MBIE* is seeking to introduce a maximum payment term of 20 days: how to be prepared
*Ministry of Business, Innovation and Employment (MBIE).
At Ocerra, we work closely with accountants and monitor NZ legislation to ensure we offer an up-to-date AP automation solution. These days, everything changes very quickly, and the MBIE is seeking to introduce maximum payment terms of 20 days. Without a doubt, it will be a fair outcome for many small businesses; maintaining positive cash flow is crucial for any business success.
Moreover, with the current dismal situation due to Covid 19, it is essential for small businesses survival. Thriving businesses and essential services can make or break it for them. Ultimately, being able to pay on time is a win-win situation for both parties. One can provide a sustainable supply and another build-in consistency in their business processes.
On the other side, 20 days payment terms will require changing procure to pay processes (P2P) and stretching the businesses limited resources. By speaking with medium to large companies, we identified some common patterns and solutions they are implementing to mitigate risks and improve P2P operations.
How to be prepared: Paying bills on time
Paying bills on time is a challenge when companies are using people for manual data entry, along with bottlenecks associated with the paper-based invoice approval process. Often, late payments are the result of outdated Accounts Payable (AP) tools and processes.
Here what other companies are doing to prevent late payments and solve some of their AP and P2P needs:
Hiring temp staff
When companies are experiencing high demand, they start adding people to their AP department. There are many platforms that you can use to hire temp AP staff, e.g. Seek, Trade Me, LinkedIn or Upwork. Contract workers can ease the situation in the short run.
Outsourcing invoice processing
Some global companies are outsourcing invoice data entry overseas. It also can be an option for smaller businesses, but you should be very careful from a security point of view. If you decide to pick this strategy, we would highly recommend working with a trusted supplier.
Automating invoice data entry
Invoice scanning and data capture solutions are a great way to add efficiency. By replacing manual data entry with an automated solution, you will have more time to ensure on-time payments to your suppliers.
More and more companies are implementing AP automation and data capture solutions to not only eliminate manual data entry but also streamline the approval process and set-up real-time reporting. Either way, this what we do at Ocerra and are happy to help.
Overall improvement of the P2P
Getting rid of the legacy systems
New suppliers need to be set-up quickly in your system. Your AP software should import your Purchase Orders and Suppliers automatically. If one of your systems does not have APIs or Online Access, it’s time to retire it.
Preventing fraud by using up to date technology
Most legacy systems don’t have API’s to integrate with other modern software tools. Unfortunately, some see it as an opportunity to forge invoices. Software tools that offer an API allow you to integrate with multiple systems like:
Accounting / Finance – Xero, MyOb Account Right, MyOb Advanced, Microsoft Dynamics 365 or SAP Cloud
Stock Management – SimPro, Dear Systems or NetSuite
Quoting and CRM, e.g. Salesforce, Tradetech or Hubspot
It makes it almost impossible to tamper invoice information.
Cash flow forecasting
When your organisation demand drops or spikes, it’s best to see it using an online tool. Many organisations we’ve talked to have already implemented dashboards using: Power BI, Tableau or Sharperlight. Following this approach, companies can track their expenses in real-time and make crucial decisions faster.
A final note
To organise P2P in a more efficient, effortless and secure way, make sure that the all the system you are planning to use have database, OData or API interfaces. Either adding an invoice scanning solution or real-time data insights, it will make your work easier by freeing time and showing your expertise.
Feel free to drop us a line or comment below if you have any questions.
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