Retailers need to be quick, agile businesses. They need to respond to new product trends at breakneck speed, ensuring that they can meet consumer demands at all times, while delivering an excellent service and a range of ‘value ads’ such as free returns. And, with so much competition in the market, retailers must keep processes lean in order to deliver to their customers and stay ahead of their competitors.
As such retailers place a heavy emphasis on improving front-end processes that impact the customer experience. However, while these improvements are critical to their success, retailers should also pay attention to back-end processes, which can often be neglected.
Retailers face unique challenges in Accounts Payable (AP) and processes can often be outdated. Manual data entry, matching and processing is time consuming and error prone. In this blog we will take a look at some of the issues that retailers face, and how these issues can be minimised with AP automation solutions.
Retailers and distributors face a number of specific challenges in managing direct spend. When stock inventories are as large as a fully stocked supermarket, for example, product lists are vast and varied. Products break down to minute detail as variations in flavour, colour and size must be recorded. This means that matching invoices to items manually is painstakingly complex and extremely time consuming.
Spending on non-merchandise goods and services is another area that can be tricky for retailers to manage. These include vital areas such as utilities, legal fees and advertising costs, but this area is often managed using spreadsheets or ERP systems. In reality, both options require a great deal of manual checking and data entry, leading to a lack of visibility, errors, overspend and poor supplier relations.
Retailers commonly deal with large numbers of suppliers. When AP is managed manually it is difficult to get clear visibility when managing invoices. This can lead to invoices being missed. Suppliers themselves can also lack visibility over whether an invoice has been received or handled, often sending duplicates to ensure quick payment. When processed manually, it can be difficult for AP staff to check whether the paperwork they are handling is a duplicate. This means that well-meaning AP staff can make duplicate payments. When this happens, further time must be spent rectifying the issue.
Retailers with customers and suppliers abroad face further challenges. Suppliers are increasingly split across numerous international locations as consumers demand low prices and high quality goods. Managing rapid fluctuations in exchange rates can be particularly time consuming, and can lead to over or underpayment. Dealing with multiple languages and invoicing requirements present further issues when relying on manual AP processes, and can result in issues ranging from processing errors to non-compliance.
Despite these challenges, automating AP processes can offer dramatic improvements, allowing the finance department to focus on strategic tasks. AP automation technology can provide greater control along with significantly reduced processing time and costs. Invoices can be matched automatically to purchase orders, meaning that these only need to be checked if an error or deviation is identified. This means minimising errors and making payments quickly and efficiently, despite the challenges retail brings.
Palette’s AP automation solutions can alleviate each of these challenges, enabling retailers to spend time on what matters most – the customer.