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Former Member

In the first half of this post last week, we identified five obstacles to networked payables that may prevent your accounts payable organization from thriving in a digital economy.

This time, we’ll look at the top five warning signals.

5. Your only collaboration option is a supplier portal. This is often a first step to networked payables, but not a last stop. While most business networks feature a supplier portal, supplier portals don’t come with a business network; and it’s the network that enables the many-to-many connections to help you thrive in a digital economy. In addition, the ability to match your suppliers with suppliers already connected to a business network will accelerate your transition to networked payables.

4. Low percentage of early payment discount capture. Related to the drawn out invoice processing cycles of paper payables is the inability to capture early payment discounts. Networked payables helps you capture all available early payment discounts, and introduces discount opportunities to new suppliers connected to the network. Dynamic discounting adds another dimension—the opportunity to capture sliding-scale discounts, up to the invoice due date.

3. Too many calls from suppliers about payment status. A supplier portal by itself won’t solve this problem, as many calls are due to the lack of detailed remittance to apply the payment. New electronic payment methods for business such as AribaPay address this problem, eliminating this tedious activity in accounts payable.

2. Invoices approved for payment but not at contracted rates. This may be responsible for the largest hidden cost of a paper payables process.  The ability of networked payables to fill this gap can save Fortune 500 companies potentially tens to hundreds of millions of dollars annually.

1. Can’t close the loop in the source-to-settle process. Without proper controls in place, decentralized buying means some locations will pay a higher price for the same goods and services as other locations.  Networked payables address this problem by enabling the capture of detailed invoice data and feeding it back to the sourcing team for analysis and better spend management.

How many of these distress signals plague your organization? If the list is long, a good place to start is getting alignment between accounts payable and procurement. That can be a catalyst for transforming your payables operation into a center of innovation.