The accounts payable (AP) function has changed significantly in the past 15 years; more opportunity exists now, in fact, to effect change than ever before, which has allowed many AP teams to become more automated and responsive to the needs of the enterprise. This evolution is critically important if AP is to become a strategic partner to other departments within the enterprise, as well as help improve business relationships with suppliers.
For that matter, automating accounts payable allows for greater efficiency in the process, which can lead to increased visibility for internal and external stakeholders in addition to simplifying compliance with the supplier contracts that procurement has negotiated. All of these changes—efficiency, visibility, and compliance—can result in lower costs overall throughout the entire AP process, something that remains one of the top pressures facing the accounts payable team.
This dovetails into the key trends that Ardent Partners sees causing shifts throughout the accounts payable workflow in the year ahead: collaboration, visibility, agility, and end-to-end processes along with a greater involvement in cash management. More and more enterprises are interested in more and more data shared across the organization in order to drive results; the above trends denote this very clearly, which forces the technology situation in some enterprises to change drastically.
The Wiley Story
Alice Hillary, procurement operations lead at Wiley, explained her experience with an AP automation project at AribaLIVE on April 8, during a co-presentation with Andrew Bartolini, Ardent’s chief research officer and managing partner. Hillary told session attendees that procurement/accounts payable at one time used more than 10 different invoice and payment processing methods; she noted that she could ask different AP staffers the same question and get different answers each time. Wiley had a lack of consistency and control, including lacking clear guidelines around approvals and compliance. Hillary said that, at one time, AP members would walk invoices around from approver to approver—no matter if each approver had responsibility for that specific type of invoice, invoice amount, or not.
What did not help matters was the initiative Wiley had for moving certain functions offshore. Accounts payable was looking to offshore some staff, Hillary said, which included consolidating functions where it made sense. This meant, Hillary said, that they needed an electronic solution as opposed to one that was mostly paper-based, which would have made the offshoring process untenable.
To make this happen, Hillary noted that Wiley set some goals, such as streamlining approvals to avoid AP carrying invoices from approver to approver, automating data validation to ensure consistent general ledger coding, and reducing payment cycle times through making use of escalation. Wiley looked at this as a global solution, Hillary said, because they eventually wanted to roll out the program to the entire organization.
After a lengthy process, where Hillary said they experienced significant pushback from line-of-business approvers who felt holding onto the legacy process was a form of job security, Wiley was able to build a new approval flow based on estimated spend as well as a new vendor request e-form through their installation of Ariba’s solution. Today, Hillary said that 80% of invoices are approved the same day, the company has a much improved cash flow, and suppliers are more satisfied than ever before.
The automation project also gave accounts payable improved credibility at Wiley. Hillary told attendees that the line of business would sometimes hold onto invoices or even outright lose them and blame AP for rush payments occurring. The new data visibility that AP gained from the automation project allowed AP to come back and say that, in fact, it was the line of business’s fault. In Hillary’s view, this is good news all around.
Final Thoughts
After many years of remaining a staunchly paper-based process, the accounts payable workflow is beginning to finally get noticed as an avenue for business process automation. Results like those Wiley and others experience—shortened approval timelines, increased levels of visibility, etc.—can be achieved in most cases through a well-implemented AP automation project. Moreover, it is quickly becoming apparent that any accounts payable team that ignores the push toward automation will end up moving against industry trends, which has as a consequence dissatisfied suppliers and poor relationships with internal stakeholders as well as the executive ranks. As the Wiley case study shows, AP automation can provide too many organizational benefits to ignore.
Check out these related articles for more:
AP’s Top Trends in 2015: The Increasing Automation of Accounts Payable
AP’s Top Trends for 2015: A Stronger AP/Procurement Partnership
AP’s Top Trends for 2015: A Greater Involvement in Working Capital Optimization
AP’s Top Trends for 2015: The Changing Skillsets of Accounts Payable
