It’s no secret that the pandemic upended the life sciences industry. As COVID-19 began spreading across the world, pharma and biotechs big and small suddenly faced a slew of unprecedented challenges.
Not only did these organizations need to procure additional personal protective equipment (PPE) and other resources to keep mission-critical operations humming along, but they also needed to keep their own supply chains running smoothly as they worked to develop new drugs and vaccines in addition to the lifesaving drugs they were already manufacturing.
In these high-stakes scenarios, any kind of delay in payments or procurement could literally mean the difference between life and death.
On top of these challenges, pharmaceutical companies had to rapidly transition to remote work. To ensure that they were able to pay their suppliers and keep their operations running along smoothly, many pharma companies brought the power of automation to their accounts payable (AP) and procure-to-pay (P2P) processes — thereby putting themselves in a position to thrive both during the pandemic and in a post-pandemic world.
That said, a number of pharma companies are still relying on manual, paper-based AP processes to approve and pay invoices. Not only does this approach lend itself to errors, but it also burns up resources, delays invoice processing and approval, hurts profitability and damages supplier relationships. Beyond that, as many businesses discovered the hard way, it’s a lot more difficult to process and pay invoices when they’re being sent to an empty office as AP teams are working from home.
With all this in mind, let’s take a look at some of the ways pharma companies can leverage the power of AP/P2P automation to reduce costs and deliver more value to suppliers, investors, and patients alike.
Eliminate invoice exceptions
Nobody likes dealing with invoice exceptions. But they’re inevitable when AP teams still process invoices arriving as paper or scanned PDFs.
Invoice exceptions no longer need to be the cost of doing business, yet many companies still tolerate this old problem. For example, one recent study found that 62% of accountants agree that invoice exceptions are the biggest challenge they face in their day-to-day work.
By investing in AP/P2P automation, pharma and biotech companies can overcome the challenges caused by invoice exceptions. Obviously, there is a lot of manual labor required to resolve each exception. At the same time, it also slows invoice approval and triggers potential credit holds that may materialize if a supplier is not paid in a timely manner.
Instead of resolving invoice exceptions through arduous email and phone processes, companies can automate and eliminate invoice exceptions altogether with an intelligent AP automation platform.
For those rare occasions where straight-through processing cannot be achieved, invoice resolution can be automated for both PO and non-PO invoices. AP teams can rest comfortably knowing that transactions are flowing end to end, efficiently and accurately, without manual intervention.
Reinvest time in other areas
Did you know that as much as 84% of an AP team’s time is spent on processing invoices by hand?
Let’s face it: In today’s digital age, that is simply not acceptable — especially considering that technology exists that can take care of the bulk of those tasks for them. By investing in AP and P2P automation, it’s possible for AP teams to achieve 100 percent straight-through processing, or at least somewhere close to it, and reclaim enormous chunks of time along the way.
And that might even be an understatement. Instead of wasting their days dealing with tasks that could be automated by technology, AP teams are free to focus on the bigger picture: helping the organization increase profitability by spending their time on higher-value activities.
Improve employee engagement and reduce turnover
Employees today place a tremendous amount of importance on having a job that gives them greater meaning in the office. In fact, according to a recent Harvard Business Review report, 90% of workers would even forego lifetime earnings in exchange for having a job that makes them feel as though they are adding value every day.
Does processing invoices manually day in and day out sound like the most exciting way to spend one’s time?
By freeing employees from having to tackle menial tasks every day — tasks that can literally be taken care of by artificial intelligence, machine learning or other innovative technologies — you are helping them find more satisfaction in their work and enabling them to invest their energy in more value-adding activities.
As a result, employees are happier and more engaged at work, which helps contribute to a more productive and happier company culture. At the same time, it also increases the chances your employees will stick around for the long haul.
Depending on the size of your pharma or biotech company, this increase in employee retention can have a massive impact on your bottom line. To illustrate, a recent Gallup study found that a 100-person organization that pays employees an average of $50,000 a year could rack up turnover costs that add up to $2.6 million per year.
So, in addition to AP and P2P automation helping drive efficiency across your AP function and free your AP team to focus on the most important matters, you will also benefit by avoiding the hefty expenses that come with having to source, interview, hire and train new workers.
Maximize early payment discounts
Like businesses in other industries, pharma and biotech companies need cash on hand to keep supply chains running, support innovation, bring new products to market and cover operating expenses — including hefty advertising costs and massive R&D costs.
Using AP and P2P automation, pharma companies gain access to robust analytics they can use to improve cash flow and optimize profitability. Instead of making decisions based on gut instinct, they can use data to figure out the best way forward.
On one hand, they can automatically take advantage of every available early payment discount to maximize profit margins. On the other hand, they can extend cash flow as needed, making sure they settle their accounts on the exact date payment is due.
This way, they get the best of both worlds. Not only are they able to keep their suppliers happy and make sure they are paid at the opportune times, but they’re also able to keep more cash freed up which can then be used in other areas of operations.
Build stronger relationships with supply chain partners
One of the major lessons pharma companies learned in the wake of the pandemic is exactly how fragile supply chains can be.
If an organization isn’t able to pay partners in a timely manner, the business can’t expect those partners to consistently fill orders. After all, pretty much everyone ran into a number of logistical challenges in 2020.
Put yourself in your suppliers’ shoes. In an unprecedented business landscape, would you rather do business with someone who pays you on time or someone who pays you when they feel like it or when they find some “extra” money on a tight budget?
We all know the answer to that question.
The best AP and P2P automation platforms enable biotech and pharma companies to establish direct digital connections with the suppliers they count on to keep their business operational. Since there is no cost to the supplier, and they continue to use their existing invoice process, suppliers with an upgraded digital connection can have on-demand access to relevant invoice information — such as when they can expect payment. All they need to do is check a portal to see the status of their invoices.
Not only does this give suppliers the peace of mind that comes with knowing that payment is on the way, but it also frees the AP team from having to answer any number of where’s-my-money questions — and dealing with the associated frustration. By offering this kind of next-level experience to suppliers, you establish your brand as a leader, and your reputation improves, which could make it easier to make solid deals in the future.
What’s more, by improving the supplier experience, businesses also increase the chances that they will continue working with these partners. As an added bonus, companies save resources that would otherwise be spent searching for replacement vendors.
The time is now
If your AP team is still dealing with invoices manually, it is time to adopt a solution designed for a more efficient digital world. It’s that simple.
By doing so, not only will you be able to optimize cash flow and deliver much-needed efficiency to your AP function, but you’ll also be able to accelerate R&D and innovation — making it that much easier to bring new life-saving products to market faster.
What’s not to like?