In the quest for global value creation and higher performance, corporations always need to be on the lookout for waste reduction activities. To manage the processes efficiently, numerous options are available in the market with the latest technology and automation. To understand how these latest technologies can help your company and keep accounts payable at the core of efficiency, read on to learn more.
Creating an Efficient Operations Management
Efficient cash management plays an intrinsic role in the value creation of every company. It can be a deciding factor in how the company is perceived and the value it generates for its shareholders.
Cash management comprises an effective working capital schedule with proper Account payables (AP) , account receivables (AR) , and inventories. Management of these processes can be done in-house or with the assistance of outsourcing companies. In account payables processes, companies need to tackle the invoices for making purchases from suppliers. Companies employ multiple service providers to effectively manage the processes that can be automation-based services and outsourcing-based services.
Taking the Decision for Outsourcing Accounts Payable
Accounts Payable Outsourcing vs. Accounts Payable Automation
In account payables management, companies can make use of automation as well outsourcing services. In AP automation, software providers use OCR technologies embedded with machine learning and artificial intelligence to automate the entire process of account payables. As per the report of Markets and Markets 2019, the Global account payable automation size will be expected to raise from $1.9 billion in 2019 to 3.1 billion in 2024 with around an 11% growth rate.
AP outsourcing services entail the third-party corporation that manages the whole AP system of a client company. To enhance company value, top management emphasis more on the key issues that require handover some processes with outsourcing companies. Instead of in-house AP processes, outsourcing options result in more advanced and excellent services that induce companies to adopt the same.
Strategies for Efficiency Through Automation:
Adoption of an automation process for account payables moves a corporation toward an automated payment system that focuses more on software. Corporations, which adopts automation for the AP process, incorporate strategies for boosting efficiency:
- Paperless processing system with automation:
By engaging electronic data interchange, eProcurement, and Electronic payments with AP process management, companies get more advancement. Suppliers offer more discounts due to timely payments and communication as compared to manual account payables management.
- Avoidance of Delayed Payments Issues with automated invoice matching:
With the implementation of an automation system, companies can effectively make payments on time. As per the data reported by BACS in July 2104, companies in the UK had late payments for around 46.1 billion pounds. Late payment, which became the main driver of AP automation, can instantly match with a digital invoice match system that reduces the risk of duplicate and late payments.
- Reduction of processing cost:
Shifting to an automated system from manual AP processes offers cost-effective benefits to the companies. Manual AP system costs around $12-$13 per invoice, but an automated system reduces the cost per invoice as a company can treat multiple invoices at a time. With these above effective strategies, a corporation can make payments on time with lesser cost and more efficiency.
Future challenges if you avoid outsourcing your accounts payable:
To run along with a fast developing economy, you need to become efficient with every process whether cash management, account payables, and other processes. Outsourcing, a solution for multiple processes, can effectively treat Accounts Payable process management. In-house automation for this process would cost you more than outsourcing as it will require an expert team in the corporation. Outsourcing, can prove a great solution for effective invoicing, payments, purchase records, and supplies.
Avoidance of outsourcing for the AP process would lead to future risks and challenges for your corporation. The risk can be as follows:
- Value creation growth would be impacted by the lack of expertized services for payables.
- Payments would be delayed or repeated due to manual invoicing and manual data entry with the system.
- It would create more burden for officials to concentrate on key issues in spite of the sub-element of cash management processes.
- It would cost more due to delayed payment, extra system cost, extra expert cost, and cost factors.
Apart from future challenges, if you avoid outsourcing, then you would face challenges with the existing in-house system.
Challenges of In-house Accounts Payable
If you decide against engaging with an outsourcing service provider for AP, some potential challenges you might face in-house are:
- Errors with database system:
Various outsourcing companies like ARDEM provide solutions to the manual data entry for each function that can lead to effectiveness for your business. Avoidance of outsourcing services will require the management team for the AP process system that will lead to more cost. As per the IOFM benchmark report, the cost per invoice without outsourcing system would be as follows:
Invoice volume Cost per invoice with automation Cost per invoice without automation Less than 20,000 $12.98 $ 15.97 20,000-100,000 $4.24 $6.10 More than 100,000 $3.18 $ 3.62
- Issues for the in-house expert team:
An in-house expert team can face limitations in terms of handling volumes and quality control, with increasing number of clients and complexity of transactions.
- Steady invoice processing:
Due to numerous processes and work departments, in-house payment process work becomes steady and ineffective. In trying to become an expert in every process, as a result, you would need to pay the cost in terms of negative value creation or value decline in the market.
Mechanism at ARDEM to Provide Entire Suite of AP Solutions
ARDEM, a financial outsourcing company, a complete solution for an entire in-house account payable, offers you a great opportunity to manage your invoices and payments for purchases. In order to provide you a complete guide, ARDEM employs a structured mechanism that processes the entire AP system from scratch to end.
We, at your system, apply our software along with artificial intelligence to intake inputs, process data, and provide you a complete solution for AP management.
- Adapting to Current Systems of the Company:
ARDEM, with an advanced technological software of account payable outsourcing system, can enter into a system of your company and track every process. Our trained analyst team will transit an entire invoices database in order to transform it into automated invoices. It comprises the process from taking manual invoice receipts to entering invoice data into the ERP system.
- Mechanism to Document and Streamline Processes:
In case, you already have a documented process, then we will learn your system and will provide you further services. If you are yet to build a documented process, then we will train our expert analyst team to understand your raw process so that you can share every raw database related to invoices. After getting a documented process, further refining and streamlining can be initiated by our team.
- Extraction and process of data:
Our expert analysts extract, capture, and process the invoice data with automation software that improves efficiency up to 99.97%. Analysts will use the processed invoices with 99% accuracy that leads to more efficient work with cost-efficiency. Our outsourcing center offers you to buy an entire AP process. Our entire outsourcing system will work with your invoices from scratch. Account analysts, who have experience with various analytical software, will go through your raw data and will process every document.
If you want to automate your AP process in-house, then our automation system will offer you a complete AP process with various softwares like
- Oracle people soft
These accounting softwares are real experts at our work center that can be employed with any client’s system. The automation, and outsourcing process, would use these softwares and techniques to capture and extract every process.
Value Creation with ARDEM's Outsourcing
We ensure your value enhancement with efficient and effective work processes. With outsourcing for your account payables only, we would be obligated to provide you a 100% accurate and time-bound output. With a view to providing commitment for value creation, we offer the following services:
- Quick expert term set up to ensure process on time:
We ensure a quick analyst team set up that will provide completion of work within 2 weeks or 14 days. It will keep you in line with other system processes.
- Time-bound efficiency with 100% accuracy:
As a service provider the first thing we ensure is to provide you a time-bound process output service with maximum accuracy. We offer the process output with around 99.97% accurate results that boosts your time payments and other system processes.
- Fast electronic payments:
An electronic system transforms every invoice and bill into a digital form that will pay your bills on time without any delay. It will make you track payments with the system that will automatically generate the payments to the suppliers or vendors.
To understand how your existing systems can be enhanced and streamlined within the Accounts Payable Universe, click here.