Five Tips to Take Control of AP Invoices
When it comes to supplier invoices, two things are likely to be top of mind at the moment. The first is to make sure all costs, whether discretionary or otherwise, are managed as effectively as possible. The second is to make sure the process runs as smoothly as possible when the workforce is working remotely.
Here are five tips to help you tackle both those concerns.
Streamline Spend
All businesses look to manage costs as effectively as they can. But research from the last recession shows the businesses that emerged the strongest cut their spend by reducing the volume and complexity of work in their business operations.
Discount retailer Costco is the perfect example. Early on in the financial crisis, it streamlined its stores, limiting the number of variations in each product category and focussing on consumer essentials in its product mix. These actions helped it negotiate bigger wholesale purchase discounts with suppliers. It now sells about 3,700 stock-keeping units (SKUs). In contrast, its competitors typically stock 60,000 SKUs.
Streamlining spend in this way frees up cash to invest in other areas of the business.
Negotiate Discounts or Benchmark Spend
As we saw in the example above, it’s useful to try to negotiate supplier discounts. You may be able to secure discounts for volume, as the Costco example shows. If you have regular suppliers, you could use your regular custom as leverage. If cash flow allows, you might also consider asking for discount for early payment.
You should also benchmark spend and consider if there are alternative providers. Luke Braham, former Head of Technology Operations at RED, explains how Intelligence helped him spot annual savings of £20,000: “I was able to pull up a report in Intelligence within six seconds that told me we spent £67,000 on taxis in 2017. I was therefore able to suggest that if we moved to Uber Business we’d have predicted yearly savings of £20,000.”
Implement a Purchase Order (PO) System
A PO system gives you visibility of spend as soon as a PO is raised and approved. This is great for financial planning because you can see the cash provision you’ll need and when you’ll need it. It also helps save you money because with systems such as Concur Invoice and Purchase Request in place, invoices and POs are matched automatically so you don’t pay for goods or services you haven’t received.
But a PO system is helpful in other ways too. How often do you receive invoices with no idea who placed the order? Invoices with no contact name and vague line items such as ‘Work completed in October’. It takes valuable time to track down the source of the order when you could be getting on with something more useful. A PO system puts an end to all this because you can match invoices to POs and see the person who initiated it.
Streamline the Invoice Sign Off Process
The average SMB supplier invoice involves 15 people in its journey through the system. This is time-consuming at the best of times. It’s even worse when much of your workforce is remote. Plus you’re forever behind the curve because you don’t see spend until after the event.
Ask yourself if you could cut down the number of people who need to sign off on something. You could set different protocols for different levels of spend. Or, given that pennies matter as much as pounds at the moment, harness technology. Cloud-based AP solutions such as Concur Invoice let everyone in the chain can see something at once so sign off happen much quicker.
Automate the AP Process to Enable Remote Working
In a typical paper-based AP process, your sales team will print a sales order invoice, fill out the details, scan it, send it to finance for approval and inputting in the system. The hard copy is then filed by both the original department and the finance department. It’s a process that was time-consuming before. It’s nearly impossible now.
You have no doubt implemented some valuable workarounds in the past few months. Now is the time to consider making the changes permanent. Cloud-based spend management systems can do all the heavy lifting, moving the entire process online, ensuring accuracy, and minimising paper-based records.
Continue Your Research
If you’d like more on this subject, you might like our white paper Tips to Streamline Your End-to-End AP Invoice Process. If you’re thinking about the bigger picture, visit our Business Continuity hub. It has a wealth of resources on automating company spending to protect against risk and future-proof your business.