Retailers need to respond to new product trends with speed and agility, ensuring that they can meet consumer demands while still delivering excellent service.
While retailers place a heavy emphasis on improving front-end processes that impact the customer experience, they often neglect back-end processes such as accounts payable. Optimising back-end processes can provide a competitor advantage and improve relationships with suppliers, while still contributing towards the delivery of quality customer service.
This article takes a look at the unique AP challenges that retailers face, and how these issues can be minimised with automation solutions.
Managing direct spend
Retailers and distributors face many challenges in managing direct spend. When stock inventories are as large as a fully stocked supermarket, product lists are vast and varied. Specific details of products, such as flavour, colour and size must be recorded. This means that matching invoices to items manually is complex and extremely time consuming.
Managing indirect spend
Spending on non-merchandise goods and services is another area that can be difficult for retailers to manage. These include vital areas such as utilities, legal fees and advertising costs, however, this area is often managed using spreadsheets or ERP systems. Both options require a great deal of manual checking and data entry, leading to a lack of visibility, errors, overspend and poor supplier relations.
Dealing with hundreds (if not thousands) of different suppliers
Retailers deal with large numbers of suppliers. When AP is managed manually, it is difficult to get clear visibility of invoices, which can lead to missed invoices. Suppliers can also lack visibility over whether an invoice has been received or handled, often sending duplicates to ensure quick payment. When processed manually, it can be difficult for AP staff to check whether the paperwork they are handling is a duplicate. This means that well-meaning AP staff can make duplicate payments. When this happens, further time must be spent rectifying the issue.
Challenges for retailers with international customers and suppliers
Retailers with customers and suppliers abroad face further challenges. Suppliers are increasingly split across numerous international locations as consumers demand low prices and high-quality goods. Managing rapid fluctuations in exchange rates can be time consuming and can lead to over or underpayment. Dealing with multiple languages and invoicing requirements present further issues when relying on manual AP processes, and can result in issues ranging from processing errors to non-compliance.
How AP automation can help:
Automating AP processes can offer dramatic improvements, allowing the finance department to focus on strategic tasks. AP automation technology can provide greater control along with significantly reduced processing time and costs. Invoices can be matched automatically to purchase orders, meaning that these only need to be checked if an error or deviation is identified. This means minimising errors and making payments quickly and efficiently, despite the challenges retail brings.
Our AP automation solutions can alleviate each of these challenges, enabling retailers to spend time on what matters most – the customer.