In the bustling industry of retail and commerce, a sector known for its agility and adaptability, it is still common to observe outdated manual procedures in AP processes. These older methodologies often hinder crucial financial operations. However, automated solutions, particularly those harnessing AI, provide promising avenues to rejuvenate these traditionally laborious processes, propelling retail companies into a modern age of operational efficiency.
The Issue: The sheer volume and seasonality of invoices can be a real challenge for retail companies, especially those in retail. Peak seasons can lead to a massive influx of invoices, which cannot be processed with sufficient speed using manual or semi-automated methodologies. The inability to process large numbers of invoices at high speed can cause backlogs, delays, late payment penalties, and strained supplier relationships. Inefficient manual, or semi-automated methods are also costly, in fact, according to a Goldman Sachs report, a mid-size enterprise incurs approximately £13 manually processing a single invoice. Multiply this by the volume of invoices across various suppliers and projects, and the costs become staggering. Any AP process used in B2C enterprises must be able to effectively and efficiently process large and fluctuating numbers of invoices, in a timely and cost-effective manner.
The Solution: Kloo’s AI-enabled AP solution can automatically process large numbers of invoices by automatically ‘reading’ and inputting the invoices using OCR (Optical Character Recognition) and AI, making it fast and effortless to manage hundreds of suppliers and ensure smooth operations, even during peak times.
For retail brands, collaborations with influencers or partnerships with other brands are often a cornerstone of market engagement.
Each of these unique partnerships often comes with its own set of invoicing protocols, payment schedules, and sometimes even currencies. Some influencers, for instance, may require an upfront payment, a mid-campaign payment, and a final bonus depending on performance metrics. The financial departments are thus faced with a large number of unique invoices that can take longer than usual to process using manual methods. The AP process in most companies is streamlined for handling typical supplier invoices. When we introduce variables like irregular payment terms, royalties, and even success-dependent bonus payments, as often seen in influencer campaigns, the traditional AP process can be thrown into disarray. Mistakes such as incorrect amounts or late payments can strain partnerships and may lead to reputation damage.
Kloo’s AI-enabled platform uses context-based reasoning to process invoices, allowing automation to handle atypical invoices that in the past would require costly manual processing. The system also provide a transparent audit trail from purchase order to proof of payment, allowing companies to easily handle disputes and complications that can arise with complex payment terms. By giving due attention to the idiosyncrasies that come with branding and marketing collaborations, retail comapnies can not only preserve but also nourish these valuable relationships, thereby cementing their position in increasingly competitive marketplaces.
Maintaining robust relationships with suppliers is pivotal in retail. Timely payments and accurate invoicing are foundational to this relationship.
These relationships are often placed under unnecessary strain due to inefficiencies in the AP process, notably delays in payments or discrepancies in invoiced amounts, potentially causing delivery delays. A strained relationship can lead to preferential treatment being offered to competitors, delayed shipments, or even a severed partnership. In particular, businesses with quick-moving inventory, like fast fashion or perishable goods, demand a highly efficient payment process, suppliers requiring timely reimbursement to ensure consistent stock replenishment. Payment delays and disruptions can, in turn, cascade down to the consumer level, affecting availability and, consequently, reputation.
AI-powered automation allows companies to move from receiving an invoice to payment as quickly as possible, without the delays associated with manual processing. Invoices are autonomously and accurately uploaded and automatically assigned to the requisite approval and payment workflow.
Focusing on supplier relationship management within the AP process isn't merely a 'nice-to-have' but a strategic imperative. In a successful supplier relationship being consistent and timely in payments not only builds trust but also provides a strong position from which to negotiate favourable terms such as bulk discounts, extended payment periods, or exclusive partnerships, ultimately enhancing the business's competitive edge.
In the dynamic retail sector, the bar for operational excellence is perpetually rising. In 2024, modern, AI-enabled automated AP systems are an operational necessity for retail companies going forward, to not only keep pace but also set the gold standard for efficiency, precision, and forward-thinking strategy.
Learn more about how Kloo delivers unprecedented efficiency for your AP function.