By Kyle McNabb, SVP of product marketing
Ineffective accounts payable (A/P) processes are costing UK—and global—businesses considerably. According to the US’ Institute of Finance & Management (IOFM) each payment costs an organisation twice as much to process in an organisation with less effective A/P functions than it does in best-in-class companies.
With a dogged focus on cutting wasteful spend in many organisations, A/P should not be overlooked. Automation is one way leading organisations are finding points of savings in A/P, as doing so can significantly improve effectiveness and efficiency, reduce human errors and missed payments and ultimately boosts satisfaction ratings thanks to faster payment processing.
When done right, automation is also embraced by A/P staff, as it allows them to cut down the time spent on manual processing and instead gives them more bandwidth to focus on managing exceptions, developing relationships with suppliers and taking on new tasks.
Deploying the right software solution is a first step in a successful A/P automation project, but that effort must also take into account best practices in order to realise the greatest results.
Centralisation and organisation are key to any effective accounting process. But in many organisations, the data leveraged by A/P comes from disparate sources. The company’s enterprise resource planning (ERP) system usually serves as the main source, but there are countless others. Consider, for example, the systems that reside with sales staff, external vendors, customers or other points along the supply chain, such as transportation carriers and manufacturing and warehouse facilities.
If the information needed to streamline the management of exceptions is not centralised—with data from different source systems connected via unique identifiers such as vendor ID, account code and customer name—then it cannot be leveraged seamlessly to automate payment processing.
Furthermore, a lot of content is available only as paper, PDF, image, etc. That content must be scanned to have critical data elements—such as the date, account number or amount—electronically captured and metadata created. Then, and only then, the content can be indexed and stored in a repository and database. From there, the invoice and associated supporting content can be linked and processed via workflow.
Some automated A/P solutions can integrate myriad information and content formats with their data repository. It’s important to confirm the solution you select can, in fact, cover formats such as Microsoft Word and Excel, PDF, email, video, scanned capture documents—and uses a variety of standardised methods to exchange information in electronic formats (e.g., XML, JSON and EDI). They should also intelligently index, archive and organise this content so that users can easily find and access necessary information. An effective automated A/P platform also includes auditing and reconciliation capabilities, which alert users to errors such as duplicate, short or delayed payments.
Centralisation entails storing all critical accounting documents related to A/P in a single place. However, in even the most streamlined enterprises, these documents still touch several different systems. Some documents are stored in an ERP system or a content-collaboration platform, but other crucial information often resides on paper, in sales contracts, on inspection certificates or elsewhere. Disparate systems that function independently and without effective integration only prolong accounting processes.
To be most effective, the payables software solution must be able to communicate with all core systems that house relevant documents. If it can’t, records can become “lost in the loop” and put the organisation at risk. To prevent this, any A/P automation solution should integrate with the company’s content services platform (CSP) and ERP systems. Integrating systems and federating content across them leads to substantially reduced processing times.
A/P-related systems aren’t the only software in the company that contains information relevant to A/P processes. Marketing, customer service, operations, manufacturing and legal, among other major departments, have some bottom-line impact on business operations.
Because A/P staff spend most of their time dealing with transactions that are not PO-based or with PO exceptions like mistakes in amount, quantity, price, payment terms, etc., having this information is critical to their effectiveness. And although this information exists in other departments, it is rarely made readily available to A/P to use when resolving exceptions.
Automated A/P solutions can centralise enterprise content beyond the documentation that is typically considered central to payables processes. When evaluating solutions, assess if the system uses standards-based REST APIs, low-code web-hook enabled content-centric workflows and content federation to access content stored in repositories used in other parts of the organisation. This approach will improve transparency and yield improved cost savings within A/P and the broader supply chain.
Reaping the Rewards
When a company is able to tighten its A/P processes, the entire business reaps the rewards. It eliminates the processing delays that result in inaccurate reporting, poor financial visibility, delayed business decisions, costly reruns and wasted money. It also allows money to flow into and out of an organisation faster. According to IOFM, organisations that apply A/P automation best practices can pay their non-PO invoices on time 96% of the time, compared to only 13% of those that are less automated.
