There's a new push for accounts payable (AP) to shift from tactical cost center to strategic contributor.
Accounts receivable (AR) is under the same pressure. Although supplier portals have been around for a long time, adoption has been relatively low, but that’s changing.
As a new breed of supplier networks gain wider adoption, AP and procurement professionals are becoming increasingly comfortable using supplier portals, and they’re evangelizing the strategic benefits to their AR departments.
What’s in it for AR?
Supplier networks sit between AP and AR. Portals give both departments real-time visibility into invoices and payments and a common source of the truth. AR saves time and money with scalable automated processing, streamlined communication and improved ability to manage cash flow.
New and improved
Technological advances have made portals easier to use. Consumer-style web interfaces have replaced the green screens of old. You don’t have to worry about logging in all the time or keeping track of a bunch of passwords, as most browsers remember your login and put you right into the system. In some systems, you don’t even have to go to the portal website. You can click an invoice or remittance link in an email notification and go directly to the portal.
Search technology has come a long way in the past few years. Inside the portal you can sort and search and download reports in a variety of formats so you can pull multiple items into your accounting system at once. You can also perform a lot of these tasks on a smartphone.
Finally, many networks now allow buyers and suppliers to transact free of charge, removing one of the biggest hurdles to participation. These advances have made the supplier network value proposition more compelling and worth revisiting.
The network effect
It’s important to note that we’re talking here about the portals associated with supplier networks, not individual suppliers. Some big suppliers only accept payments through their proprietary portal, or by check.
Not many accounting departments are going to invest resources to log into each one of these individual portals to make a single payment. There’s no time savings there for AP, so they’re just going to continue using checks. And suppliers that maintain their own portals or don’t use portals at all are just going to keep opening envelopes and processing a lot of checks, one at a time.
In contrast, supplier network portals are scalable. If a hundred or even several dozen of your customers are in a single portal and you can process their invoices and payments all in one place, you can save a lot of time compared to hunting and pecking for items one by one.
Perhaps the biggest benefit of supplier network portals is shortening follow up cycles or eliminating them all together. In a paper-based world, that’s an asynchronous process that takes a lot of time. AP says, “I need to research that. Let me call you back.” Now they have to do it, and AR still has it on their plate while AP is digging through their files.
If both were using a portal, they could collaborate by looking at the same data to resolve confusion and take corrective action, often in less time than it takes to make one phone call.
End the waiting game
There’s a significant cost savings from reducing time that money is in transit. With portals, you get your money faster and you know where it is at all times. The cost of money in transit is considerable. If it takes seven to ten days to get a check, and another two to three for the bank to process it into your account, that’s half a month already. It’s a big challenge for managing cash, because you don’t know where the money is or when it will get there.
If you have a lot of outstanding receivables, that’s a significant impact to your bottom line. Electronic payments can cut that time by at least half. But more importantly, the visibility portals provide ends the game of waiting for money and following up persistently.
You know if your money is coming as a check, ACH or card payment, and where it is being deposited. If there are any questions or delays, you just go into the portal and find your answers. This visibility and control makes it much easier to manage cash flow.
Change is always hard, but this one isn’t. Network portals are quickly becoming table stakes for forward-thinking companies. They reduce complexity, save time, and increase your visibility and control over your money, making them a key plank in any campaign to make AR more strategic.
About the Author
Kim is the Vice President of Operations at Nvoicepay. She has 20 years of experience delighting internal & external customers and employees in the realm of service delivery.More Content by Kim Kelley