Digital Transformation is a key goal for many organisations.
Transforming manual, paper-based processes into seamless digital ones is at the heart of many digital transformation strategies. Digitisation can reduce human error, free up employees to focus on more complex or strategic tasks, speed up essential operations, and create more unification and consolidation amongst back office processes.
Such transformation takes time, and requires both financial and human resource investment. As a result, many businesses continue to operate with substantial paper-based processes, not least in Purchase to Pay (P2P).
When it comes to P2P, failing to adapt can lead to serious risks.
In 2012, Oracle and PwC revealed that financial reporting, cash and treasury, corporate accounting and order fulfilment were amongst the top ten business processes most vulnerable to fraud, waste and errors. When invoice payments or employee expenses requests are reviewed via a series of manual approvals, there are countless opportunities for basic human error – or more malicious activity intended to commit fraud.
There is also the simple operational efficiency impact to consider. The more time accounts staff need to devote to managing the P2P process manually, the less time they must dedicate to more strategic financial management. In an increasingly competitive business landscape – and one in which talented staff will soon move elsewhere if their work appears mundane – such a strategy cannot be for the long-term.
So, what are the options for businesses looking to apply digital transformation to P2P?
- Electronic invoicing: Digitising both inbound and outbound invoices means that paper invoicing becomes a thing of the past. Rather than generating Word or pdf documents, an electronic invoicing platform uses a format like Electronic Data Interchange (EDI) or XML, which can issue and receive invoices via a web-based system.
- Electronic ordering: Purchase messages and other documents can also be processed electronically, delivering a more integrated approach to the entire P2P process. Again, the key is to use a system which is web-based rather than Word or pdf documents.
- Automated expenses management: Reconciling and paying out employee expenses can be a time-consuming and wasteful process. This is not just for the accounts department, but also for individual employees. Expenses management tools typically include a scanner for automatically recording and archiving receipts, and a centralised system with inbuilt approval processes and parameters.
- Purchase systems: Modular purchasing systems enable the automation of purchasing processes in line with an overarching corporate policy. This enables tight control over who can buy what, whilst allowing standard purchases to go through automatically.
The route to improved business efficiency
A report by Paystream Advisors has suggested that around one in three organisations currently use an e-procurement solution, suggesting that while the shift to digital transformation in P2P is well underway, there is still plenty of space for organisations to get ahead of the curve.
Digital Transformation is the route to improved business efficiency, reduced costs and enhanced creativity and innovation across a wide range of processes and departments, and P2P is no different.