The Cost of Inaction
Welcome to 2022. Today’s world has changed dramatically over the past 2 years. Most every aspect of our lives have been impacted and most organizations, regardless of industry, have had to adapt.
One of the constants in this world is change, and most companies have been steadily embracing the efficiencies and benefits that come with automation. Organizations were well on their way to utilizing tools that standardized and automated processes, implementing AI to enhance automation, and redefining resource utilization. Then the pandemic hit, and workforces had to pivot overnight to remote working conditions. Those without cloud-based automation processes were left stranded. Some were able to figure out stop gap alternative procedures that may not have been ideal. Others did not and failed.
As we continue to move ahead, one thing is clear – alternative business processes and automation are now in the forefront of any business requirement. For those still on the fence about implementing full end-to-end automation solutions, know that there are costs that you will incur by avoiding this decision.
First and foremost, manual processes cost money, time, and relationships. Manual labor required to process paper, enter data, and support a transaction through historical workflows is expensive, wrought with errors and delays, and creates friction in both internal and external relationships. These processes are also filled with additional risk. Missed invoices, duplicate payments, fraud, and KYC issues are all more prevalent in a non-automated environment. And that’s nothing compared to the costs incurred because of late payments--whether that’s lost discounts, penalties or even supply chain disruptions.
The analysis is clear: automation will save you time, money, and risk.
Before the pandemic, 41% of businesses paid more than half their suppliers via check. Currently, most companies spend up to 6 hours a week processing manual checks, and 66% of companies spend up to four hours a week reconciling these manual payments. With an average cost to process a check of $5.95, compared to ACH which average less than $0.75, the opportunity for savings in both efficiency and costs are substantial by automating and using electronic payments. In addition, you can better manage cash flow of the company, keep your suppliers happy, and take advantage of early pay discounts. All of these positively impact your bottom line.
The top reasons given for not automating in recent surveys are lack of budget, lack of IT resources, confusion about available technology, fear of change, and other distractions.
But can you really afford not to address these costly and risky manual procedures?
Gone are the days you can just throw another employee at a problem area. With work from home and health risks, you need to automate to leverage the resources you have and keep them safe. Automation can bring upwards of 84% savings through these efficiencies.
Best-in-class organizations are fully automated from invoice receipt to payment and make 92% of their payments electronically. This allows for more effective use of staff and resources, better supply chain management, better cash management, less fraud, less costs, and the ability to take advantage of early pay discounts. If you are also making cross-border payments, these and additional benefits can be recognized. Currency exchange risk changes dynamically. Without an automated solution in place, additional costs and risks will be incurred by manually paying the cross-border suppliers or not having an effective hedge strategy in place.
So how do firms go about deciding on and implementing the most effective solution for your needs?
There are many options available in the market today. The best one for you is driven by business needs, ERP, and supporting systems, your supply chain and its volumes, cash management strategies and corporate policies. But the most effective solution will involve a cloud-based configurable platform that can be deployed to meet your specific business requirements.
Organizations need to identify a complete end-to-end solution that starts with digital data capture, an automated workflow, and payment optimization as part of its core deliverable. A supplier portal capability will enhance this process even further and allow for better communication with your supply chain.
Electronic payments allow for more effective payment decisions and cash management. This type of solution consolidates data into one instance and gives complete visibility into the supply chain and cash management process. A discovery workshop with your line of businesses, IT groups, and management teams will highlight these critical requirements, and help you understand industry best practices. A short and defined deployment schedule will allow for a quick ROI on this project.
Your automation partner should manage these projects. Additionally, your automation partner will reduce the burden on your IT teams and provide the tools you need to succeed and grow in today’s world.
So instead of thinking of if you can afford the cost of automating your core processes, start thinking about how much it will cost you if you don’t.