CEOs certainly have their work cut out for them these days. Facing uncertain supply chains, accelerating inflation, and widespread labor shortages, it’s critical for executives to get as much control over cash flow as they possibly can. By doing so, it’s possible for them to navigate the current difficult business climate and position their organizations to win in the future.
To this end, CEOs need to engage their CFOs to make sure they’re aligned and laser-focused on maximizing cash flow. One of the easiest ways to do that is by investing in accounts payable (AP) automation.
Here are three ways AP automation streamlines cash flow, making each dollar work harder and leading to better business outcomes because of it.
- Straight-Through Processing of Invoices
When organizations process hundreds or thousands of invoices by hand every month, it takes a lot of staff time for something that can be accomplished with computers. Making matters worse, it also opens up the door to human error and fraud. An AP professional might misplace an invoice, thereby delaying payment. Or, they might pay the wrong amount—too much or too little. Further, they might also miss payment deadlines and incur late payment penalties, which is one of the biggest pain points affecting AP teams around the country.
By investing in AP automation, it’s possible to achieve 100 percent straight-through processing, ensuring that your suppliers get paid on time and accurately with little to no human intervention required. With the right solution in place, it’s possible to validate invoices that contain missing or incorrect information using intelligent automation, filling in the gaps to complete two- and three-way matching without AP teams having to lift a finger.
As a result, organizations that use AP automation solutions cut labor costs, are more accurate, and are more profitable. This is particularly advantageous for seasonal businesses that are much busier during specific times of the year. They won’t have to hire and train new employees to accommodate an influx of invoices. Instead, they can manage all of their AP needs with the same amount of staff throughout the year.
Add it all up, and AP automation enables organizations to run incredibly efficient AP departments, which helps them ensure the cash flow river keeps running smoothly.
- Taking Advantage of Every Early Payment Discount—Automatically
When it comes to maximizing cash flow, there are two major ideas to keep in mind. First, there’s no sense in paying suppliers any faster than the organization absolutely needs to. Second, assuming organizations have the cash on hand, it’s also imperative to take advantage of every available early payment discount.
This is much easier said than done for organizations that are still relying on manual AP processes. By investing in AP automation solutions, organizations can consistently control the timing of payments to suppliers. This enables them to either shorten the payment cycle to maximize the available payment discounts or to hold payment until it’s due in order to get a cash flow advantage—whichever approach makes more sense depending on the situation.
And the best part? All of this is done automatically, ensuring that not even a single payment is sent at the wrong time.
- Keeping Your Suppliers Happy
CEOs also need to be cognizant of the fact that suppliers are dealing with many of the same problems in their own supply chains—which means they are focused on doing what they can to improve their own cash flow situations and ensure the money they’re owed is coming in.
AP automation can save the day here too. The right solution enables organizations to create a direct connection with each of their suppliers. As a result, suppliers will be able to easily check payment status just by logging into a portal. That’s a more effective and affordable way to ensure suppliers know when they’re getting paid than staffing your team to respond to phone and email inquiries about missing or delayed payments.
With AP automation, organizations give suppliers visibility into all outstanding invoices and when they will get paid. Suppliers can be notified and quickly resolve any issues to keep the payment process moving.
What’s more, companies also avoid getting hit with any potential credit holds, which could slow down their own operations—even if a late payment was simply a mistake.
Conquering Cash Flow Issues with AP Automation
Getting ahead in today’s complex business landscape starts with making smart investments to optimize AP processes and bake as much efficiency into operations as possible. By implementing AP automation solutions, businesses can maximize their cash flow, getting the money they need to weather the storm we all find ourselves in and end up on solid ground on the other side.
Written by Shan Haq.
Track Latest News Live on CEOWORLD magazine and get news updates from the United States and around the world. The views expressed are those of the author and are not necessarily those of the CEOWORLD magazine. Follow CEOWORLD magazine on Twitter and Facebook. For media queries, please contact: email@example.com