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Automation for Enhanced Efficiency in the Procure-to-Pay Process
Most enterprises miss out on the full benefits of automation because they pick the wrong technology or take the wrong approach during its deployment. The terms procurement automation, payments automation, and invoice payment or AP automation are sometimes used interchangeably, and there seems to be a lack of clarity about how to differentiate the three.
Before starting the automation journey, a company needs to ask the right questions to align themselves, “What is the fundamental goal in automating accounting workflows?” To gain more profound understanding enterprises need to understand the basics well before automating the right processes to yield maximum results.
Procurement automation (PO/PR) is the first step in the procure-to-pay (P2P) process that is concerned with automating solutions that guide employees across the buying process. This stage is also known as spend management. It is a portal where all vendors and their products are listed in one place, which makes it easy to compare prices, promotions, and discounts. Additionally, this stage provides comprehensive insight into spending behavior and prevents rogue purchases. A dedicated procurement automation solution might need several months of great implementation and meaningful IT involvement, which requires heavy lifting from the vendor side, such as entering the PO and generating the invoice. Therefore, companies which are large and decentralized should pursue procurement automation.
While procurement automation is responsible for automating the buying steps, payments automation solves the signing and mailing physical checks. Payments automation is an integrated solution that allows organizations to take checks, ACH, virtual cards, and wire payments, taking automation to the next level where invoices are received, processed, and approved.
When restaurants receive invoices, the system reads and codes them to decide which workflow the restaurants need to follow for approvals. Once invoices are approved, they are automatically synced into the Enterprise Resource Planning or the accounting system that the company has deployed.
Organizations have to remember the thumb rule before jumping into the features and benefits from any automation provider they are considering; they need to know what their primary goal in automating their AP workflow is. An excellent place a company can start is by asking, “What part of the process costs the most time and direct expense?” And from there, it needs to determine the best solution that is likely to work effectively.