Steven Standring, Chief Revenue Officer at Tungsten Network, on how to get on the road to best-in-class invoicing

Firstly, a confession

I’m not an architect. I couldn’t build a house, or a bridge – I might be able to build a shed with some help. That said, even I – a self-confessed, architecturally-challenged man – can say with certainty that foundations matter. There are very few businesses that succeed without stable, scalable back-office operations.

Breaking down the problem

Like my shed, without a foundation (and I mean concrete!), it’s hard to see how secure your journey to world-class will be and what it will really look like. Ultimately, we all know a foundation provides security and stability in the face of a moving platform.

The only problem is, this journey requires embracing something that might initially seem of minor importance.

Often seen purely as a cost reduction exercise, it can actually be the foundation to adding genuine value to your business.

I’m talking about total digitisation of the invoice – digitisation of every invoice and all of its details across the whole P2P department.

Total AP and Total AR bring new value to invoicing, from line-level data leveraging to real-time spend analysis. These are previously untapped insights you can access for the first time.

To us, this is what the road to world-class really requires: taking your back-office and turning it into a powerful accelerator of efficiency and an enhancement to the decision-making in the front office.

1. Manual Cost Reduction

We’re starting with an immediate benefit of digitisation. Investing in technology across the source-to-pay (S2P) process – whether you’re considering e-procurement, e-invoicing, even robotic process automation (RPA) – there can be a more cost-effective way of handling AP and AR.

Digitising AP and AR means processing invoices quicker, cheaper, and using fewer resources in a more secure way than manual processing has ever been able to.

It’s as simple as that.

2. Efficiency Improvement

Like your alarm clock in the morning (although perhaps less annoying), becoming more efficient over time is a business principle that can’t be ignored. Fortunately, this kind of efficiency goes far beyond just cost reduction.

In the context of AP and AR automation, efficiency refers to invoice processing and the data associated with it, too.

They say data is the new oil. Many of those we work with – large, multi-national businesses – are sitting on huge wells of the stuff. Making use of that resource is possible with the right technology.

Beyond simply paying and being paid quicker and cheaper, we can take a lot more value from the information generated every time those interactions occur, both in our resource management and decision making.

3. Repeatable, scalable sub-processes and tasks

Suppliers don’t tend to love being paid a month after they provide their goods. Worse still, when exceptions arise, as they often can when dealing with invoices, suppliers can end up waiting two or even three times as long. What’s more, exceptions can cost you ten times as much as an invoice to process.

Nobody wants to be working to those deadlines or waste that much energy, nor do they need to.

Picture being able to verify all those unique, necessary invoice details before the invoices are even created. Not only are we capable of handling your business rules, it’s completely scalable.

When 70% of the world is still using paper for invoicing – and a lot of North America are still writing cheques – I don’t think there has ever been a better time to get ahead of the game here.

4. Optimising Cash Flow

If you’re spending anywhere from 30-120 days to pay your invoices – manually and inefficiently – you can’t supply-chain-finance your suppliers. That can mean missing out on any potential discounts that you’re only able to earn by processing invoices quickly enough to pay suppliers early – and processing an invoice that quickly requires transferral to a digital format.

There are companies who have optimised their supply chain to the point that they’re achieving 6% discounts. These discounts add up. And by taking advantage of faster processing times, you’re also making your suppliers happier, without much extra work on your end.

When dealing with 30% or more of your invoices, as a rough average, running into exceptions – you could reduce this to near zero. Only then can you start to make real strides towards world-class performance from top to bottom.

5. Data-driven decision making

One of the most important aspects of digitised AP and AR are the data insights you can access. Without digitisation, you’re going to be waiting a lot longer for any form of analytics from commonly-used providers like BPOs, for example.

Furthermore, the quality is limited to what these providers choose to include in their results. In a nutshell, while there can be a preoccupation with purely saving you money, imagine having all invoice data (down to the colour of your pencils) in one data file with the ability to analyse any aspect of that data in seconds.

Total AP and Total AR give you spend analysis that’s in-depth – and literally at your finger-tips – allowing you to operate as a world-class procurement team with a full picture of your spending across the whole organisation. I know it seems hard to believe, but AP really can be Procurement’s best friend!

6. End to end process alignment

AR solutions are where I see S2P technology coming full-circle – not just in money saved, but in material value and strategic insight that was previously inaccessible to suppliers.

Let’s be honest, the buyer’s interest is in managing their commitments. A supplier’s interest is in receiving what they’re owed. Whoever we are, and wherever we do business, we all just want to get paid.

Alignment over how we ensure this, including all the regional and company compliance rules that affect buyers and suppliers, is finally being enhanced and managed in a network that maximises value to your business, beyond (but still including!) the monetary.

We could realistically call this end-to-end process collaboration – as that’s about as close as we really get to full alignment. That collaboration among employees, procurement, suppliers and AP means no maverick spend (PO compliance being forced on your employees by your suppliers), full PO compliance and straight-through processing, as well as the wonderful data accompanying the process.

What all this means

The world average, off the top of my head at least, for invoice processing, falls at about 26 days. Cutting that down to less than half the time, let alone cost-effectively, is an impossibility in a paper-based environment.

Reducing costs and increasing efficiency isn’t all that’s at stake either. How much invoice data are you sitting on right now, that you simply can’t access? Perhaps you haven't even had the chance to try.

When we think of ‘world-class’ or ‘business agility’, ultimately, these are just words to try to capture a much larger concept. Even ‘global compliance’ is a very simple term for a complex entity that evolves daily.

Having full visibility of your commitments and sales as early as possible – as well as insights into trends and divisional/regional differences – will give you far more strategic benefit. Being able to adapt to new trends and business changes quickly and proactively is at the core of world-class performance.

Globally, there is so much more we can do for businesses who may struggle to improve their invoicing functions alone. I’d say there’s a strong argument to be made that they will find it impossible to increase efficiency without technological input like ours.

But, there’s a reason that I’m optimistic about all this.

I’m optimistic because we’re finally able to offer a complete solution to refine and perfect processes that have been done inefficiently for a very long time.

Like I said: I’m no architect. But I know that to rebuild a house, getting the foundation right is critical. When renovating AP and AR, you need to start from the ground up.

Steven Standring is Chief Revenue Officer at Tungsten Network

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