Accounts payable departments value fast, efficient and accurate invoice processing. That’s why invoice automation technologies have been moving up the agenda among AP managers recently. It is reckoned that 77% of AP departments are now using some form of automation in their invoice settlement processes. However, for many, the journey towards full automation is only just beginning and only a minority are yet benefiting from end-to-end automation.
The improvements brought by automated invoice processing are clear – speed and precision are at the forefront. No more lost or duplicate invoices, less back-and-forth with suppliers and payments made at the optimum time. But automation analysis also brings advances in working capital management, which are of direct value for the operations of the company more broadly.
Capital Management Strategies
In our difficult economic times, companies cannot take a healthy cash flow for granted. Assets on the books may be of long-term value, but without available working capital, the business will quickly grind to a halt. It’s vital therefore to maintain tight control over spending and clear oversight on the timings of payments. Invoice automation analytics is thus proving invaluable to offer just these overviews and controls.
With centralised data and consistent processing, invoice automation offers a much better capacity for analytics. Accurate and timely data is available immediately to guide spending parameters and forecasts. The insights that are gained from the analysis can inform strategic decisions on payments.
Often there are conflicting priorities from different business departments. Finance, for example, will want to benefit from early payment discounts. Alternate strategies could include delaying payments until due dates to keep healthy balance sheets. However, procurement departments may favour timely resolution to preserve seller relations. Invoice automation analysis helps to balance demands and settle on the right strategic decisions.
Measuring Performance – Indicators And Metrics
Invoice processing analysis also provides important metrics and indicators to assess performance, helping AP managers to compare their operations with other organisations and peers.
Important Indicators Include:
- Days payable outstanding
- Early or late payments
- Average days to pay
Key Metrics Are:
- Spend per term
- Payment run profile
- Blocked payments
- Cycle time (order to settlement)
These metrics help to give a consistent overview of the business’s accounts, showing strengths and weaknesses and revealing areas for improvement. Most importantly, with invoice automation analysis software, these metrics can be generated in real-time, which promotes strategic decision-making with the best available data.
Overall Values
When operating with tight margins, it is essential that businesses have close oversight of their working capital along with little or no possibility of human error. Good analytics helps to determine payment timings, select preferred suppliers and improve strategy.
To learn more about invoice automation analytics and how it can improve your AP department’s performance, contact Cogent Consulting today to book a live demo.
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