At the moment, Ardent Partner’s research team is completing the annual AP-focused market research report which will be widely available shortly – ePayables 2013: AP’s New Dawn. This report will focus on the evolving role of AP from a back-office function to one that adds- value and supports other functions such as Treasury and Procurement and will also allow AP groups to compare KPIs to Best-in-Class companies.
As I was digging through the data (over 250 companies) it quickly became apparent that certain enterprises are currently operating at a very high level of efficiency, proving the benefits of investing in and transforming AP. It is also apparent that for a large portion of AP groups, there is still lot of room for improvement. With that, I thought it might be interesting to share the profile of one of these Best-in-Class companies. Below you’ll see a summarized profile of an AP operation and its performance.
The company is a multi-billion dollar Pharmaceutical & Life Sciences Company that operates several shared service centers around the world. From a finance perspective these centers are responsible for AP, AR and other financial activities (e.g., general ledger, closing, etc) for the 100 plus subsidiaries that are located all over the world. The centers also provide IT, HR and procurement support and pride themselves on being in the top tier in terms of costs and efficiency.
Here are some of the key performance indicators that give this AP operation a Best-in-Class status:
*All Data from ePayables 2013: AP’s New Dawn report by Ardent Partners
By any measure, the above are impressive results for a global organization with multiple businesses and dealing with hundreds of thousands of suppliers all over the world. Of course, it took a lot of work to get to where they are now and strong support from internal stakeholders to develop a world class shared service center that highly leverages technology.
Technologies used currently for AP:
- Document imaging/scanning
- Automated data capture and extraction (e.g., OCR)
- Evaluated Receipt Settlement (ERS) – converts a receipt document into an invoice with pricing and payment terms based on a pre-existing contract
- Automated routing and approval workflow
- eInvoicing solution
- Supplier Network (B2B network or payment network)
Even at this level of performance there are areas that need work. For this shared service operation, improving the linkage throughout procure-to-pay process is next on the agenda and so is improving the level of collaboration between AP and Treasury.
Striving to reach this level of performance should be a goal for AP groups whether in a shared service environment or not.
