Congratulations! If you’ve read the links below, you have successfully completed CPO Rising’s ePayables Study Hall course, an immersion program focused on AP Automation and Transformation.
For those of you who missed the course material, here’s a cheat-sheet:
Why should someone in procurement care about the accounts payable department and what technologies it uses?
I believe that the source-to-settle process should be managed as a single holistic – one that is supported by a single or several solutions and one that can cut across one or more departments – therefore, understanding the tail end of the process is important. In recent years, there has been increasing momentum within the marketplace for AP transformation – nothing as broad-based as what has been happening in procurement; but something big is brewing in AP.
As more enterprises gain awareness regarding the opportunities that exist within their AP departments, more groups will invest resources to improve AP and ultimately automate the function by deploying ePayables solutions. Those enterprises that go down the AP automation path, they should consider the tools and processes that are used in procurement and work to develop a more comprehensive P2P approach.
Here are a few of the major challenges or obstacles that have impeded significant advances in the AP marketplace.
- Lack of supplier invoicing standards
- Lack of invoice processing standards
- Lack of a standard technology approach
- Lack of an executive presence with AP
The interesting thing about most of these opportunities is that they don’t require any unusual or extraordinary amount of effort, investment, or leadership.
- Improve invoice processing efficiencies
- Improve customer service
- Improve the visibility into line item and supplier detail
- Improve visibility into invoice payment terms
- Improve the ability to close the period’s books in an accurate and timely manner to gain better alignment and engagement with accounting
- Opportunity to engage the CFO
In our view, the AP process has in three major phases: Phase 1 – Receive (how the enterprise accepts supplier invoices and expense reports); Phase 2 – Process (how the enterprise validates and approves the invoices or expense reports); and Phase 3 – Pay (how the enterprise schedules and makes payments). Understanding (or defining, as the case will be for many groups) the activities that comprise each step is an important part of understanding the ePayables system requirements and in improving overall processes.
Building a Business Case for ePayables – Key Metrics:
An accounts payable department seeking to improve its performance has several key areas upon which to focus: efficiency, effectiveness, and accuracy. An investment in accounts payable automation solutions referred to on these pages as ePayables can help the average AP group drive performance improvement across each of these areas. But in making the business case, one matters much more than the others – average cost per invoice [Sidebar: Those looking for a “graduate-level” resources for an advanced ePayables degree should investigate our AP Automation Business Case Template, which is part of the ePayables SMARTSet)
Other metrics there are several underlying “accuracy” metrics that are solid drivers of improving efficiency and lowering the average cost per invoice – exceptions being the big one on the processing side and payment errors (duplicate payments or over-payments typically) on the payment side. Beyond the process efficiency gains as captured by the average cost per invoice, the other primary areas with quantifiable metrics that can help drive a business case are related to cash management. Don’t forget that once you understand your current state metrics, the one other area that needs to be discussed is the process of making assumptions on the key value drivers for the return on an investment in ePayables.
And there you have it, our ePayables Study Hall course – Class Dismissed!
But before you go, be sure to grab your reading material for the next chapter in your AP development: the 2016-2017 ePayables Technology and Innovation Outlook, available for download here (registration required).