Innovations in telehealth and other forms of remote care have dominated the tech focus of many healthcare organizations over the last year. But behind the scenes, business process automation has also been a big area of attention as CFOs look for new ways to reduce costs without impacting patient care. According to a Deloitte 2020 survey, cost reduction was an increased strategic priority for 83% of healthcare CFOs.
One of those cost reduction areas is Accounts Payable (AP). Recent research indicates that AP is the number one back-office digitization priority for businesses overall. While not on the front lines of patient care, AP automation can save valuable time and money while also ensuring prompt payment and good relations with suppliers so critical supplies keep flowing.
Manual AP bogs down processes rack up costs
Unfortunately, many AP departments at healthcare facilities are still using manual methods to process invoices and payments, wasting a lot of time and money. Invoice receipt is often decentralized, arriving in different locations across the organization, making it easy for them to get lost or misplaced. Once they do get to AP, data entry clerks have to manually enter lines and lines of invoice data into the accounting system, a very time-consuming and error-prone process. For one oncology practice that receives 1,000 invoices a month, this manual process took two AP clerks each 5-6 hours every day.
Then invoices are manually sent for approval to different individuals in different locations across the organization. Not only is this slow and inefficient, but it also burdens front-line workers like doctors and nurses trying to focus on patient care.
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AP departments face equally inefficient supplier payment processes too. Checks, which are still popular in healthcare, are costly and time-consuming to prepare and send. Then, due to all the delays outlined above, healthcare organizations often end up missing out on payment discounts or incur late payment penalties.
These manual practices were particularly problematic during the pandemic. AP staff had to go into the office to get invoices and send them via email or by mail to reviewers for approval. Then paper checks had to be prepared and physically sent to executives–in some cases, being left at the CFO’s front door–for signing before being mailed out. The need to physically retrieve and cash checks also created challenges and cash flow issues for suppliers, leading to increased preference for electronic payments.
Automation provides a better way
AP automation solves these problems, providing visibility to each and every invoice, streamlining inputs and approvals, getting suppliers paid on time, and enabling healthcare organizations to embrace a holistic ePayments strategy that allows them to reduce costs, take advantage of discounts, and avoid late penalties. In addition, AP automation also gives financial management access to key data that helps them determine when to pay suppliers to maximize cash flow or benefit from early payment discounts. With this capability, a substance use disorder treatment center was able to get early payment discounts from its pharmaceutical and lab processing suppliers, resulting in sizable annual savings. At another biotech company, the finance team was able to use AP visibility and predictive modeling, to anticipate which invoices had not yet been received, to account for their impact on cash flow.
Electronic payment methods also provide efficiencies both to healthcare providers and their suppliers. Virtual cards, for example, are unique 16-digit numbers created solely for a single-use transaction. Payments can be made from anywhere and they are highly secure for both payer and payee. Users can earn valuable rebates every time they make a payment. The same substance use disorder treatment center used virtual card payments to extend its cash flow by paying suppliers at the very last minute, but still within payment terms. Additionally, these cards provide strong fraud protection since they are authorized for fixed amounts and one-time use only.
Source: Hitconsultant