INTERVIEW OF THE MONTH
Interview With Mr. Chetan Trivedi
Chief Information Officer,
Hindustan Zinc Ltd (Vedanta Resources Plc)
In the last few years, we have seen a lot of evolution in P2P automation? What is driving this change?
In today’s business climate, organizations in every sector are under pressure to do more with less. That means businesses cannot afford to seize opportunities to free up their working capital. By giving you greater availability to the cash trapped on your balance sheet, a formal working capital strategy can deliver the added liquidity you need to fund growth, streamline processes, reduce costs, enhance service levels and seize new investment opportunities as they arise. P2P is one of the focus areas where availability of technology for automation presents this opportunity. Stringent tax and regulatory compliance requirements, demand for better stakeholder engagement (supplier in this case) and collaborations are few more factors driving this change.
What technology trends are you seeing in the Procure to Pay process (P2P)?
Given the way technology is moving in general and in this space in particular, I see following trends emerging for P2P process:
- Continuous Process Improvement
With the rapid advancement of technology, I think focus will continue to be on collection and analysis of information to improve the process. Organizations will look for using this information for better budgeting, planning and forecasting of their cash flow. Intelligence derived out of data generated during this process will also help to know spending patterns and identify the opportunities to get better discounts through early payments.
- Growing Adoption of Automation
While P2P process has undergone a lot of technology intervention in the recent years, it has not yet seen as many benefits in comparison with other processes. Growing adoption of automation will not only give organizations an advantage in terms of efficiency but it will also help to go green and eliminate reliance on cumbersome and costly paper-based processes. Digital Invoicing and Payments being processed through digital channels will facilitate near elimination of paper in the whole process. In a high-compliance, high-risk environment such as accounts payable, advancement in terms of automation shall integrate into people-powered processes to create cost-effective and accurate results.
- Adoption of Cloud and Mobility
One of the strongly emerging trend in the space is cloud-based automation rather than on-premises solutions. Organization are clearing seeing value in adopting cloud in this space due to obvious benefits in terms of reduction in expenses, no capital investment, greater flexibility and scalability; and access from anywhere any time with enhanced security.
Mobility in Accounts Payable is being talked about for quite some time now. Adoption of mobility in other functions and due to over-all mobility trend in the enterprise, it is becoming imminent in P2P process too. One of the critical element of P2P process is workflow and approvals which consume a significant proportion of time. Adoption of mobility will definitely help organizations to cut down this process time.
- Digital Authorization and Security
In a new digital world, accounts payable process is going rely less and less on pen-and-ink signatures and printed forms. With various technology options easily available now, organizations are embracing digital authorization for purchase orders, reimbursements and invoice approvals. This benefit comes with associated digital risk and security requirement. And therefore, organizations will have to ensure that cost savings generated by adopting the digital way is not lost to security breaches.
What kind of business benefits have enterprises seen by automating the Accounts Payable function?
By automating accounts payable functions, enterprises have seen many benefits. Some of them can be listed as below:
- Improved Process Efficiency
Scanning and OCR of invoices, workflow based approval, integration with base ERP system and inherent business rules and controls have made the entire process much lighter. This has definitely improved the overall efficiency in the entire AP process. Adoption of mobility and digitization has further added to that benefit.
- Savings on Time and Cost
Improved process efficiency has resulted into savings in the form of time and cost. Information is available real-time to take decisions. Nobody in the organization has to spend time to search for an invoice or to find out where exactly it is waiting in an approval process. There is no “misplaced” invoice anymore. Discrepancies are automatically pointed out and exception approval happens through a workflow based approvals. This saves time.
Inherent controls ensure that there is no duplicate invoice payment or overpayments. Invoices are paid accordingly to a due date and therefore there is no late fees. In fact, with visibility of available cash flow and due date of payments, you may leverage on discounts using early payment. Resources involved in the process are also optimized. All these result to cost savings.
- Audit and Compliance
Automation of accounts payable has greatly helped in maintaining audit trail and ensuring compliance. Organizations know exactly where the invoice is lying in a process and whether it has been paid or not. Business rules and logic ensures compliance and eliminates the instances of potential errors, malpractices and fraudulent activities. Electronic audit trail can be created instantly to show who authorized the payment, why payment was made, who made the payment and whether it has been paid in line with tax and regulatory requirement. This makes it easy to comply with audits and regulations.
- Maximize Productivity
Since all transactional activities are automated, staff is able to spend time in strategically reviewing and analyzing the transactions and get intelligence out of the data. This helps in strategizing payment terms and methods, leveraging on discounts, managing cash flow and predicting future costs and trends.
What do you believe are some of the good practices / imperatives in order to maximize returns from technology investments in the P2P space?
Choice of technology in the P2P space is very important. It is imperative that solution in which you invest is robust, scalable and flexible with single point of contact to suppliers. It is always wise to invest in a solution which can take care of entire or major part of P2P process without much integration issues. Having multiple systems managing parts of process and then integrating them with each other makes it very complex. The solution must be user-friendly for internal staff and more importantly to suppliers. With technology advancing at a rapid speed in an age of digitization and mobility, the solution should also be able to cater to those changes and adoption of those upcoming technologies.
What kind of strategies are companies in your group putting together to maximize efficiencies in P2P?
We have various entities independently operating in the group. They are operating at a different levels of automation and maturity in P2P process. Some of the entities are quite matured leveraging automation for a long time while some of them are in an early stage of end-to-end automation on AP process. As a strategy, we are driving AP automation for the entities where this has not been so far done. We are increasingly adopting an AP shared services across units. While we are using SRM as a Supplier Collaboration Platform, we are also in a process of integrating SRM with AP solutions to achieve end-to-end automation in P2P process eliminating physical scan of invoices. Overall strategy for the group is to maximize shared services and automate the entire process to reap full benefits in terms of efficiency and productivity.