Organizations cannot afford to skip this step, however, and collecting data on potential suppliers can be slow and rife with legacy processes. This is especially true for firms that silo information in disparate systems across the enterprise, causing potentially important details to slip through the cracks. Such practices affect other processes, too, including vendor payments, invoice management and procurement efforts, and all can lead to poor company-vendor bonds.
Automated AP solutions can put all these details into place, giving companies the information they seek in a fraction of the time manual processes require. Artificial intelligence (AI)- or machine learning (ML)-powered automation takes it a step further, sifting through large quantities of data and helping companies find the best partners.
Building Better Business Bonds
Manual processes affect companies greatly, especially as more businesses embrace digital methods. PYMNTS’ Payables Friction Playbook reported that nearly 90 percent of surveyed AP departments still use paper checks to pay suppliers, for example, and another survey found that 24 percent of AP professionals are aware that manual processes can damage supplier relationships.
AP teams appear to be more in step with the digital times when it comes to onboarding, however. PYMNTS’ research found that 63.4 percent use digital methods to onboard suppliers, while 49.5 percent use manual methods. It also revealed that 72.1 percent use digital means to collect credit information on suppliers, but 67.7 percent still prefer to negotiate contract terms with onboarding suppliers through manual methods.
Automation also facilitates interdepartmental communication, making documents and data available in real time to those who need them. Analysts argue that having vendor portals in which master data is centralized with invoicing, order and payment history may further streamline operations, especially when such portals are enhanced with AI or ML technology and connected to organizations’ AP and AR software. These links will ensure companies can make timely payments to vendors in their preferred methods.
Making AP automation key in supplier management will thus pay dividends, providing streamlined operations, greater control over cash flows and deeper knowledge of partners’ activities.
Boosting Bottom Lines
Companies that fail to focus on AP automation are missing opportunities to optimize their returns, according to industry analysts. Automated AP payment can ensure bills are paid on time, which could be their greatest single contribution to fostering strong business ties.
Timely payments boost firms’ credibility with partners, keep collaborations solid and enable businesses to better negotiate discounts on services or products. This in turn allows them to better manage cash flows and could even earn them discounts for early payments. Recent research found that only 33 percent of organizations were able to receive early payment discounts, however, and that 16 percent never secured them. Other research shows that just 5 percent of businesses always pay their bills on time. These companies appear to pay late for numerous reasons, but implementing automation could alleviate some of the many potential issues.
Vetting new suppliers can be time-consuming, and analysts note that strategically important partners often require even more governance. Businesses that use AP automation to reduce fraud and friction and pay their suppliers on time are doing more than helping their bottom lines — they are building their reputations as reliable corporate partners with suppliers and beyond.
Strong vendor and supplier relationships are among businesses’ most valuable assets. Solid partnerships can make all the strategic difference, helping companies offer needed services, improve in-house operations and expand into new markets. Turbulent ones can have the opposite effect, however, hindering firms’ potential and preventing them from achieving their goals or adequately serving customers.
