The desire to support suppliers – echoed by calls from the Government to do so – has never been stronger. But, in these challenging times a new dynamic for finance and accounts payable functions has emerged – a remote workforce – and it could be creating risk for some organisations as teams operate remotely for the first time against a backdrop of pressure to pay suppliers as promptly as possible, or at least to agreed terms.

Three pressure points that could lead to this risk:

Suppliers cashflow needs

During uncertain times, it is understandable that buying organisations will wish to hold onto cash for as long as possible for security, but some suppliers will be feeling the pressure of low cashflow. This is something that is particularly likely for SMEs, which may result in some requesting early payment or pushing for payments to be made to agreed terms. Many buying organisations pre-COVID-19 already had challenges with their Accounts Payable (AP) processes, which have subsequently been compounded and amplified by remote working.  This creates cashflow pressure for the buying organisations during these times, alongside the amplified need for efficient processing of invoices when working remotely, and the need to show compassion as well as meet legal obligations.

The inefficiency cracks – getting invoices ready for payment approval

In an ideal world, the AP function of any organisation would have an agile strategy that can efficiently capture 100% of invoices and process them electronically with as little effort as possible, regardless of if the team are office or remote-based. The reality for many organisations is that the process of managing the full spectrum of invoice types (which is needed to fairly service the entirety of their supply chain) is usually done by a mix of people power and technology, and for some is not agile enough to cope with change. This is where the new element of remote working is causing challenge and highlighting the cracks. For example:

• Many organisations are struggling to process paper invoices which are mailed to their offices, when there is nobody on site to receive them.
• Managing pdf invoices which are emailed is slower and more prone to error in a home office and the lack of structure also means AP clerks may be unclear as to who is picking up which emails if a central mailbox is being used.
• Many people are working from single screens (often small laptops) rather than the multiple screen they are used to and this creates a need to continually move between pdf invoices and the finance system in order to key in data – a process which is much less efficient and more error-prone, especially if multiple sources of information are required to approve/match invoices (e.g. timesheets, delivery notes etc).
• Difficulty resolving missing and incorrect invoice information, which can be hard enough with colleagues in the office. A good example of this is missing PO numbers, a common challenge that is amplified when trying to get hold of people remotely.

Because of this, we are seeing some vendors pushing for an end to paper invoicing and a transition by all suppliers to electronic invoicing (eInvoicing) in an effort to increase efficiency. eInvoicing may be a sensible approach for digital ready suppliers, so we support that, but we also make the case that now is the time for your organisation to remain agile and service 100% of supplier invoices, regardless of their format, to ensure that suppliers can focus on delivering their core business and fulfilling their contract terms, especially during these challenging times when SMEs in particular are under real pressure.

The inefficiency cracks – approving invoices

Access to information is also an efficiency issue when it comes to approving invoices for payment – a good example would be an associated timesheet for an invoice. Do they match the invoice and did the services get delivered? This can be time consuming to check as these related documents are not necessarily in the same system as the invoice or may be in paper format in the head office with no way of gaining visibility to the information, so it requires an AP clerk to hope to find the information in an email and check the attachments, both scenarios driving inefficiencies and risks within the process.

The moment of risk

When you combine these issues around inefficiencies caused by a lack of AP agility and supplier demand, it may leave some buying organisations with a dilemma. Do they miss payment terms in order to complete full validation checks? Or do they make a payment when there are things like missing PO numbers, or no confirmed goods receipts – thus, heightening risk of payment errors, or even undetected fraud in the supply chain?

Combining technology for an agile AP function that minimises risk

The ability to efficiently process all invoice formats, quickly resolve queries and validate information – which can be further strengthened with features such as linking associated documents for checking as part of the payment approval process – is achievable through an agile AP automation solution. And, these digital processes can be flexible enough to cope with things like remote working, since electronic information provides control and transparency. This can then be built on to reduce the risk of error or fraud, with the use of forensic finance technology which analyses 100% of payment transactions, supplier changes and transaction trends, and flags any potential issues before payment.  Adding in this layer of innovation, that delivers actionable intelligence captured from a wealth of transaction and supplier history, will serve to provide greater clarity and visibility of financial risk to enable organisations to make more robust, better informed decisions and protect working capital for the future.

Proactis Spend Management solutions help organisations achieve greater cost savings, full spend control, and process efficiencies, in ways that gain and sustain the greatest bottom-line value. From managing sourcing, contracts and procurement transactions, to supplier collaboration and automated invoice processing, Proactis’ integrated spend management solutions streamline and control all purchasing and spend. Their solutions are used by over 3 million people, serving 1,000 enterprise clients.

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