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Abstract Digital Wave

Why Accounts Payable (AP) is Adopting a Customer-Centric Mindset

Accounts Payable (AP) and customer service aren’t typically considered to go hand-in-hand. However, over recent years, the increasing importance of strong supplier relationships along with the demand for better financial visibility have led to AP functions taking a more customer-centric approach. Digitisation is helping to drive this change, with the AP automation market growing at an annual growth rate of 10%.

In this article, we’ll discover why improving customer service in AP is crucial to long-term business success, and how digitisation and automation can help Accounts Payable teams improve relationships with suppliers and vendors. Read on to find out more.

Why AP functions are becoming more customer-centric

Accounts Payable - once a back-office function - hasn’t historically been responsible for customer service. However, the remit of AP has become wider than just processing invoices behind the scenes. Today, AP teams are involved in almost every aspect of business operations - from managing relationships with suppliers to sharing data with senior leadership to help drive financial decisions and inform business strategy.

As a result of this broader scope of responsibility, AP today requires a customer-centric mindset to ensure the satisfaction of both internal and external parties. 

Let’s take a simple example - the primary function of an Accounts Payable team is to manage the bills owed by a company to its suppliers and vendors. However, 20% of AP  leaders say that paying suppliers on time, while staff work from home, is a major challenge. 

Processing invoices accurately and on time is crucial to maintaining the happiness of suppliers. Meanwhile, enhanced collaboration and communication can strengthen the relationship with suppliers and vendors to ensure they last long-term.

All of this is why - in recent years - there has been a shift towards making AP more customer-centric, which involves improving the overall experience for suppliers, vendors and employees.

How AP automation and digitisation is improving customer experience

Digitisation of AP processes and the investment in modern technology such as Artificial Intelligence (AI) and Machine Learning (ML) has allowed businesses to streamline invoicing processes to enhance customer service. Here are a few ways digitisation is revolutionising AP for businesses and customers:

  • Faster processing times - Using technology and automation, the processing time for invoices and payments can be significantly reduced. Automation allows most AP departments to process their invoices in about 3-5 days, which is more than 50% time savings compared to the few weeks it can take with a manual process. This means that suppliers and vendors receive their payments faster, leading to a better customer experience.
  • Improved accuracy - Digitisation eliminates the need for manual data entry, which can be error-prone. With automated processes, the risk of errors is reduced, leading to more accurate payments and fewer disputes with suppliers.
  • Enhanced visibility - With AI and ML, suppliers and vendors can access real-time information on their payments, including when they will be paid and any outstanding invoices. This transparency improves trust and reduces the likelihood of disputes or misunderstandings.
  • Reduced costs - By eliminating manual processes, digitisation can reduce the cost of managing accounts payable functions. These cost savings can be passed on to suppliers and vendors, leading to a more competitive pricing model and a better customer experience.
  • Self-service portals - Some companies are using AI to create self-service portals for their suppliers and vendors, which allow them to manage accounts, submit invoices, and track payments. This can help to reduce the burden on AP staff and improve the overall experience for suppliers and vendors.

Other ways AP functions are enhancing their customer focus

  • Communication and collaboration efforts - AP teams are increasingly working more closely with their suppliers and vendors to build stronger relationships and improve communication. This can help to identify and resolve issues more quickly and build trust between the two parties.
  • Flexible payment options - More suppliers today are offering flexible payment options to their customers such as early payment discounts or the ability to choose between different payment methods. By making faster payments, AP teams can help the wider business capitalise on these rewards to improve cash flow and strengthen supplier relationships.
  • By becoming an intelligence hub - Accounts Payable is home to a huge amount of financial data, including where money is being spent and to who. AP teams are now working collectively with the wider business to share data which can in turn help inform business and budgeting decisions. This is helping internal stakeholders and senior leadership see AP as a strategic partner within the business.

The changing power shift between buyers and suppliers

Another driving factor behind the more customer-centric approach to AP is the recent power shift between buyers and suppliers. Historically, buyers always held the upper hand in this relationship and had more power over payment terms. However, globalisation, new technologies, and changing consumer habits have evened out the previously one-sided relationship.

Today, buyers no longer view their relationship with suppliers as transactional. Instead, they put a greater emphasis on collaboration and working with suppliers to achieve long-term goals. Therefore, keeping suppliers happy is crucial to ensuring ongoing business. New technology and digitalisation is accelerating this trend, enabling more transparency and open communication. 

Supply Chain Financing (SCF) is also helping businesses enhance the level of service they can provide to their suppliers while increasing profits.  The global supply chain finance market was valued at $6 billion in 2021 and is projected to reach $13.4 billion by 2031. SCF enables buyers to pay invoices early via third-party funding. For suppliers, this reduces days sales outstanding (DSO), supports healthy balance sheets, and improves their credit rating.

The benefits of making your AP function more customer-centric

By improving customer service within Accounts Payable, it’s not only clients who will benefit, but businesses will see a positive difference internally too. From better financial management to increased operational efficiency, organisations of all sizes have a lot to gain from a customer-centric AP approach:

  • Save time - By providing prompt responses to supplier inquiries, businesses can reduce the time and effort spent on resolving payment disputes and other issues, allowing your team to focus on other critical tasks.
  • Better financial visibility - Accurately tracking and analysing supplier spend and business activity allows organisations to gain insight into potential process improvements, identify areas for cost savings, and make informed decisions to improve financial management.
  • Improved supplier relationships - As mentioned above, keeping suppliers happy is crucial to long-term success. Better AP processes can lead to increased trust, better communication, and a more reliable supply of goods and services.
  • Avoid late fees - Effective customer service can help businesses to avoid payment delays, which can lead to better cash flow management and reduce the risk of late fees or other penalties.
  • More informed decision making - Digitising AP functions enables useful data on financials to be shared across the organisation, helping inform critical business decisions.
  • Improved reputation - By ensuring AP functions provide excellent customer service, businesses can improve their reputation amongst suppliers and stakeholders. This can help to attract new customers and suppliers through positive feedback and word-of-mouth.

Digitise AP and improve customer service with Tungsten Network

The first step to achieving a customer-centric AP function is through digitisation. By automating workflows, sharing real-time data with third-parties, and increasing the speed of accuracy of invoices, suppliers and customers will know they can rely on your business. Plus, you’ll be improving efficiency for your team - saving both time and money.

Tungsten Network can help you achieve true invoice automation. We can support your e-invoicing journey from end to end, including customised system integration, white-glove supplier onboarding and dynamic compliance services.

Tungsten’s tools and data can help AP and P2P leaders deliver insights and become strategic partners to the business, while optimised processing, status updates and Supply Chain Finance options keep vendors happy.