Editor’s Note: Ardent Partners recently published our annual AP-themed report, The State of ePayables 2017: The Convergence of Cash, Suppliers, and Intelligence. Today’s article is part of a new four-part series focused on how the role of the Accounts Payable professional has changed over the last 15 years. If you would like to get the full report, it is available for download here (registration required).
Historically viewed as a back-office function, executives have started to take a hard look at Accounts Payable (AP) operations and realized that it holds untapped cost savings and process efficiencies. As more enterprises identify the inefficiencies of the manual, paper-based AP process, many are looking into AP automation solutions as a way to streamline invoicing and payment approval workflows. Automated solutions not only help to speed up the process, but they also help reduce costs and provide more timely and accurate financial data and reporting that can be utilized. Increased levels of process automation along with more robust data and visibility into the overall AP process mean AP teams are now in a better position for success than ever before and are poised to transform into a more strategic department.
Beyond transactional efficiency, AP can serve as a centralized hub that provides insights and knowledge to help key decision-makers within the organization – namely the Chief Financial Officer (CFO) and other C-level executives. This new opportunity will help move the modern AP professional beyond the basics of their function. In fact the very future of the AP function hinges on its ability to transform itself into a more strategic unit, and serve as a convergence point within the organization. There are three major areas that are directly linked to AP processes. These areas within the business are the most accessible and prominent ones that AP should pursue in order to reach this level within the organization. The third and final major area that we are discussing today is business intelligence.
Technology has long been an essential element in the success of the modern business. Businesses that choose to ignore the paths of innovation too often get left behind, while those that embrace automation and next-generation solutions position themselves in an increasingly dynamic and fast-paced business world. It is important for the modern AP leader to remember this when trying to take their unit to the next level of performance. Core automation is essential to the immediate success of the unit, but true innovation will push it to even higher levels. Core AP automation (including invoice-processing and ePayment automation) is the most critical step in bringing technology into the accounts payable department. Once the initial gains from automation are achieved, AP must look to incorporate innovation and technological advancements as additional value drivers.
Through Ardent’s research, the Best-in-Class accounts payable department is significantly more likely to be built on a foundation of solutions, platforms, and technologies that address the multiple facets of the ePayables Framework. But the strategic transformation of AP is frequently a multi-stage process that changes based upon multiple factors, including stakeholder requirements, organizational maturity, and project alignment with the overall enterprise goals. AP must move onto other extended areas of automation. Best-in-Class organizations are three times as likely to utilize agile reporting dashboards to support greater AP intelligence efforts. Electronically paying for invoices allows AP departments to better identify ways in which they can manage their cash and structure their payments. From a cash management perspective, AP can get smarter on when to make those payments.
There is a deep well of untapped financial and business data that is warehoused within accounts payable. If AP teams are able to extract invoice and operational data, they can turn it into intelligence that can be utilized throughout the entire organization. The use of Big Data is now a real and effective strategy that can drive knowledge sharing for executive planning and key decision-making. Taking a data-driven approach is one of the best ways to accelerate P2P performance and drive more business value. This approach must be founded on the principles of data science, and can be broadened via integrated and collaborative intelligence. As more responsibility falls under the AP operation, the function has the opportunity broaden its influence and make a larger impact that will ensure that AP moves from that traditional “back-office” function and into a more valued and strategic part of the organization.
Download the new report here, and learn more about how business intelligence has put AP in a position to become a more value-added department within the wider organization.