In today's fast-paced global market, UK manufacturing companies grapple with a number of challenges. Beyond the complexities of post-Brexit trade and the rising costs of raw materials, one of the most significant drains on efficiency and profitability is rooted in their accounts payable (AP) processes. Manual AP workflows, or even basic automated systems, consume vast amounts of time, proving to be inefficient and prone to errors. In an uncertain landscape where companies are keen to streamline operational processes and cut costs, AP represents a realm where substantial savings and improvements can be achieved through the adoption of AI-driven automation.
The Challenge of Volume and Complexity
The Issue:
Manufacturing companies frequently work with thousands of suppliers, each sending a large number of invoices with varying formats, currencies, and terms. This sheer volume and variability of invoices translates to huge administrative costs when using manual workflows.
Even basic automation systems often fail to account for the true complexities involved in the manufacturing industry. It is commonplace for a single supplier invoice to encompass multiple purchase orders (POs), especially with bulk orders or phased deliveries, and purchase orders and invoices may not always match 100%, perhaps one showing a company’s full name and the other an abbreviated form. Simple, rules-based automated AP systems often struggle with processing these edge cases, forcing companies to fall back on time-consuming manual methods.
The Solution:
Kloo’s AI-enabled AP software is able to automate workflows even when there is complexity involved, using optical character recognition to automatically input data from an invoice, then using contextual reasoning to match invoices to purchase orders, with a high degree of accuracy and no human intervention.
There are huge savings to be made for companies processing large numbers of invoices. According to Goldman Sachs report, a mid-size enterprise incurs approximately £13 manually processing a single invoice, adding up to eye-watering sums for a manufacturing company is processing tens of thousands of invoices per year.
Dynamic Pricing and Production: Seamless Adaptability
The Issue:
Manufacturers often negotiate prices based on various factors, and ensuring the invoiced amount matches the negotiated rate is pivotal. Furthermore, seasonal demand results in cyclical influxes of invoices. Transparency and good documentation are key for keeping track of such a changeable environment, manual AP systems often fail to provide adequate financial oversight, as it takes time to manually input and match invoices, failing to keep up with the agility of the industry. This lack of up-to-date, accurate information in accounts payable runs the risk of overpayments, late payments and strained supplier relations.
The Solution:
Implement smart AP automation which can provide much-needed degree of transparency, creating a well-documented audit trail for each transaction, from purchase order to proof of payment, all traceable in one platform. This not only enables better financial management but also empowers management to make informed decisions on the fly, affording your business the flexibility to adapt swiftly.
Expenditure Reporting: Clarity and Savings
The Issue:
In the landscape of manufacturing operations, accurate financial reporting stands as a cornerstone for sound decision-making and future projections. A vital component of this reporting is the apt categorisation of expenditures into Capital Expenditure (CapEx) and Operating Expenditure (OpEx). When businesses rely on manual systems or rudimentary automation, not only does this categorisation risk becoming imprecise, but the entire financial recording process can become clouded by inefficiencies and delayed or incorrect data entry.
The Solution:
Kloo offers unlimited custom fields to ensure precise categorisation that ensure expenditures are consistently and correctly recorded so decision-makers have clear and detailed insights into spend and cashflow.
Key Takeaways:
In the continuously evolving landscape that UK manufacturing companies navigate daily, modernising the AP process emerges as a pivotal strategy. The enhanced agility, precision, and efficiency that AP automation software brings can be a game-changer. By reducing errors and streamlining processes, companies not only safeguard their bottom line but carve a pathway to sustained growth and competitiveness in a demanding market.
Learn more about how Kloo delivers unprecedented efficiency in your Accounts Payable.
