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Why Management Should Make AP Automation for Retailers a Priority

As the retail industry catches its breath after the hectic holiday season, the financial team and C-suite must make AP automation for retailers a top priority for 2019.

As the holidays come to a close, retailers may be feeling a sense of relief. The busy season of frenzied December shopping is over, and most companies see a lull before the pace picks up again in the spring. While a slow-down may seem like a welcome break and chance to kick your feet up, there’s no better time to address an incredibly important area for retailers – their accounts payable department and adopting AP automation for retailers, such as AP automation for Dynamics and other industry leaders.

This month, the NRF Big Show for retailers will likely break all existing records for the show, with tens of thousands of retail professionals and vendors coming together to learn more about the latest advancements for their industry. No doubt, there will be vendors with solutions for everything from POS systems to marketing services, but the key focus for retailers (attending the show or not) should fall on fixing the crux of their financial process with AP automation for retailers.  

What to do with direct spend?

Retailers deal with multitudes of invoices from a vast pool of suppliers. This crush of invoices, particularly around their busy seasons, can be unmanageable without the right systems in place. Direct spend matching in a manual or semi-automated system is messy, as complex invoices with multiple line items make it a time-consuming procedure to match line-by-line or get to the bottom of deviations.

In an industry where success depends on remaining agile and innovative, every hour freed up translates to more creative thinking and progress toward the next great product. AP automation is key to making this a reality. The cutting edge technologies used by leading retailers allows organizations to reach genuinely touchless levels of direct spend processing by using dynamic line and header level matching from the invoice to the corresponding purchase order or goods receipt. That means the AP staff gets back much of their time, and purchasers in the business spend less time approving invoices, only getting involved when identifying a deviation.

In retail, your relationships with suppliers are critical to the business. For every product sold, some likely multiple suppliers contribute some element to the complete package. If a slow, manual AP process is preventing you from paying these suppliers on time, you could face a situation where one burned bridge turns into an industry-wide reputation and a blacklist situation on your hands. The ease of AP automation for retailers guarantees fast and accurate invoice approvals and makes working with suppliers streamlined and enjoyable.

Handling Non-Merchandise Invoices

For brick and mortar business, multiple locations can translate to maverick spend that catches the AP department off-guard. Indirect spend is an already tricky category to master, and while it usually is essential to the business, the AP needs a better way to handle it and keep oversight on the spend taking place across locations.

Modern retailers are looking to AP automation to provide a digital workflow and invoice capture to provide their AP team with the platform to efficiently manage invoices, accelerate lead times and reduce the risk of fraud or erroneous payments. AP automation for retailers makes it easy to automatically route invoices to the appropriate approver without involving the AP staff, eliminating the age-old problem of invoices getting buried on desks and saving the AP team the trouble of hunting down the appropriate person, who likely works in an alternate location.

AP Automation and Your ERP

It’s important to note here that not all automation systems are created equally. Static workflows and OCR technology can provide some efficiency boost, but will never match the capabilities of an authentic accounts payable automation system, particularly in the category of non-merch spend. For example, many organizations falsely believe that the built-in solutions for their ERP, such as those for Microsoft Dynamics, qualify as AP automation but struggle to understand why they still have manual steps in their AP process and regularly fail to pay their suppliers on time.

The answer is simple. These built-in solutions were not designed to provide sophisticated technology like that of genuine AP automation for Dynamics.  For built-in solutions to offer comparable benefits, it would require massive amounts of IT resources to customize or build from scratch the functionality for matching, routing, coding, capture, and much more that already comes pre-packaged in a best of breed solution.

Microsoft Dynamics is the most commonly used ERP among retailers, and have a significant opportunity for automating their account payable to great success, as there are stand-alone, best of breed cloud solutions in the marketplace. Some of these systems even have pre-packaged connectors to easily link to the Dynamics environment, giving retailers all of the benefits of a modern, best-in-class AP process.  

20/20 Vision into Important KPIs

While most retailers mainly focus on developing front end systems that impact and measure the customer experience, there also needs to be an equally strong focus on improving business-critical systems. Without insight into the financial processes that create the working engine of the business (such as AP automation for retailers), it can be nearly impossible to make any improvement, let alone understand which areas need to improve in the first place.

Retailers need to be able to identify and track complex factors impacting the invoice workflow to increase the efficiency of the accounts payable department. A genuinely robust AP automation system offers the technology capable of providing insight into KPIs over time and varying across suppliers, employees, and business departments. Retail Info Systems predicts that the second most significant trend to watch in 2019 will be data analytics systems, proving that it’s no longer an IT-only venture core to becoming a data-driven business.

What’s equally as important to the data itself is a backdrop to compare against, accurate data-based benchmarks. Not based on surveys or broad data with no correlation to your industry, but real-time statistics consolidated from a pool of organizations using the same system and standardized process, so you know exactly what is achievable and where you fall among the below average, standard or the industry leaders.

The Future of AP Automation is Bright

While many organizations are only beginning to venture into the world of automation, the automation industry has been booming with innovations every year for the past decade.  The term Artificial Intelligence (AI) may conjure up a far distant futuristic scene. The truth is that the leading automation solution providers are already utilizing AI functionality at the core of their products. 

For accounts payable automation, perhaps the biggest attraction and opportunity for AI is its ability to provide more automated intelligence of everyday functions in the AP process. By combining powerful invoice automation to eliminate manual processing and machine learning techniques to “understand” and replicate what the AP team is doing as part of their normal routine, AP automation systems will be able to deliver even better insight into the status of the most crucial financial operations.

The retail industry leaders who set the pace for the rest of 2019 are always thinking about new technologies and products that help them compete and deliver better services or products to the consumer. More and more retail companies understand that improvements in the heart of the business will ultimately translate to better customer-facing operation and making the investment in true AP automation for retailers to better prepare for the challenges of the new year and years to come.

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