"ALL TECHNOLOGY SHOULD BE ASSUMED GUILTY UNTIL PROVEN INNOCENT" DAVID BROWER.

It is hard to believe that, in the 21st century and in the face of economic uncertainty most companies are yet to implement solutions that will allow them to turn cost centres into profit centres. Who wants to be called “overhead”? The benefits of an automated procure to pay (P2P) process have been documented and talked about for over a decade yet there are many that still remain skeptical.

I have personally driven initiatives that resulted in 34% savings (bottom line). The results were not “fluff” or estimated savings based on soft cost reductions. The savings were measurable year after year (fact not fiction).

Today one of our customers received the results of an independent audit conducted in an effort to identify potential duplicates/over payments.

“A Disbursement review was performed during November and December 2014. The purpose of the review was to identify disbursement errors and the associated control weaknesses, which may have caused the error. The period reviewed included disbursements from July 2011 through June 2014.

For this 36-moth period, the Company reviewed approximately 281,593 transactions totalling over $1.5 billion. Recoveries were identified totalling $34,442.03.

Overall, 99.996 percent of the transactions and 99.998 percent of the total amounts disbursed were processed correctly. The review indicates that the accounts payable area is very well managed and controlled. Based on the review the $34,442.03 occurred as a result of manually processed invoices”

Both payables and procurement are being challenged with reducing costs while identifying new areas of added value. Suppliers need to be treated as partners rather than commodity providers. There is a shift from managing spend categories to managing supplier relationships. Knowing who is buying what when can shed light on untapped savings.

Successful supplier partnerships can only be maintained if invoices are managed efficiently and paid on time. Process inefficiencies can only result in added costs to the suppliers (lost/disputed invoices, returns, days of outstanding receivables, etc.) The reality is that suppliers also need to make a profit and will inevitable increase their prices to account for process “inefficiencies”.

When it comes to working capital optimization, many companies erroneously believe that extending payables as long as possible will allow them to maximize cash flow. Unfortunately, this has unintended and costly consequences. Hoping your business will thrive by negatively impacting another business is not the strategy that I would like to bank on, or be proud of for that matter. In most cases, delaying payment can erode supplier goodwill, resulting in less willingness to fix defects, missed delivery dates, lower quality, slower response to queries and higher prices. A breakdown on your supply chain CAN and WILL negatively impact your customers. An unhappy customer = loss of revenue. Do the math.

To manage your company cash flow efficiently consider instead:

• Negotiating early pay discounts (always calculate the cost of capital to ensure value)

• Negotiating volume discounts as a result of spend initiatives

• Monitor variances (contract prices)

• Automating processes and systems to prevent late payments, under- or over-payments, duplicate payments or missed payments

• Outsourcing non-strategic services

• Paying invoices on time (not early/not late)

• Extended negotiated payment terms if applicable

It is my opinion that automating of the procure to pay process has reached a tipping point. Being left behind is riskier than adopting what is fast becoming the “norm”. Do you want to be on the wrong side of the hill, or are you willing to embrace change and do things differently?

"Insanity: doing the same thing over and over again and expecting different results." - Albert Einstein

Are you insane?