by martieLast Updated : Jul-31-2023
Are you a biotech company struggling with manual payments, poor cash visibility, laborious invoice processing, and matching invoices with purchase orders?
In the fast-paced world of biotech, staying ahead of the curve is important. Although despite this reality, many biotech companies still find themselves experiencing the burden of manual supplier invoice processing, draining both time and financial resources.
This blog aims to take you deeper into biotech AP automation. Let’s explore the advantage of automation systems to help elevate Accounts Payable (AP) at your Biotech company. By automating AP automation, your company can enhance accuracy, reduce human errors, and even save costs in the long run.
Today, biotech companies are experiencing major challenges due to the supplier boom in the industry. As biotech companies continue to expand operations and engage with increasing suppliers, they encounter difficulties in managing many invoices and supplier relationships.
Here are some of the common problems biotech companies are experiencing at present:
At present, finance teams are burdened with adding new vendors to the procurement systems and setting up the payment process. This consumes time and resources and increases the risk of human errors and delays in invoice processing.
Manual processing has a significant impact on the efficiency of biotech companies’ operations. Oftentimes, research delays cause the time-consuming and error-prone nature of managing multiple suppliers and invoices. The lack of automation limits the ability of companies to scale.
Biotech companies find themselves stuck in the laborious tasks of processing supplier payments manually. Aside from consuming valuable time, this also demands meticulous attention to detail, considering the sensitive nature of biotech transactions.
The extensive manual effort required to manage supplier payments drains biotech companies’ time and financial resources. Man-hours can be used for research and innovation but, instead, are used for repetitive administrative tasks.
Did you know reliance on traditional check issuance compounds further problems for biotech companies? Most of the time, delays in supplier payments are caused by manually preparing checks, chasing down multiple signatures, and ensuring timely dispatch.
Manually handling invoices and payments increases the risk of errors such as data entry mistakes or even missed payment deadlines. These errors often damage the supplier relationship and potentially lead to financial loss.
Due to the absence of real-time payment visibility, it becomes challenging for biotech companies to manage cash flow effectively. The lack of visibility hinders financial planning and decision-making, which impacts the company’s overall financial health.
In biotech companies, manual invoice processing poses significant challenges for the AP team. Matching invoices with purchase orders requires meticulous effort, leading to delays and constant back-and-forth with stakeholders for approvals.
As the process is manual, ensuring everyone follows it becomes daunting. Consequently, the risk of paying unapproved invoices increases, adversely affecting the company’s cash flow. Unauthorized payments are the primary issue impacting cash flow, potentially leading to significant financial consequences.
Manual business processes are time-consuming, and getting invoice approvals from stakeholders involves frustrating back-and-forth emails. This leads to delayed approvals and late payments for invoices.
Late payments often incur additional costs, with large vendors charging late payment fees ranging from 1-2%. These fees may be hidden among other charges or finance fees on invoices.
Let’s consider a simple scenario: If you have $500K in monthly payments and 20% of vendors charge late fees at 2%, that amounts to $2,000 per month in extra costs.
Moreover, late payments can strain vendor relationships, with critical vendors potentially ceasing product or service delivery. This could significantly impact your bottom line, affecting your ability to serve customers effectively.
The lack of AP automation software hampers the AP team’s productivity, forcing them to work weekends to close books on time. This leads to burnout and lower team morale, affecting overall efficiency.
Biotech companies often require a dedicated focus on research, development, and other core activities critical to success. The excessive time spent on AP processes diverts valuable resources from these core activities, hindering progress and innovation.
To overcome these challenges, biotech companies must adopt AP automation solutions that streamline payable processes. In the dynamic and fast-paced world of biotech, it is without a doubt that these challenges are becoming inconveniences that directly impact the ability of a biotech company to stay competitive, drive innovation, and bring life-changing products to the market.
Biotech companies must explore solutions like Biotech AP Automation to overcome these hurdles. This technology not only streamlines the AP process but also empowers these firms to allocate more time, effort, and financial resources toward their mission-critical endeavors, propelling them to new heights of success in the ever-evolving biotech landscape. By leveraging AP automation solutions, biotech companies can streamline payable processes, ensure timely payments, improve cash flow, automate invoice capture, approval workflows, and payment processes, and even reduce the risk of human errors.
