In our recent webinar, we shared the work undertaken with some of our clients in uncovering areas of risk across the Purchase to Pay (P2P) function. However, it’s not only the risk organisations need to consider but the costs associated to these risks that are easily accepted as the norm.
Organisations need to find where these risks are hidden, what they cost and take action to remove them.
ERP technology delivers efficiency and reduces operating costs, but we see that even with the most up to date enterprise ERP there are still errors across P2P. Although most ERP systems deliver transaction analysis, this only touches lightly on 3-way matching and PO validation, but not to any depth. So, as they say, the devil is in the detail.
Even with the most efficient ERP solution, our customers found that they still needed AP resources to manually investigate duplicate supplier invoices, processing errors and managing credits. Far from reducing the operating costs across finance, they had allowed for the errors, focusing more on how staff managed the recording and resolution of errors, which took time and resource away from revenue generation activities. The AP team spent their time on:
- Manual analysis of AP Transactions via ERP reports
- Identifying and investigating duplicate payments, errors and queries
- Engaging suppliers to recover the lost funds
- Processing credits
- Manually updating ERP systems with the corrected information
- What was lacking was the capacity to undertake root cause analysis and the ability to stop errors before they hit the payment run. Therefore, as the errors continue, supplier issues remained and grew, and this then become an accepted part of the status quo.
Improving the Finance Function to Reduce Cost
In the recently published report from The Hackett Group – 2019 CFO Agenda: Building Next-Generation Capabilities, they identify that although the main focus for the CFO is to reduce operating costs, enabling modernisation through technology and creating more capacity with skilled resources is the key to driving down these costs.
Stopping Payment Errors in their Tracks – Reduces Costs Across Finance
Now our customers take a proactive approach, using NXG Forensics®, our customers monitor 100% of their supplier transactions and prevent errors prior to payment. They quickly experienced benefits across the whole finance function, this has resulted in:
- A reduction in the operating costs of AP and the number of resources needed to carry out mundane tasks – time saved on manual processing queries, duplicate invoices, checking statements, payment analysis and managing credits
- Increased supplier relationships, payment discounts due to payment efficiency
- Reduction of costs associated with Recovery Audit Services
- Increased efficiency and clarity of financial position, reduced requirement for internal audit
- Rationalised Supplier File – streamlined supplier lists, clarity and control of costs
- Reduction in lost working capital
- Reduced risk of fraud, losses from either opportunistic or organised finance fraud
- The finance function benefits overall by being able to focus on revenue generating finance initiatives, confident that their supplier payment transactions are secure and that they have payment assurance.
Using NXG Forensics our customers have both increased capacity and refocused the resources to work on higher value activities. They undertake daily transaction analysis, highlighted through our extensive range of complex financial analysis and pattern matching algorithms. A simple daily routine enables them to identify the root cause of erroneous payments and deliver process improvements across P2P.
FISCAL Technologies’ solutions deliver clarity and control of costs, enabling organisations to retain working capital within the business and proactively monitoring risk.
If you want to see how you can uncover the hidden risks in your AP function, reduce cost and transform your financial operations, contact us for more information.