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).
The broad industry wide transformation that Accounts Payable (“AP”) has experienced over the past 15 years continues with strong momentum as evidenced by the latest 2018 ePayables research data. In this report we identified that 52% of all AP organizations perceive the AP function as either “very” or “exceptionally” valuable to organizational operations. This new majority is significantly higher than the 33% who saw AP the same way just two years ago, and indicates that a new chapter has started for the industry. What this says is that the glass is half full in the world of AP because 48% of organizations in 2018 are still not viewed as ‘very’ or ‘exceptionally’ valuable. So, let’s look at three things that these organizations can do to become more strategic tomorrow.
Strategy Number 1 – Become a Better Collaborator
Our research continues to show that the information that AP processes on a daily basis is highly valuable, not only to people who work within the finance department and within AP, but also to treasury and procurement as well. For procurement, understanding spend information and buying behaviors as well as supplier performance as it relates to invoicing is very valuable and, among other things, can help procurement make strategic assessments in awarding contracts during a sourcing project. On the Treasury side, the amount of money that AP pays out to its suppliers relative to incoming revenues is typically a high percentage, and it is not a cash flow that’s frequently moderated, overseen, or even really considered by many treasury departments. AP’s ability to connect this information to treasury makes them a better collaborator.
Strategy Number 2 – Become a Better Communicator
One of the challenges that many functions have is not only executing well and achieving performance rates, its actually being able to communicate what they’ve done successfully to the larger organization. This means that AP leaders and managers have to do a better job extolling the values and accomplishments that AP brings to the larger organization on a regular basis. So whether that’s processing things more efficiently, reducing the percentage of invoice exceptions that are happening on a monthly or annual basis, becoming the value added partner to your strategic suppliers, etc., AP needs to find ways to communicate this better whether by means of written reports or in their regular interactions with others in the organization as they report out to the larger finance organization.
Strategy Number 3 – Identifying Key Performance Metrics and Improving Upon Them on a Regular Basis
Many AP departments today still struggle with understanding their own performance as it relates to performance and operational metrics. Developing a scorecard of these metrics, tracking them regularly, and then working on a plan to improve upon them on a regular basis is a sure-fire way to impact the bottom-line and bear out that AP is in fact a strategic function.
Conclusion
Perception is reality and our ‘State of ePayables 2018’ research bears this out. While we all know that AP is highly valuable to each and every organization, the fact remains that it needs to do a better job of promoting itself and the work it does to the wider organization. Being viewed as a more strategic function has to begin within AP itself. Once AP starts collaborating, communicating, and tracking their performance better, the rest of the organization will see them for what they really are, a valuable and strategic resource that needs to be leveraged as fully as possible.
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