September 17, 2024
Healthcare executives face constant pressure to provide quality care to patients, streamline registration experiences, and comply with data privacy regulations – all while being tasked with increasing operational efficiencies and decreasing costs. In our current environment, you can add the long-term impact of a global pandemic, wide-ranging supply chain issues and rising costs. It's not easy out there.
These pressures land heavily on accounts payable (AP) departments struggling to streamline, automate and secure their function in the face of all of these pain points. In fact, cost reduction initiatives are the number one priority of the healthcare CFOs we recently surveyed.
How can those demands be met while keeping AP secure and suppliers happy, especially when our survey found that 71% of the healthcare finance leaders ranked increasing the efficiency of supplier payment transactions as important?
Research report: 2024 CFO Insights Report | Healthcare
AP makes sense as a focus area for any organization because most healthcare organizations have expansive supplier networks. Making on-time payments to vendors relies on cash flow that can be impacted by factors well outside the organization’s control, from federal reimbursement, patient payments, and regulatory issues. With these factors complicating the AP process and over a quarter of organizations still making most of their payments through manual processes with paper checks, it’s no wonder CFOs find themselves struggling to rein in the costs of making payments.
The right payment and invoice processing solutions make it possible for healthcare organizations to transform AP into a streamlined, cost-effective function, just what the doctor ordered for an expensive and difficult business environment. Here are the five biggest benefits to doing so at your organization.
The manual handling of checks and invoices requires dedicated labor hours, data entry, routing for approval and document storage. That’s not even mentioning the reams of paper, expensive printing supplies and postage necessary in a paper-based payables model.
Full adoption of AP automation and electronic payments eliminates the need for extensive staff hours spent on processing, which is why Ardent Partners found best-in-class AP groups average 81% less time to process an invoice.
The right AP solutions give healthcare organizations the flexibility to pay suppliers in their preferred format, whether that virtual card, ACH, or even check. Some of these payment methods aid in healthcare organizations’ ability to take advantage of early-pay discounts and reduce the number of late payments, and even onboard suppliers for you to further save your AP staff time.
It is important to choose an electronic payment solution that can provide suppliers with rich remittance detail, which makes cash application easier for their accounts receivable (AR) departments. That builds better relationships.
A manual-based AP process doesn’t just encompass paper payment transactions, it also includes paper tracking documents and storage files – all of which makes it difficult and time-consuming to follow an audit trail or determine real-time status of a payment.
The right solution will provide healthcare organizations with improved reporting, auditing, and visibility to cash, which facilitates better decision-making across supplier relationships and spend management. This helps elevate the AP department as a strategic partner to the larger organization, and frees up your team to focus on tackling the big picture supply chain, inflation and cost issues that plague the business.
Processing checks leaves organizations vulnerable to payment fraud. Automating payments can help reduce the incidence of fraud by 10x, and automated invoice processing can red flag issues before you have to deal with them.
A sophisticated AP transformation partner will have built-in security monitoring technology to identify threats and stop unauthorized transfers of funds. Your partner should also verify and maintain sensitive bank information of suppliers and securely store the data in a location with multiple fail-safes in place. Above all, they should protect your payments from being intercepted, and be able to offer expertise to help your team avoid sophisticated fraud attempts.
Lastly, there’s the opportunity to earn cash back on AP spend depending on the payment structure in place. This can increase overall positive ROI and has the potential to transform the AP department from a cost center into a profit center.
When seeking an integrated payables provider, it’s important for healthcare organizations to find a solution that offers multiple payment types and integrates into existing back office systems and bank accounts. Having a robust rebate program is a significant bonus.
With these features in place, transitioning to an automated AP solution can help healthcare organizations increase efficiency, reduce costs, and mitigate fraud risk while also monetizing AP spend. Automating AP also elevates the strategic relevance of the function and aligns it to the top priorities of healthcare organizations, including an interrupted supply chain for uninterrupted patient care.
Connect with a banking partner who understands the complexities of healthcare to see how AP Optimizer automates core accounts payable processes, leading to better outcomes for healthcare organizations. Our experts can help you unravel the challenges of today and build for what’s next.
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