Having a manual AP Process for your biotech company can be quite costly. Here is what your current manual AP process look like:
Note that biotech automation costs include upfront implementation costs and ongoing maintenance fees. Implementing automation solutions in a biotech company also involves upfront costs, which may vary depending on the company’s size, the complexity of the automated processes, and the chosen automation software.
While there are expenses associated with biotech automation, there are also potential cost savings. Automation reduces the likelihood of human error, thus decreasing the risk of financial discrepancies, which may be costly. This also streamlines the payable processes, reducing the time spent on manual data entry and invoice processing workflows.
Although the cost of biotech automation may be initially higher, the long-term benefits and cost savings outweigh the investments.
It is important for biotech companies to carefully evaluate their specific needs and calculate the potential return on investment as well, before implementing any automation solutions.
Implementing automation for biotech companies comes with unique challenges, especially for organizations that use manual payment processes. Although there are benefits to leveraging Biotech AP Automation, knowing the roadblocks that may come during the implementation process is crucial.
Let’s explore some of the key challenges faced by biotech firms that are interested in venturing into AP automation:
One of the main challenges with integrating the new AP automation system is ensuring seamless compatibility and data synchronization. This can be complex and requires careful planning and coordination between IT teams. That is where systems like ProcureDesh can help with seamless integration.
Data accuracy and migration are hurdles that may arise when implementing biotech AP Automation. The ability to transition from manual, automated processes to automated ones requires migrating a significant amount of data. It is important to prevent automated system errors and avoid serious financial implications.
Introducing a new automation system requires comprehensive training from the AP team and other stakeholders involved in the process. With continuous support and encouragement, employees would be more inclined to adopt.
Coordinating suppliers and aligning their invoice process with the new automation system can be time-consuming. Some suppliers might not be technologically equipped, leading to potential delays in the implementation process.
It is common for biotech companies to deal with complex and specialized workflows that off-the-shelf automation systems may not easily accommodate. Thus, it might be challenging to customize the automation system to cater to unique requirements.
Biotech firms usually handle sensitive data, which includes intellectual property and patient information. Ensuring data security and compliance with industry regulations is important when implementing AP automation to be safe against breaches.
Although AP automation promises long-term cost savings, the initial investment and ongoing maintenance require careful evaluation. Balancing the benefits against the expenses is important to determine the return on investment.
Biotech AP Automation system has two types:
Here are some common features that might be included in these systems. Let’s explore how ProcureDesk uses these features to leverage automation.
Using smart user defaults prevents users from entering the same information repeatedly when creating a purchase request, as the system automatically fills in commonly used fields such as shipping info, department, and cost codes.
Here is an example of how a user default works in ProcureDesk:
Stay worry-free about exceeding your budget with budget tracking. Plus, you don’t need to wait until month-end to check your performance against the budget. Define budgets for departments, locations, and GL accounts easily using budget controls.
You can break down your budgets for different departments. You can even assign respective departments so only they can use the budget.
ProcureDesk checks the budget compliance in real-time to ensure your organization does not go over budget.
Catalogs streamline purchasing, but purchase approvals remain essential. Managers can review requests before purchases with a configurable approval workflow, cutting approval time. Avoid the back-and-forth of email approvals by setting up a smooth purchase order approval process and benefit from automated approvals.
Here is an example of how to set up a workflow with ProcureDesk:
An integrated invoice and purchase order system offer significant advantages.
You won’t need to manually import purchase order info for invoice matching, eliminating tedious tasks. All relevant data is in one place. When the vendor sends the invoice after delivery, systems like ProcureDesk can easily capture it from email.
No need to download and upload invoices to AP automation software. ProcureDesk reads the email, imports the invoice, and automatically extracts important details like date, amount, invoice number, and line-items, reducing manual data entry errors. The AP team saves time as the invoice information is populated automatically.
With email automation, manual invoice entry becomes unnecessary. But you can take it even further with electronic invoicing.
Electronic invoices are sent directly from suppliers to the buyer’s AP automation software, eliminating the need for manual entry.
EDI and cXML are the most common standards for electronic invoicing, widely used by large vendors.
Upon receiving the electronic invoice, the software automatically matches it with the corresponding purchase order and receipt.
Any discrepancies are directed to the appropriate person for review.
