Saving money is not good enough anymore – it’s time to spend smarter. Cost savings can only take an organization so far. There comes a point when processes are streamlined through procurement solutions and accounts payable automation, every pocket of spend is optimized, contracts are as favorable as it gets, inventory carrying is maximized and efficiency is peaking – then the trajectory begins to level out. While there’s something to be said for steady excellence, it’s not going to beat the competition – it’s only going to achieve parity with like companies.
To go beyond parity, companies must make the money being spent work for them; value must be extracted from the supply chain and used to fund critical initiatives that lead to wins. So, how can you take a company beyond parity? Adopt a holistic approach to purchase-to-pay (P2P) automation in 2017 to spend smarter and optimize working capital.
What is holistic P2P?
Holistic P2P breaks down traditional silos not only between Procurement and Accounts Payable, but also with Treasury, Finance, and even revenue-generating sides of the business, as well as the supplier base. In addition to automating procurement, AP, travel and expense reporting, inventory and asset management, this approach optimizes the full cash flow cycle. With holistic P2P, companies go beyond just saving money and get the most return from the money being spent across the organization.
Why is holistic P2P the key to going beyond parity?
If there is one thing to understand about holistic P2P, it is that holistic P2P produces unparalleled, real-time visibility into financial data that enables companies to make fast, informed decisions. Users can drill-down from high-level graphs and dashboards into every transactional detail to truly understand what is happening beneath a trend, and then pivot one way or another to free-up and maximize working capital from the supply chain.
Holistic P2P empowers companies to be more agile in the ability to analyze and respond to big data. For example, a company can review sales patterns and determine that production may need to slow down because if they continue at the current rate, there will be a gap in demand. This allows them to decrease the purchase of materials, knowing production will be slowed, and generate additional capital, instead of spending money.
How does holistic P2P create a competitive advantage?
Once companies tap into their operations through this critical visibility, openings to break away from the pack are revealed through:
- Transparency: When companies automate every aspect of the buying process and are connected with the other millions of transactions happening over the many-to-many network, there is visibility not only with the company’s data, but across all data. This breaks down silos, not only internally with other departments, but also with suppliers. Companies can do things like identify and resolve bottlenecks before they happen, collaborate with suppliers to ensure both parties can leverage working capital, and pinpoint potential risk in the supply chain. This also empowers companies to be a good customer, strengthening relationships with suppliers, and opening the door for advantages like access to unique innovation.
- Predictive Analytics: As we look ahead to the future, technology providers are adding more artificial intelligence (AI) and machine learning capabilities into their solutions, allowing businesses to incorporate smart capabilities into their financial business processes. One focus for this technology is predictive analytics. Because all transactional data is being aggregated across the network with holistic P2P, it’s possible for applications to make intelligent decisions based on trends and patterns. For example, companies can more easily detect fraud through dashboards that alert users to exceptions to the norm or unusual activities.
- Strategic Financial Opportunities: Full automation across an open business network presents new opportunities for organizations, like: using strategic payment programs, negotiating more advantageous days sales outstanding (DSO) with customers and days payable outstanding (DPO) with suppliers, participating in buyer industry communities to be more effective with the supplier base, and more. Companies that strike the right balance of these solutions can optimize their working capital and become more agile to create a competitive advantage.
Where will holistic P2P go in the future?
Automation has transformed purchase-to-pay from a manual, time-consuming process to a streamlined buying cycle. Now, with holistic P2P companies can harness the entirety of financial operations to spend smarter, better manage capital, boost cash flow and leverage supply chain financing and strategic payment options. Future innovation in this space will likely deal with the application layer of financial technology in which applications will offer companies ways to leverage the data collected through holistic P2P over open business networks to help create a competitive advantage.
Think about how Netflix revolutionized the television experience or how Uber transformed how we get around – it will be disruptions of this caliber that take holistic purchase-to-pay to the next level. So, make sure your company is ready now – go beyond parity and automate purchase-to-pay with a holistic approach.