The key to enabling that is to capture, manage, federate and audit content across the entire organisation and ensure systems work in concert across different departments and applications. Only with that centralisation, integration and unification can a company make more-informed business decisions and improve cash flow for the near and long term.
TIME TO THINK OUTSIDE OF THE BLACK BOX
Mike Brockman, CEO, ThingCo
If you have the unbridled joy of parenting a teenager you’ll probably know what telematics insurance is. In very simple terms, telematics or ‘black box’ insurance enables insurance companies to track driving behaviour using technology fitted to the car or via a smartphone app. It is the first practical example of IoT – machine to machine communication of real-time data.
Telematics has been crucial to helping thousands of young people get experience on the road who would otherwise have found the cost of insurance too high. When you look at the number of road casualties in the UK over the last nine years there is a clear correlation between the rising adoption of telematics and a fall in young driver casualties[i]. The problem is that as soon as they can, young drivers chuck in telematics and take traditional insurance. As such telematics insurance has got stuck firmly in a rut.
So why is that a problem?
First, telematics saves lives – think what it could do if more drivers had it.
Secondly motor insurance costs are linked to claims costs – if we can bring down the cost of claims through the engagement, speed of response in accidents and anti-fraud benefits of using telematics data to its full potential, everyone could access cheaper insurance.
Thirdly we are living in a world deeply impacted by COVID-19. Travel trends were already altering prior to the pandemic but have changed and could remain significantly changed for the foreseeable future. Consumers are beginning to think more deeply now about their motor insurance and value for money. This may create demand for motor insurance cover that is more responsive to people’s individual driving behaviours – why pay an annual premium when you only use the car once or twice a week? On the flipside, those nervous of using public transport could see an increase in their car use. Telematics allows insurance providers to offer insurance based on actual rather than predicted use.
The fundamental reason for telematics getting stuck in a rut is insurance companies are not offering something consumers actually want and they are not deriving value from their investment in the technology. Different telematics devices give different qualities of data and that data determines the economic equation they have to resolve in terms of how much they pay for the technology and what value they get from it.
Another key factor is that if you give something away – as the insurance industry has done with telematics ‘black boxes’ – you are sending a strong signal to the customer that the technology is of no value to them and only there to serve the insurer’s need.
You need to make the device a desirable piece of technology that consumers would value in their own right – rather than something that is imposed on them to get cheaper insurance. By introducing new technologies into these devices such as Voice, camera, ADAS, black spot warnings, it becomes a truly connected device that not only helps the driver but also creates incredible amounts of data that’s useful to the insurer to manage risk and provide better customer services.
With next generation telematics, the data is no longer a one way street direct into the insurer. You can feed that data back to the customer and develop additional services such as a voice alert when they have been driving for too long without a break, an incentive of a coffee at the next rest-stop.
Telematics also transforms the claims process for the customer and the insurance provider. A crash alert can kick in and activate a voice command in the device and that will ask the driver if they had an accident, whether they need help and will alert emergency services if necessary.
This is where the data brings huge value to the insurance provider providing a whole range of detail – like a liability assessment, video footage, fault, g-force etc. This data is dynamite to First Notification of Loss team with an insurance provider.
But the biggest difference next generation telematics offers is it really strengthens the relationship with customers and insurers can make it fun as well. Insurance and fun aren’t usually two words you see in the same sentence but unlike traditional insurance, or old school telematics, it allows engagement and the opportunity to provide incentives without any big brother feeling about it.
Technology has changed massively over the last ten years, the quality of devices has developed and the Cloud has opened the potential for telematics products to be designed for customers in the most attractive way. Barriers around trust and big brother can be broken down by being absolutely clear that the data belongs to the driver – they can choose how it is used to their benefit, spelling out the advantages, being transparent and flexible.
