More than one-third of corporations have accelerated their plans for automating their accounts payable function during the Covid-19 pandemic, according to a poll taken during the latest Working Capital Forum online meeting.
That data was reflected in a presentation by Andrew Wilson, head of shared services at Genesee & Wyoming, who has accelerated his own plans to automate key business processes within the firm’s AP function, where 17% of invoices were still distributed by post. “Invoice processing was taking too long, around 42 days on average, which meant we were never going to hit our ‘paid on time’ targets’, he said. After an ’emergency’ automation drive, those figures have improved rapidly and Wilson had seen that ‘working from home’ really is a viable option for his AP team.
Edgar Jimenez, Partner Director at consultancy Brait, has also seen a pickup in interest in the digitisation of the AP function. His strong advice was to, “Talk to your main suppliers to understand the different invoice formats they may use.” Jimenez also pointed to the increasing pressure from national governments for mandatory e-invoicing. “Don’t fall behind, ” he advised. “E-Invoicing has been enforced by several countries in the past years, and this trend is more than likely to continue.”
Early Payment is the carrotFor Mike Jud, Director of Product Marketing at Tradeshift, the move to digital processes was an essential precursor to working capital optimisation. Working capital benefits such as early payment were also an essential ‘carrot’ to encourage suppliers to get on board. “Payment terms were decided before the crisis”. he said. “On average, businesses wait two months to pay sellers.” In the economic emergency created by Covid-19, companies are more focussed on getting paid than ever, so more likely to push toward digital invoicing as a way of speeding payment. “Onboarding sellers and giving them digital capabilities is the starting point and the key to success,” he added.
A recording of the webinar can be accessed here.
The next Working Capital Forum online meeting is on July 14 @ 3:30 pm BST. Our topic is The other side of Covid – Funding supply chains for recovery.