How to Optimize Cash Management with a Portfolio Approach to AP Processes
Posted by Aileen Busi, Product Marketing, Solutions, and Strategy in Accounts Payable on November 5, 2019
A centralized, seamless, process for your accounts payable team is integral to faster invoice processing in order to attain early payment discounts and avoid fees. This can feel impossible when viewing a diverse field of suppliers and transaction types, but it is entirely possible to offer your suppliers the flexibility they need while adhering to your own organization’s requirements.
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Throughout 2019, digitalization and automation have been a major theme in relation to accounts payable, but this goes a long way beyond the conversion of paper invoices to digital. Digital transformation involves taking a comprehensive look at your spend and reevaluating how you manage the entire transaction, from sourcing and onboarding to ordering and paying. There is unlikely ever to be a one-size-fits-all solution so it’s important to analyze your different spend categories and divide them into processes that optimize the payment terms in order to see real savings.
The diversity of your suppliers and how they do business with you varies greatly, which is why you need to offer flexible options to ensure that you get the best terms whether through invoicing or direct payment: a system that not only offers multiple options for receiving invoices and directing payment, but also flexible business rules to make it easier for suppliers to meet your requirements. For example, by automatically supplementing supplier, account, and order data or allowing multiple invoices against a single purchase order or vice versa.
JAGGAER ONE offers several ways to manage the order and payment process. Here are the most common methods. No matter which method the supplier chooses, JAGGAER ONE uses the same robust data inputs and workflow to enhance the invoice for your AP team:
- Electronic using standard protocols like XML, EDI, CSV interchange of the invoice
- Digital mailroom for those that simply want to send paper or emailed PDFs
- Digital portal with reminders to suppliers to submit their invoices via email entry, PO flip, or portal upload
- Virtual payment cards to eliminate the need for invoices with a secure and controlled transaction
- Payment processes like contract milestones and evaluated receipt settlements to automatically pay your supplier without needing to wait on an invoice with already agreed payment terms
An initial task when implementing JAGGAER ONE is to review your supplier list and flag who has electronic capabilities. Electronic integration is a huge cost saver for organizations and is becoming a requirement in some countries. We will discuss this topic more in our next blog post, but our goal is to enable as many suppliers as possible electronically for you to gain true ROI which is why we offer unlimited turnkey supplier enablement with JAGGAER ONE Invoicing.
For those suppliers where electronic interchange is not the right option, typically small to medium suppliers, we recommend a portfolio approach to analyze your spend and evaluate the appropriate method and corresponding workflow for each. An example portfolio approach may look like this:
cXML or EDI connection between supplier and JAGGAER
Catalog purchases, high order volumes
PO Flip, Upload, Email Notification to Supplier
Mid-tier suppliers with agreed purchasing terms
Automated Invoice Generation
Invoice creation based on business rules
Contract milestones, leases, maintenance agreements, subscriptions, services payment schedules
Email, fax, PDF attachments, paper
Ad hoc, small suppliers
Virtual Payment Cards
Indirect small dollar purchases
Suppliers who accept card program
Reviewing your spend data, we classify your suppliers and transaction types under one of the options above. Because of our flexible workflow options, we can implement all of these different processes into a single dashboard looking like this:
Supply chains are getting more diverse but that doesn’t mean you can’t keep your AP processes unified. With flexible options to work with your suppliers, you can keep everyone happy under one system!