In the ever-evolving world of manufacturing, staying competitive is not only about optimizing your production lines but also streamlining your financial operations. Your Accounts Payable (AP) process plays a crucial role in maintaining efficiency and cost-effectiveness. But how does your AP process stack up against others in the manufacturing industry? Let's explore the top challenges facing mid-market manufacturing enterprises as we head into 2024, backed by insightful statistics.
The Manufacturing Landscape
Before diving into the comparison, it's important to understand the dynamics of the manufacturing industry. Mid-market manufacturers face unique challenges due to their size, scope, and the complexities of their supply chains. From raw material procurement to managing an array of suppliers, these organizations often operate in highly competitive environments.
The State of AP in Manufacturing
Accounts Payable, often regarded as a back-office function, is a vital part of manufacturing operations. Invoices, supplier payments, and financial accuracy directly impact the bottom line. Here's how your AP process compares to others in the industry:
1. Invoice Exceptions (51%)
Stat: A staggering 51% of mid-market manufacturers report invoice exceptions as a top challenge.
Invoice exceptions can disrupt your cash flow, increase processing times, and lead to costly errors. If your AP process is plagued by a high number of exceptions, it's a sign that there's room for improvement. Advanced AP automation solutions can significantly reduce exceptions through accurate data capture and validation.
2. Invoice Payment Approvals Taking Too Long (48%)
Stat: Almost half, 48%, of manufacturing enterprises struggle with lengthy invoice payment approval processes.
Delayed approval cycles not only frustrate suppliers but can also lead to missed early payment discounts and strained relationships. If your AP department is struggling with slow approvals, it's time to consider implementing automation tools that enable faster, rule-based approval workflows.
3. High Invoice Processing Costs (34%)
Stat: One-third, 34%, of mid-market manufacturers are concerned about high invoice processing costs.
Manufacturers often have high invoice volumes, making manual processing expensive and error-prone. Implementing AP automation can lead to significant cost savings by reducing manual labor and improving accuracy. Plus, it enhances your ability to capture early payment discounts.
4. Working Remotely (26%)
Stat: A quarter of manufacturers, 26%, are challenged by the need to adapt to remote work environments.
The COVID-19 pandemic accelerated the shift to remote work, and many manufacturing AP departments had to quickly adapt to this change. If your AP process was affected by remote work challenges, it's a clear signal to invest in technology that supports a distributed workforce seamlessly.
Benchmarking Your AP Process
Now that you have insights into the challenges facing manufacturing enterprises as we head into 2024, it's time to benchmark your AP process against industry standards. Here are some key questions to consider:
Are invoice exceptions a common issue in your AP department? If so, it's time to explore automation solutions that offer intelligent data capture and validation.
Is your approval process causing delays? Streamlining your approval workflows using automation can significantly reduce processing times.
Do you have a handle on your invoice processing costs? AP automation can help you achieve cost savings by reducing the need for manual labor.
Can your AP team work effectively in a remote or hybrid work environment? If not, consider technology that enables remote collaboration and access to AP processes.
The Path to a More Efficient AP Process
Comparing your AP process to industry standards is the first step toward improvement. In the competitive world of manufacturing, efficiency and cost-effectiveness are critical. To address these challenges and stay ahead, it's imperative to embrace automation and modernize your AP operations. If you want to see if now is the right time for you and your team to take advantage of AP Automation - reach out to us.