COVID-19 is providing an opportunity to stand back and think about telematics differently – how to make it customer friendly and how to make the economics work. By leveraging next generation telematics technology the insurance market has a window of opportunity to turn the motor insurance grudge purchase into something consumers really start to value.
BRANCHES ARE THE HUMAN FACE OF YOUR BANK?
Sudeepto Mukherjee, Senior Vice President, Financial Services Lead EMEA & APAC Publicis Sapient
Branches have always played a pivotal role in a bank’s ability to acquire and service customers. Historical surveys have consistently pointed to the fact that proximity to branches is one of the key reasons that determine who consumers choose to bank with. Even with the increased adoption of mobile banking in the past decade, research from data specialists CACI had found that surprisingly, the decline of branch visitors has been modest, equating to less than 2% per year, with digital channels supplementing the customer experience rather than replacing it.
The COVID pandemic has changed all of that. It has suddenly forced consumers away from branches into call centres and web/mobile channels to meet their banking needs. So the big question is what role should branches play as we recover from this pandemic? Will branch centric business models like that of Metro Bank still thrive or will the digital only banking offerings like those from Starling and similar win out?
Banks will always have 2 different faces to consumers. The first face is one that is human and relationship based. This is the part of the bank that consumers rely on to get advice on how to manage their life savings. The face that they call upon when they are in financial distress and need help overcoming that. The face that helps them make product choices on what credit type would best suit their circumstance. The second face is that of the bank as an efficient machine that uses the best available technology, data and AI to meet transactional needs quickly. This is the face that consumers rely on to make payments in real time and conveniently. The machine that provides the ability to quickly respond to queries around account balances and transaction history. The machine that alerts consumers when certain actions are performed on their accounts. Customers expect both these faces from their bank. However, the financial crisis and the PPI scandals saw banks loose the trust and credibility of customers as they were seen to be driven more by internal profits rather than consumer needs. The human face of the bank was no longer visible to most consumers and the machine failed to live up to the expectations set by the Big Tech giants like Apple and Amazon that seamlessly provided services via their digital platforms.
The Bank Branch can play a pivotal role going forward in re-establishing this human side by helping a bank build trust and become the primary advisor for our financial needs. Instead of just meeting transactional needs like check deposits and account openings, banks can now transition branches into relationship centres where their employees are 100% focussed on financial advice and well-being of their customers. They are teachers and coaches, life-cheerleaders and financial partners – they are many in number.
Historically this model has been difficult to achieve because of the high cost of such personalised service at scale in branches. However, advancements in technology/AI coupled with the propensity of customers to use digital channels for transactional needs now make this imminently within reach .
This transition will require a fundamental shift in 3 big areas:
- Creating a strong digital infrastructure to enable an omni-channel service: Banks will have to double down on their digital transformation efforts and build an infrastructure that can serve most transactional needs seamlessly via digital channels and call centres. The operational burden on both call centre and back office staff will have to be significantly reduced by automating as many processes as possible and providing the right tools and insight to help consumers efficiently.
- Culture and Capability: This will also require a big shift in both capability and culture. Every function of a bank (like risk, finance, product control) will have to get more comfortable in leveraging technology to do a majority of the tasks currently done by humans while investments will be needed in new capabilities so front line staff can focus on building relationships at scale and provide good advice to consumers.
- Bringing customers along on this journey: All this will work only if there is also a strong focus on educating customers on how best to interact with a bank and use branches only for the most complex needs while relying on other less expensive channels for day-to day banking services.
Making this transition will not be easy. Constrained finances and a higher compliance burden, have resulted in a large technology debt and complex operating models in most banks. Banks have to take a more ambitious approach to “jump” to this new model. Digital leaders like Amazon and Netflix have shown how a shift from physical stores to a more digital centric ecosystem can not only be more efficient but also create value for consumers.
Now is the time for banks to seize this opportunity to redefine the role of branches and re-establish them as essential advice centres for meeting their communities financial needs.
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