Leveraging Software To Maximize Days Payable Outstanding
Days Payable Outstanding By Industry
For CFOs and financial executives within the industry, leveraging software to maximize days payable outstanding (DPO) can deliver considerable upside, such as more efficient payment system processing and accelerated cash flow. Evaluating the right Accounts Payable Automation (APA) technology solution can propel companies towards financial success and drive down the amount of manual effort required in the accounts payable process.
In order to ensure that Accounts Payable Automation initiatives are successful and deliver the targeted financial outcomes, companies must select the appropriate technology, properly configure the solution to their existing organizational structure, and recognize that any automation of manual processes will require an extensive change management strategy.
Technology Evaluation Criteria
When evaluating APA solutions, it is essential to understand the key features and functionalities, system integrations, and flexible payment options that are available. Each solution should be able to meet the organizations needs, deliver operational efficiency, and provide real-time, actionable insights that can be utilized to make informed decisions. To do this, the Softwareshould have an array of features such as data extraction capabilities and the ability to create single view of an invoice, thereby streamlining the payment process. Automation tools, such as automated supplier statement management, helps to significantly reduce the time taken for review and reconciliation, saving organizations valuable time and money.
Additionally, accounting teams should direct their attention to the Reporting Analytics capabilities of the solution. The approach to payment analytics should focus on driving down DPO, as well as optimizing liquidity by understanding the terms and timing of payments. Market and supplier intelligence capabilities to identify opportunities for improvement in payments and analytics tools can inform companies of when to best negotiate and pay their suppliers.
Change Management
The key component to ensure that company achieves the desired financial performance is the necessary changes to the companies internal processes. Depending on the level of automation, this could require replacing parts of the existing manual processes or even the complete automation of the Accounts Payable function. As well as implementing new software, companies need to assess their existing procedures and ensure they are up to date before automating them, including the related regulatory requirements. Introducing Change Management system, that assesses and accelerates the flow of information, can enable companies to understand how an APA solution is impacting their existing processes, helping to identify further areas for improvement.
Conclusion
For organizations looking to improve days payable outstanding, investing in an Accounts Payable Automation solution is paramount to achieving financial performance. The key to successful implementation lies in the selection of the right mechanism, combined with the determination and commitment to make the necessary internal changes. By introducing the correct processes, organizations can leverage automation to achieve optimal financial results and move away from manual processes and enabling CFOs and financial executives to reach their desired performance goals.
