Business growth can be hard to come by in today’s increasingly competitive global economy, where upstart competitors are disrupting entire industries. Businesses are desperate for growth strategies.
More businesses are turning to their finance departments for help. Businesses recognize that automating financial processes such as supplier payments can help accelerate business growth.
Eighty-six percent of executives say that digital platforms and ecosystems are the key differentiator for success, per AppDirect’s Digital Economy report. It is no wonder that 79 percent of businesses are in the process of digitally transforming their finance departments with emerging technologies such as holistic payments, robotic process automation, artificial intelligence, and business analytics.
Three ways automation drives growth
Deploying digital technologies in the finance department can help accelerate business growth.
Here are three ways how:
1.Free up cash to invest in the business:
Fast-growing businesses need strategies to free up cash to pay down corporate debt, make capital investments, increase research and development, or support other growth initiatives.
Leveraging certain card programs for electronic payments enables buyers to instantly extend their Days Payable Outstanding (DPO), a measure of the time it takes a business to pay its suppliers, without changing their payment terms.
In this scenario, the funding for the payment program is provided by the buyer’s bank via card. Buyers are cashing in on the fact that the payback period to the card issuing bank kicks in once payment is initiated, an average DPO increase of 22 days.
2.Reduce your overhead:
Paying suppliers with virtual cards – plastic-less one-time-use cards – provides an opportunity for businesses to earn cash-back rebates. It is not uncommon for businesses to earn cash-back rebates on 30 percent of their spending.
In some cases, the cash-back rebates earned by businesses have single handedly transformed their accounts payable department a profit center. The money earned through card rebates also can provide an accounts payable department with the capital to automate invoice processing. And cash-back rebates can be reinvested into strategies that drive business growth such as research.
3.Lower your cost of goods:
Many suppliers will exchange a discount on the amount due on an invoice for earlier payment; the earlier the payment, the bigger the discount. The usual discount is 2 percent, which translates into big savings when applied to eligible invoices, especially as businesses grow. The result is that a buyer’s net cost for purchases will be lower.
Automation makes it easy for buyers to approve invoices within early-payment discount windows. The workflow and routing engine in advanced automated solutions enables businesses to approve invoices fast. Alerts and notifications help eliminate any bottlenecks. And automated solutions provide visibility into the status of invoices whose window for early payment discounts is closing.
Suppliers may find early payment via ACH enticing after buyers have normalized/extended their payment terms.
Unsurprisingly, the strategic benefits achieved by automating supplier payments can more than offset a finance department’s overhead, transforming the function from a cost center into a profit center.
The stakes are high for businesses to get their finance automation strategies right.
Sixty-nine percent of executives believe that only businesses that have digitally transformed will survive over the next five years, AppDirect’s Digital Economy warns. You cannot risk a delay!
ACOM Solutions and its partners provide an end-to-end platform that accelerates business growth.