Ardent Partners recently completed its annual market research report focused on accounts payable – ePayables 2013: AP’s New Dawn. The report is based on survey data collected from approximately 245 enterprises and one of the key themes of the report is the evolving role of AP and that is the focus of today’s article. The full report includes detailed market research around the entire AP process (receive, process and pay) and provides KPI’s that compare Best-in-Class AP operations with all others.
For far too long, the AP function has been under utilized within the enterprise and considered to be a largely administrative function. However, Ardent research has found that the view of AP is evolving from administrator to collaborator. Because of AP’s unique place within the enterprise, it is well positioned to collaborate with and support other functions such as treasury and procurement. AP’s place is unique in that the function is the main gateway through cash flows out of the enterprise but it is also a key part of the procure-to-pay (P2P) process which manages enterprise spend and relationships with suppliers. An AP function that is operating at high levels of efficiency is not only cost effective but is also able to create the much needed visibility into invoice and payment data that is valuable to procurement and treasury departments.
From the procurement perspective, P2P has traditionally been about establishing and maintaining processes that reduce operational costs, deliver savings, and provide accurate data. Procurement is focused on driving more spend under management, negotiating and capturing the savings from the sourcing process, and managing supplier risk and performance. The second “P,” or what happens after the goods and services have been delivered, has generally been an after-thought for the average procurement team – viewed as a different process that is managed by a completely different team. This is not the case anymore; in fact, according to 61% of AP professionals, AP and procurement are currently working towards certain shared goals.
From the treasury perspective, an efficient AP department that can provide much-needed visibility into payables and access to accurate information on current financial liabilities or opportunities to capture early payment discounts is tremendously valuable in executing working capital optimization strategies. According to Ardent’s research, 45% of AP professionals agree that AP is instrumental in executing Treasury’s working capital optimization strategies. This is a perfect example of how AP can add significant value to treasury and to working capital management in general. Additionally, 51% agree that automating AP processes would significantly benefit the treasury group. An AP operation that constantly deals with high exception rates, numerous discrepancies and delays in invoice approval, erroneous payments and a general lack of visibility does a disservice to the treasury function and the enterprise at large.
For insights and market research on AP, be sure to watch for out latest report ePayables 2013: AP’s New Dawn
