Automating Payments Is a Critical Step in Digital Transformation
One of my summer jobs in the college years involved manually inputting invoice data into an enterprise resource planning application (ERP) back in 1997. My entire day consisted of entering various cost codes, amounts, and invoice data into a terminal at a large industrial pump distributor’s office. Once the information entered the system, the organization could track and manage various invoicing and accounts payable details. I had little insight into the actual payments to vendors, but I know that they were cutting checks manually for the bulk of their disbursements.
Even today, many companies still accommodate manual processes to manage payments. Despite our best efforts, manual tasks such as sorting, filing, and mailing remain vulnerable to human error, lost paperwork, and late delivery. In a world where a steady and reliable supply chain is crucial to customer and vendor satisfaction, digital transformation is no longer a desired feature of a financial program – it’s a necessity.
Digital transformation, in some form or another, has permeated almost every aspect of the business world in the last three decades. We have seen many definitions of digital transformation, but for the sake of clarity, I’ll defer to Gartner:
Digital transformation can refer to anything from IT modernization (for example, cloud computing), to digital optimization, to the invention of new digital business models.
While many of those manual tasks that I performed years ago have been automated, surprisingly, many companies still struggle with various aspects of digital transformation and automation within the financial realm. The ActiveWorx team knows from experience that even today, some of the world’s largest corporations still have a precarious dependency on manual processes and analog partnerships to keep their businesses running. This reality became apparent when the pandemic struck in 2020, testing the modern enterprise’s dependences on their supply chains’ antiquated components.
The stress exerted on the supply chain structure had an immediate impact on organizations worldwide and exposed weaknesses in the value equation that drives customer satisfaction, growth, and profitability. The pandemic illustrated just how vulnerable some of those supply chains are.
A crucial lifeline of those vendor relationships is providing timely, accurate payments. The ripple effect of Covid-19 made us face the fact that relying on manual processes to receive invoices, manage approvals, and pay vendors proved inadequate in many cases in today’s modern business.
The Opportunity to Automate
Vulnerabilities in the Supply Chain
Today the need for companies to digitally transform their financial processes has never been more urgent, and the technology to accomplish this is reliable and secure. Cloud-based systems for invoice automation can be deployed relatively quickly with little IT resources required. These systems can process tens of thousands of invoices monthly with little or no manual intervention.
Additionally, sophisticated digital payment providers can deliver electronic payments in various payment methods globally with accuracy and speed while improving compliance and mitigating the risk of fraud.
In transforming established business practices to new digital procedures, payments automation remains crucial to overall business performance improvement. Invoice automation allows financial departments to see anticipated expenses, and accounts receivable automation shows expected customer payments. Combined with a digital payment process, finance teams can control who to pay, when to pay, and how to pay. This translates to greater cash management visibility.
Although many companies worldwide have made considerable progress in their efforts to adapt fully digital processes and technology, we still have a long way to go. Digitally transforming payments needs to be a priority for large enterprises that want to protect their supply chains from the vulnerabilities of antiquated, analog processes.
If your business struggles with AP, AR, or payment processing, we can help. Connect with an automation expert at [email protected].