Nimble Buying: A Guide to P2P Solutions for Mid-Market Companies

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Procure-to-pay needs can be quite different for the large corporations of the Fortune 500 and small and medium-sized companies, yet the former has tended to dominate. Fortunately, now there are plenty of flexible and economical solutions that meet mid-market companies’ P2P needs and budgets.

Xavier Olivera, lead P2P analyst at Spend Matters, and Justin Holden, a vice president of sales at Yooz, recently presented a webinar geared towards the mid-market company, Year of the Nimble Buyer: Quick-Hit Tools for P2P Success in 2018.

Olivera began the webinar with a discussion of AP automation and the pain points that can be eliminated by improving the AP process, such as slow payment cycles, error-prone processes and duplicate payments. After all, the pain points of AP are going to be the pain points of procurement professionals.

The primary way to improve KPIs like invoice processing time and cost, number of supplier inquiries, discrepancies and disputes, and days payable outstanding (DPO) is to automate your AP process, Olivera says.

What Do Nimble Buyers Need?

Audience members were asked to respond to a poll on their AP challenges. As Holden and Olivera predicted, manual processes were a major one, with 83% of the audience citing that as an AP challenge.

“It’s difficult to go from a very heavy manual process to a 100% electronic format because there are a lot of steps that organizations have to think about before they implement it,” said Holden. “If you [have had manual processes] for 20 to 30 years, it’s going to be difficult to change.”

Olivera noted that organizations do not need to make these big changes all at once, however. Rather, it would make more sense to start small and consistently add new processes as people become more familiar with the automation tool.

“Large enterprises will benefit more from spend management solutions,” he added. “But a middle-market organization will benefit more at the beginning from payment automation.”

There are three main parts to an automated AP process, Holden said. The first is the capturing of documents. Whether that is done via email, mobile or scanner, the fewer people who need to be part of the process, the better.

Next is the approval process, which larger organizations may be more likely to have documented than their small and mid-sized counterparts. Again, the no-touch path is “obviously the holy grail,” said Holden. For documents that require manual review, there needs to be a workflow tool.

“And last but not least, it’s great to have a process, but if that data’s not put into my ERP system, it really doesn’t do me any good,” Holden says. “When you look at AP automation as a whole, that’s really what the three parts of it are. It’s capturing the documents, it’s workflowing those documents and ultimately sending that information into your financial system of record so you can manage your books.”

Identifying the Right Tools

“Each organization has its own needs, and each organization has its own business requirements,” Olivera said. “So we established five personas, or five different organization profiles.”

For P2P, these five personas are Nimble, Deep, Configurator, Turn-key and CIO-friendly. The focus in this post (and in the webinar) is on the Nimble persona, although you can read more about all the different personas here.

Mid-market organizations that are growing rapidly, more decentralized and risk-tolerant tend to fall into the Nimble persona. The ideal P2P tool for them should offer intuitive, cloud-based, low-priced software with optional value-added services.

“Value creation is one of the topics that everybody is talking about right now,” Olivera said. “The creation of value depends on the organization’s goals. If you’re going to automate a process with an IT solution, you really need to understand first what your organization’s goals are. That will guide you into what kind of functionality and solution you will require.”

The following are a few key questions that you should ask yourself when embarking on an IT payment automation value creation project:

  • How can AP contribute to my organization’s goals?
  • What does AP need to improve?
  • How can IT solutions like automation, systems integration and analytics help in this task?
  • Which solution has the best balance between price, rapid implementation, process expertise, value creation, TCO, ROI and problem-solving potential?

Finally, there are many indicators of AP automation success. Perhaps you were able to reduce cycle time from a few weeks to a few days. Perhaps you were able to reduce processing costs and capture supplier discounts. Or perhaps your P2P process is now more secure, with full traceability and no more lost documents.

Watch the full webinar replay, including the audience Q&A session, for free here.

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