An expert in cloud-based procurement-to-pay buying technology has urged CPOs to drive cost reductions and efficiencies in Accounts Payable (AP) by harnessing the power of new software capable of integrating purchase orders (POs), the first link in the chain, with invoice approval and payment.
Given that procurement practitioners are familiar with strategic rather than tactical approaches to their work, e.g., strategic sourcing, purchasing tech expert, Jack Mulloy, advocates a strategic approach to AP efficiency. Organisations, he says, should go back to the beginning of the AP chain of events – AP transactions are always triggered by an approved invoice which is, in turn, triggered by a PO submitted by the procurement team. Any acceleration of the AP process hinges on connecting these ‘moving parts’ as efficiently as possible – not an easy task, as the invoicing process on both the buyer and supplier side contains multiple points of friction that hold up the procurement-to-pay passage.
Mulloy believes that well-structured POs generated from catalogues containing “well-documented, approved requisition line items” is a crucial first step, ensuring that PO line items are matched against invoice line items. The first step for suppliers is being able to receive that well-structured PO and proceed to generate an e-invoice submitted through XML or electronic data interchange (EDI). And there’s the rub: most vendors will not have the capacity to buy the invoicing technology needed for contactless invoice-to-pay processing. Fortunately, many procurement-as-a-service providers include procurement-to-pay technologies among their offerings, capable of reaching vendors where they are and facilitating as many touchless invoices as possible.
The faster the generation of e-invoices becomes, the faster the payment can be made – a significant advantage for purchasers, as it opens the door to early payments discounts for them. Mulloy believes that procurement-to-pay platforms facilitate better alignment between AP and procurement, and with the treasurer and CFO – a rarity but very welcome when it happens.