Secrets to unlocking the next level of finance automation

While automation tools like e-invoicing have been around for decades, important developments are making automating Procure-to-Pay (P2P) more appealing than ever.

The sudden need to work from home and operate in challenging conditions showed us that agile businesses with accurate information about their financials performed better than those struggling with manual processing and inaccurate forecasts. 

Though companies are returning to the office, partially through hybrid working models, there’s evidence that internal processes will remain permanently changed by the impact of the past two years. In this environment, senior leaders are finding that expectations are rising, particularly in relation to digitisation of finance functions.

Governments, hungry to make back a greater share of tax revenues, are mandating e-invoicing and real-time financial reporting at an unprecedented pace. The goal is to collect more indirect tax from businesses. Continue reading to find out how leaders can achieve the next level of finance automation and get ahead of government mandates.

Three reasons to automate your financials now

1. Automation boosts operational resilience: The pandemic pushed operational resilience and disaster readiness up the agenda. AP (Accounts Payable) and P2P professionals need to plan how they can best protect their future organisations against future disruptions — and automating invoice processing and supplier communication are top priorities.
2. E-Invoicing mandates are coming into force: As referenced above, governments around the world are implementing e-invoicing and real-time reporting requirements rapidly. Regulations vary from country-to-country, but most mandates require companies to submit invoices in real-time. It will essentially be impossible for enterprises to remain compliant with a manual system. Automation is key.
3. Automation gives you a competitive edge: While some businesses will be focusing on keeping the lights on and reducing costs in the aftermath of the pandemic, this isn’t sustainable forever. By investing in simple but critical changes now, finance leaders can optimise their organisations’ financial health in ways that better equip them to navigate disruptions ahead.

With the reasons for finance automation clear, it’s perhaps surprising that some companies continue to struggle to modernise their operations. What’s holding business leaders back from realising the full potential of automated finance?

What’s stopping businesses from automating?

High levels of automation and e-invoicing are certainly possible with technology available today. Using the right system can transform organisations, even turning finance functions into profit centres in some cases, but automation remains far from the norm. Let’s unpick the reasons some businesses struggle with automation of their AP and AR finance departments.

Problem one: Forgetting change management is a journey

Leaders may have a vision of what they want to achieve, but sticking to long-term goals in times of turbulence requires real leadership and change management skills. Digitisation never goes exactly to plan, requiring a degree of flexibility that may not come naturally to highly motivated individuals.

Solution: You need proactive, persistent and passionate process owners. Driving change requires someone with a vision who understands the business and is committed to keeping projects moving forwards. 

Problem two: A lack of high-quality data

Businesses often own all of the data they need to make automation happen, but it’s rarely organised or fully accurate. Data sets that are inconsistent, messy and misleading will fail to provide quality insights, and could derail projects entirely if not dealt with head on.

Solution: It may not be the most glamorous task, but cleaning your data is a crucial step on the road to digital transformation, and building good data governance will help you maintain it in the long run. Essential steps include:

• Assessing your vendor database
• Validating addresses, registration numbers, bank details, etc.
• Analysing active vendor records and completing missing information.

Problem three: Low levels of supplier adoption of e-invoicing 

E-invoicing is only successful if suppliers onboard to your chosen solution. For new suppliers, it’s possible to onboard them seamlessly with the new system so that they don’t notice the difference. For more historic relationships, you’ll need to be persuasive and firm to change their behaviour. 

Solution: Resist implementing mandatory e-invoicing as it could provoke a negative reaction from your suppliers (with whom you need to cultivate a strong relationship). Instead, try to win them over by communicating the benefits of e-invoicing, person-to-person. Be personable and patient, but above all make sure to let them know about other suppliers that have had better experiences on the new platform. Social proofing is essential to success, as noted by Honda North America’s Accounts Payable Supervisor for Finance & Treasury, Brad Gerritsen.

Problem four: Low levels of straight-through processing

Some businesses claim to have transformed by moving manual processes to the closest digital equivalent. For invoicing, that would be swapping paper invoices for PDFs. As finance teams have discovered, however, it’s every bit as easy to lose track of a PDF as a paper invoice. Worse still, some companies implement e-invoicing but still receive invoices in PDF or paper formats, reducing the imperative to change systems for the better.

Solution: As PO (Purchase Order) issues and Price and Quantity discrepancies are the main reasons behind the creation of exceptions, requiring manual intervention, alignment between finance and procurement is critical. Consider the following:

• Align AP and Procurement KPIs
• Embed e-invoicing best practices throughout the entire procure-to-pay process
• Procurement can work to help manage expectations when it comes to invoicing.

Spreading the secrets of unlocking next-level finance automation

The automation of finance processes offers companies a unique opportunity to dynamically upscale their resilience in an altered economy. Understanding the issues facing senior leaders is an important step in preparing to move forwards with finance transformation.

By carefully implementing e-invoicing and gently onboarding suppliers, finance functions can enjoy greater flexibility without risking critical supplier relationships.

Accelerate your automation journey with Tungsten Network

Ease your transition to the next level of automation. Access industry-leading finance software and expertise using Total AR and Total AP from Tungsten Network.

Want to learn more about how automating P2P processes can save your finance department money and time? Download our full white paper here.

You can also get in touch today by requesting a call with us.