow and discounts, CFOs can take advantage of the fact that they have more timely, accurate access to data related to AP that they can leverage to better forecast things like days payable outstanding and working capital.

From the Bottom Line to the Top

From the perspective of AP teams that want to add more value to their organization and elevate their roles within the organization, making the case for P2P automation pay off in many ways. While there is a solid business case to be made solely based on efficiency gains, getting your CFO and executive team on board as project champions is that much more effective when considering how P2P automation can empower them in their roles and support the organization to achieve its goals.

Ultimately, sophisticated P2P processes should not only cut expenses and boost the bottom line—they should result in better vendor relationships and create efficiencies and cost savings that benefit customers and ultimately grow the top line.

With access to timely data, analytics to align AP processes to key performance indicators and confidence and control over how P2P impacts the companies financials, your AP team can help turn their work into a strategic asset for the CFO and the company as a whole.

To learn more about how to transform your AP processes, eliminate manual document filing, data entry and approval routing while translating documents and data into actionable information and insights, contact your Artsyl Technologies account executive.