How Paperless Payables Can Streamline Ops and Improve Cash Flow

  • April 13, 2017

When you’ve started small and focused your tech investment on the core business, it’s easy to overlook how digitizing your accounts payable can make the whole company more agile. But this isn’t just about saving time. Digital processes can simplify accounting and help monitor costs, which demonstrates to investors and auditors that you’re being strategic and efficient at every level.

How Paperless Payables Can Streamline Ops and Improve Cash Flow  
First, consider how going fully digital can solve problems and create a strategic advantage for your company. Second, use our checklist to guide you through the transition.

1. Invoice Receipt and Entry
Whether you receive invoices via snail mail or as emailed Word docs and PDFs, entering their information into your system takes up valuable time and invites data-entry errors. Tools that scan invoices and auto-fill each field can also lead to errors if the software doesn’t read the invoices properly. Fully digital invoice processes, on the other hand, cost anywhere from 40 to 90 percent less than paper-based, manual invoicing, according to Ardent Partners.

In a fully digitized system, your supplier typically inputs invoice information directly into your database. Invoice receipt is seamless, and data entry is already taken care of.

2. Routing and Approvals
Going digital also makes it easier to stay on top of invoices as they move through your approval process. Most accounts payable software — whether standalone or part of an ERP system — automatically matches invoices with purchase orders and routes them to the appropriate approver for authorization. That kind of rules-based workflow also reduces the chance that inappropriate or duplicate payments get through.

Meanwhile, employees can track invoices to make sure they've been seen for activity by the right people, so no payment will be delayed while an approval languishes in somebody’s inbox. A system that accepts approvals from mobile devices will speed the process even more.

3. Payments
Once approved, electronic payments made through Automated Clearing House (ACH) debits or commercial cards quickly close the loop. Automatic payments — using the payment type that you’ve agreed on with the vendor — can typically be prescheduled, requiring no further input from your team.

Virtual card numbers (VCNs) can make an especially dramatic difference in accounts payable departments. A VCN is a unique, 16-digit number that is created for each transaction or a specific set of transactions, and those individual payments each carry more data that helps with your reconciliation as well as your vendors’ account receivable process.

In addition, a fully automated process with electronic payments can yield benefits that go beyond time-savings. The ability to put spending limits on VCN transactions helps companies closely manage their working capital. The accumulated transactional data also provides insights that can lead to improved vendor negotiations and partnerships.

"Elevate payables from a back-office function into a source of strategic value"  

With digital tools in place, accounts payable goes from a multistep process that requires employee involvement at just about every stage to a streamlined workflow. Making these changes can give you better control and greater visibility from necessary spend – elevating payables from a back-office function into a source of strategic value for the company. 

To learn more about digitizing your accounts payable, contact your SVB Global Treasury and Payments Advisor.

Checklist: Prepare to Take Your Payables Digital

Turning accounts payable into a fully digital process saves time and money, allows for more precise cash-flow management, and uncovers data to help you analyze costs and optimize supplier relationships and spend.

Use this checklist to guide you through the transition to a digital payments system.
  • Know where you stand on some key performance indicators (KPIs). Begin your process by determining how well you are doing on important measures of accounts payable performance. First, calculate how much it costs you today to process an invoice without a digital system. Why? The pre-transition measurement will mark your starting point and help you measure results when you move to a new system. Include expenses such as labor at each step, check-printing and mailing. Other performance benchmarks to establish may include time to process an invoice, percentage of available early-pay discounts captured, percentage of payments in error and percentage of invoice exceptions (such as discrepancies between the invoiced amount and the purchase order amount).
  • Evaluate processes. Bringing in some new tools presents an opportunity to streamline procedures and make them more efficient. As you review KPIs in the first step, it will likely become clear where bottlenecks, redundancies and other inefficiencies exist. Record these and look to improve those areas as part of your digital transition. For example, you may decide to change how approvals are routed or reorganize your accounting codes.
  • Encourage suppliers to transition with you. You and your suppliers both benefit if they receive payments electronically. Show them how accepting credit cards or ACH transfers will save them time and money, and point out that digital payments are far more secure than paper checks. Migrating your suppliers' payments to a new channel is easier when you look at things from their perspective. For example, if you want to pay by credit card and they’re concerned about paying transaction fees, quantify the time and cost savings between options with cash flow and reconciliation benefits. Your bank can be a good resource here, assisting you with information as well as helping facilitate the process.
  • Choose tools that deliver on your data needs. The system you pick should provide the easiest possible access to data, and it should provide it in a format that you can pull into your favorite analytics tool. Identify the data that is most important to you by considering what you turn to most for evaluation and planning. With these high-priority needs in mind, look for payables systems that make it easy to capture critical data for reporting and analysis. With better spending data available for analysis, your company may find opportunities to consolidate suppliers and negotiate better terms.
To learn more about digitizing your accounts payable — and how using commercial cards for payment can create a new revenue stream — contact your SVB Global Treasury and Payments Advisor.

Related Content

Read more in our series on how to optimize your company’s payments tools and processes on SVB’s Payments Trends and Insights page.

Learn more via SlideShare.


The views expressed in this column are solely those of the author and do not reflect the views of SVB Financial Group, or Silicon Valley Bank, or any of its affiliates. This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. You should obtain relevant and specific professional advice before making any investment or other decision. Silicon Valley Bank is not responsible for any cost, claim or loss associated with your use of this material.