Businesses of all sizes have made automating the procure-to-pay (P2P) lifecycle – from purchase order requisition through payment settlement – a priority, according to research from Levvel. Compared to piecemeal solutions that automate only part of the procure-to-pay process – such as purchase order requisition, invoice approval or posting invoices to an ERP – end-to-end P2P automation solutions provide much greater efficiency and control.
But most providers of procurement and invoice processing solutions are unsure of how to help their customers complete the last mile of automation and optimize payments to suppliers:
- Partnering with a payments provider that only supports certain types of payment methods will leave suppliers wanting.
- Payments solutions that require users to manage multiple payment files or portal logins are too much of a headache.
- Supplier adoption will suffer if a payments partner doesn’t provide comprehensive supplier onboarding and support services.
That’s why it’s crucial for P2P automation solutions providers to complete the last mile of automation by finding a partner that offers an integrated approach to automating payments to suppliers.
5 Reasons To Achieve End-To-End P2P Automation
The migration from paper checks to electronic payment methods such as virtual card payments and Automated Clearing House (ACH) transactions and is long overdue for most procure-to-pay and accounts payable departments.
Traditional approaches to paying suppliers create five big challenges for buyers:
- Unnecessary expense: Paper checks are a lot more expensive than card payments or ACH. Staff must print, sign, and mail paper checks. Most businesses must add staff as their payments volume increases. And checks frequently are misplaced or stolen, resulting in rework, high bank fees and/or unrecovered funds.
- Poor visibility: Businesses cannot accurately determine where they stand with their cash flow or corporate spending if their payments to suppliers have not been made or reconciled.
- Onerous supplier management: Managing supplier information can be a headache in a paper check environment. It is not uncommon for a supplier to move without their address being updated in the buyer’s ERP. The days or weeks required to resolve this type of issue hurts visibility into cash flow because outstanding payments cannot be adequately reconciled.
- Missed early-payment discounts: Paper checks create operational bottlenecks that stop supplier payments from being made on time. These delays may result in buyers missing out on discounts on the amount-due in exchange for early payment.
- High risk of security and compliance issues: Compared to electronic payment methods, paper checks leave businesses more vulnerable to fraud and compliance issues. Dishonest employees may issue checks without proper authorization. And criminals can alter checks or create counterfeit checks, along with using the bank routing and account numbers on paper checks for nefarious purposes. Identifying and resolving check fraud is a manual, time-consuming process that requires buyers to issue stop-payments, reissue payments, close and reopen accounts, and order new checks. Paper checks also make it challenging for businesses to comply with ever-changing tax laws and regulations, such as 1099 reporting, that pose big fines and penalties.
The Benefits Of An Integrated Payables Solution
Automating the procure-to-pay lifecycle end-to-end by working with a provider of an integrated payables solution uniquely addresses the issues buyers face:
- Reduced costs: Integrated payables solutions reduce the high cost of initiating, reconciling, and reporting on supplier payments, collecting and maintaining supplier bank information, and responding to supplier inquiries. A single file initiates payment to all suppliers, regardless of the payment method. Payments are reconciled in real-time in the buyer’s ERP, eliminating the need for staff to re-key information or decode cryptic banking messages.
- Enhanced visibility: Integrated payables solutions track the status of payments in real-time. Detailed transaction and reconciliation reports are consolidated into the buyer’s ERP. And suppliers and buyers alike can effortlessly access their payment history online 24/7.
- More early-payment discounts: The faster cycle times facilitated by an integrated payables solution opens the door for buyers to capture significantly more early-payment discounts. For example, AccountingTools highlights that businesses that take advantage of a discount term of 1/10 net 30 earn an annualized 18 percent return – a lot more than they can earn from a typical interest-bearing bank account.
- Less risk: Integrated payables solutions ensure strong access controls across all payment methods, mitigating the risk of payment fraud and compliance violations.
- Streamlined supplier information management: Leading integrated payables solutions take the burden of adding and updating supplier information off the shoulders of buyers.
These benefits are the reason that more accounts payable departments want to complete the last mile of automation. Providers of P2P automation solutions can help their customers achieve these benefits by partnering with a provider of an integrated payables solution.
If you are a procurement or invoice processing solutions provider that wants to help its customers complete the last mile of procure-to-pay automation, WEX wants to speak with you. Get in touch to learn how we can help.