CloudX Blog

It's amazing how fast technology changes!

So you're a Finance leader these days in the midst of turbulent economic conditions that are unprecedented...what's the deal with forecasting?

Economic worries abound, supplier pricing is rising, political volatilities contribute to uncertainty, transportation costs are skyrocketing, and investors want more insight into your organizational financials...sounds terrific, sign me up.

In a recent Wall Street Journal Article, it was noted that 'Companies offer fewer details about their outlook', and that they 'seek to 'manage expectations' – Trying Times For Forecasting, Wall Street Journal, October 1, 2012.  This is largely due to the global economic uncertainty mentioned above and as a result many CFOs have adopted broader variances than previously in their reporting functions to analysts and shareholders.  There is also a growing trend of CFOs that have abandoned or curtailed the practice of forecasting, with the article noting a drop from 85% to 76% of companies providing financial insight over a period of three years.  This issue is certainly a cause for concerns for analysts and shareholders alike, who rely on accurate reporting data to value companies appropriately.

With that said, it's opportune to look to your back office functions, especially AP (2.0 that is), as an area to mine rich reporting data from a spend perspective.  This is infeasible with legacy technology and processes, however.  Often, AP invoice and pipeline information sits in silos (or on people's desks/inboxes)  without being addressed in a timely fashion.  Without having visibility to that info...you're already behind the eight ball in terms of being to forecast with any degree of ease and accuracy.  On the other hand, if you are one of the smart cookies that has recognized the value to automating your Accounts Payable process, then there is a good chance you are reaping the fruit of your labors.  No one said that Accounts Payable automation is easy, but the juice is worth the squeeze when done right.

Here are three ways that Accounts Payable software will make forecasting easier for you, and your analysts, shareholders, board, and organization happier: 

1. With invoices converted to data via smart OCR upon receipt, you have usability of the data to drive the process.  With the Accounts Payable process expedited, you can begin to turn invoices around quickly and eliminate late payments...bonus!  The bigger opportunity here is to capture more early payment discounts...double bonus!  An interesting note in Aberdeen's AP Invoice Automation in a Networked Economy - May 2012, show's that there is a difference of 73% rate of capture for companies who have automated (91% early payment discounts captured :) ) their AP vs. those who have not (18% :( ).  Faster invoice processing means better access to near real-time info, and real time info is the crux of accurate forecasting.

 2. By deploying an electronic workflow solution, you can eliminate internal bottlenecks and identify choke points to your approval process.  This also can contribute to faster payment turn-arounds, increased discount capture, and linkage across departments.  Think about it, you're effectively getting out of the paper pushing business and integrating procurement, finance, and the various approvers throughout your organization, you facilitate better shared intel between departments and promote inter-departmental collaboration.  Also, by getting visibility into process outliers (invoices in approval land that may be stuck in the process, you can more accurately accrue and forecast pending spend).

3. With usable data and imaged invoices, you can have immediate, dynamic insight to your spend.  Period.   With that accomplished, you can quickly and easily prioritize invoices for payment, manage supplier relations better, and account for your AP transactions and pipeline instantly

With advanced technology solutions in place to help you with invoice processing, you can get a firm grasp on forecasting, as indicated above.  However, besides making your life easier and more productive, the real boon with Accounts Payable automation is the added benefit of being able to reap profit where it simply was impossible before.  The two primary ways profit is generated through a successful AP automation initiative are by way of processing cost reductions (you’re invoices fly through the process now instead of limping) and by capturing more supplier discounts.  Interestingly, the discounts are usually a multiple of the cost reductions and really add the icing to the cake.

If you’re looking for ways to improve your AP process so that your forecasting woes can be gone and you want to learn how to make your AP system profitable and more strategic, you can learn more in our eBook on 7 Accounts Payable Best Practices to AP automation, here.  Also, you might want to consider improving your efficiency through Document Process Outsourcing & AP services.

Happy Valentine's Day to all you in the Accounts Payable world!

Valentine’s day is recognized the world over as a special occasion in the year when lovers recognize and direct their affection towards each other through a variety of sentimental means.  Gift-giving, whether it is confectionery, floral, or greeting cards, is the modus operandi for most people that participate in celebrating this romantic day.  So in the context of shedding some appreciation on love towards all of our Accounts Payable friends who routinely save the day (Month/Quarter/& Year for that matter!), we at CloudX thought it would be apropos to send a little Valentine’s love your way.

In our opinion, the best Valentine’s gifts (chocolate aside) for most AP professionals would be the gift of peace of mind.  Seriously, many AP Directors and Managers are beyond stressed with the workload and daily burdens of the AP process and function.  Managing staff, providing reporting, ensuring accurate invoice entry, monitoring KPI’s, preventing fraud, ensuring compliance standards are met, satisfying vendors, improving processes, closing the books, and a litany of other tasks all go into the equation when balancing work/life standards. 

With that said, here’s a quick hit list for any last minute Valentine’s day shoppers looking to give that unforgettable, life changing gift to their AP sweethearts.

1.Accounts Payable Software – To use a broad term loosely, we think that this should encompass the ability to convert an invoice to data (from any native format – paper/pdf/tiff/edi/other) from the outset of the process, then validate the invoice data against ERP data (Vendor Master File/PO Tables/Business Rules – Approval Workflows), automate the routing and processing, and filter out items for exception handling.  Get the mundane stuff that sucks up time and energy out of the way, and isolate the stuff that needs attention and provide visibility to that…pronto!

2. Vendor Portal Technology – Another time consuming and everyday issue that AP leaders face is satisfying supplier inquiries about the status of payment on any given invoice.  At times, AP managers and supervisors are required to get in the midst of vendor disputes to affect positive resolution for both parties.  Unfortunately, this is a time consuming process for both suppliers A/R representatives, as well as AP staff.  With that said, by leveraging Vendor Portal technology, you can facilitate dynamic supplier invoice submission. This way they don’t have to print and mail invoices anymore…saving them time and money.  Also, in conjunction with the technology stack listed under point 1, they can have access to viewing where their invoices are by status…ie. have the been ‘Received’, ‘In Approval’, ‘Approved’, ‘Posted’, ‘Disputed’, etc, and thereby you can cut down on that inbound call volume by promoting a self-serve approach.

3. Dynamic Dashboards – By using the invoice data captured at the process outset with AP software, you can splice and dice the data to your heart’s content and use the data to make your life easier.  With it, you can speed the month/year-end accrual process, by associating invoices with GL data automatically, and make your outstanding spend efficient to retrieve.  In manual environments, this involves tracking down approvers and hodge-podging a forecast.  Also, you can use dashboards to identify chokepoints to processing invoices (especially Non-PO) and to identify early payment discount opportunities (by capturing invoices with terms and prioritizing them chronologically).

4.  Audit Utilities – The Accounts Payable audit is another one of the fun gyrations that AP leaders have to go through on an annual or biannual basis.  Generally speaking, it’s not difficult, but more cumbersome, especially if you’re managing your invoices outside of an electronic AP system.  Paper takes more time to locate records and provide them to auditors, whereas managing invoices and correlating documents in an electronic database format tends to be much faster, promoting a better audit experience and reducing audit cycle times (and your audit bill!).

We know this is a little bit whimsical today, but in the spirit of Valentine’s day, we wanted to give anyone who was on the fence about what to buy their loved one another great option.  I mean who really wants more chocolate, champagne, roses, a dinner out, jewelry, or trinket, when you can have awesome technology like this? ;-)

To learn more about Accounts Payable best practices or whether AP Automation, e-Invoicing, or AP services  (via document process outsourcing) are right for you, check out our eBook below!