Integrated invoicing and purchase order software streamlines the process, as there’s no need to import purchase orders from another system. This leads to a more efficient and faster matching process.
Here is a sample of an invoice electronically created by a supplier:
The primary benefit of integrated invoicing and purchase order software is the automatic matching of invoices with purchase orders, eliminating manual intervention.
With all data in one system, the matching process is highly efficient, avoiding the need for data imports from other systems.
ProcureDesk seamlessly matches vendor invoices with purchase orders and receipts, notifying stakeholders of further action.
The automated 3-way matching streamlines the process by:
Integrated reporting consolidates all spending information into one system.You can easily track open purchase orders, invoices, and outstanding amounts.
This eliminates guesswork and manual reconciliation from multiple systems. For instance, an open order report provides real-time visibility into your available balance.
Here is a sample report from ProcureDesk:
Implementing accounts payable (AP) automation solutions for the biotech industry requires adherence to regulatory requirements and compliance measures. These measures ensure biotech companies maintain compliance while streamlining their AP processes.
Biotech companies are subject to regulations and standards, depending on their specific area of focus.
For example, A company is involved in pharmaceutical research or clinical trials and must follow strict regulations set by organizations like the Food and Drug Administration (FDA) or the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH)
Here are some of the common key regulatory considerations for Biotech AP Automation:
Below are some of the key regulatory considerations for Biotech AP Automation:
Biotech firms handle sensitive data, which includes intellectual property, patient information, and financial records. Compliance with data privacy laws like General Data Protection Regulation (GDPR) in the European Union or the Health Insurance Portability and Accountability Act (HIPAA) in the United States is essential to safeguard the confidentiality and privacy of this data.
Biotech companies must adhere to specific financial reporting standards like Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS). AP automation needs to facilitate accurate financial reporting by these standards.
A lot of countries have specific regulations when it comes to electronic signatures and records. Biotech AP Automation should comply with applicable laws, such as the Electronic Signatures in Global and National Commerce (ESIGN) Act in the U.S. or the eIDAS Regulation in the European Union.
The AP Automation system should maintain a comprehensive audit trail, documenting every transaction and action. It should also adhere to data retention policies to ensure the data is stored and accessible for the required duration per regulatory requirements.
Biotech companies may be subject to AML and KYC regulations to prevent money laundering and verify the identities of their suppliers and vendors. The AP automation system should support these compliance efforts.
The automation system must facilitate accurate and timely tax compliance, including handling tax calculations, reporting, and documentation for various tax authorities.
Some countries have specific regulations for electronic invoices, such as the use of electronic invoicing formats and requirements for electronic signature validity. The automation system must adhere to these requirements and process invoices.
Embracing automation benefits biotech companies, helping them thrive in a competitive landscape. Let’s explore some of the remarkable advantages brought by automation for biotech firms:
Biotech AP Automation can significantly impact the biotech industry in major areas such as drug discovery, manufacturing, and quality control.
Let’s quickly discuss how it impacts each:
In Drug Discovery, AP Automation can help streamline the process of sourcing and acquiring materials and reagents. This allows scientists to focus on their research and development and ensure the company complies with regulations.
This can be done by creating a centralized database of suppliers and their products and by automating the process of placing orders and tracking shipments.
In Manufacturing, AP Automation can help improve efficiency and accuracy in the production process. This leads to shorter production times, lower costs, and higher-quality products. This can be done by automating entering invoice data, matching invoices to purchase orders, and approving payments.
In quality control, AP automation can help ensure the company’s products meet all quality standards. Thus, helping protect the company’s reputation and avoid costly recalls. This can be done by automating the process of testing products, tracking test results, and issuing compliance certificates.
Leveraging automation for biotech companies is key to unlocking several advantages. Here are some of the reasons why biotech companies should leverage automation:
Staying at the forefront of innovation is crucial for biotech companies. Although despite of this reality, many biotech companies still struggle with moving forward with transformative solutions.
As a biotech company, you must begin your journey to embracing cutting-edge automation systems to finally do away from manual supplier payments and make a difference for your biotech firm. Elevate your supplier payment process and embrace your path to success and innovation!
What you should do now
Whenever you’re ready… here are 4 ways we can help you scale your purchasing and Accounts payable process.