[Editor’s Note: Ardent Partners recently published our annual AP-themed report, The State of ePayables 2018: The Future of AP is Now. Today’s article is part of an on-going series focused on the report’s key findings. If you would like to get the full report, it is available for download here (registration required).]
One of the most fascinating things about Ardent Partner’s ‘State of ePayables’ research is that it enables us to clearly identify what differentiates ‘Best-in-Class’ Accounts Payable (“AP”) organizations from all others. This in turn enables us to share key insights and learnings with our community of AP and Finance professionals for them to use in measuring how they currently stack up against the top performers. We are also able to provide an accurate description of the technologies and processes these organizations are using to separate themselves from others. In ‘The State of ePayables 2018: The Future of AP is Now’ research report, we define ‘Best-in-Class’ performance as the 20% of enterprises with the lowest average invoice processing costs and shortest average invoice process cycle times.
Not surprisingly, our research again this year shows that technology is the linchpin to AP’s ultimate success. There is indisputable evidence that successful technology adoption is the key to an enterprise achieving top results. Best-in-Class organizations are not just relying on a specific set of tools, top- performing enterprises leverage both traditional AP automation solutions as well as platforms that optimize more strategic activity within the function.
Best-in-Class Insights: The Technology Advantage
In every area of this years’ ePayables research, the adoption of technology is higher by the top performing organizations. Let’s take a look at four areas where the Best-in-Class have truly separated themselves from the rest. The first area is in eInvoicing where the adoption rate for top AP departments is almost double (71% vs. 38%) that of all others. eInvoicing technology greatly reduces the amount of paper and manual processing by the AP department because the invoices that the suppliers submit are native digital documents that require no conversion and can be directly ingested into an AP system without the need for human intervention. This saves significant time and cost and is an important step to being able to take advantage of other cost-saving opportunities in the marketplace, like supply chain financing.
A second technology with a major adoption contrast is self-service supplier portals which the Best-in-Class use 2.5x (61% vs. 24%) more frequently. These “windows to the world,” enable global suppliers to transact and communicate with their customers across the full P2P process. For buying organizations, the value from deploying a portal can be tremendous. Portals are a cloud-based solution that enable self-service registration and on-boarding. Most portals serve as a platform that provides visibility and enables communication and transactions between trading partners. Portals also provide significant financial benefits to enterprise users by reducing time, money, and resources previously required to perform supplier enablement and information management tasks.
Much of the strategic value in the Best-in-Class AP unit is derived from this group’s reliance on both P2P automation (52% vs. 24%) and business networks (48% vs. 28%). P2P solutions streamline processes, like purchasing, invoice processing, and payment, and also enable businesses to execute more consistent procurement processes, enable more holistic transactions (and support operations), and increase visibility into enterprise spend.
Business or payment networks can play a vital role in the AP function. These networks have become a “boundary-less” means for organizations to not only automate core processes related to both procurement and finance, but also enhance collaboration with key suppliers and align AP with the preferred payment methods of key vendors. Business networks can boost the efficiency of the function, accelerate supplier enablement, and drive strategic value through supplier collaboration, improved payment management, increased compliance, easier cross-border payments, and better visibility into spend.
Conclusion
While many things go into making an AP department a top performer, one thing is perfectly clear, technology adoption is a key and integral component to achieving success. Top-performing enterprises have taken their AP operations to the next level by leveraging technology to streamline the AP process, make it more efficient, and enable more strategic activities to be carried out. As I have written about many times before, as AP continues its pursuit of organizational relevance and impact, the strategies and approaches utilized by top-performing organizations serve as a valuable guide to what can be accomplished as well as what is needed to get there.
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