It is with great pleasure that Ardent Partners announces the publication of its latest state of accounts payable (AP) research report—“ePayables 2015: Higher Ground.” Like the annual reports that came before it, the 2015 ePayables report focuses on the state of the AP function as well as assessing how AP teams leverage ePayables solutions to improve business results and offering up Best-in-Class metrics that allow readers to benchmark their own operations against top performers. (The report is available for download here, here, here, here, and here.)
AP’s Top 3 Priorities in 2015
The accounts payable function has, in the past 15 years, undergone a dramatic shift in the level of strategic importance to the organization. To be fair, AP has always been a valuable department—without someone performing this function, supplier invoices would not be paid—but the AP team has not historically held much attention for executive leadership. The manual, inefficient invoice approval process worked well enough, and was a classic case of “if it’s not broken, don’t fix it” in many organizations.
This changed in the wake of the 2008/2009 financial crisis, as many enterprises realized they could ill afford to continue bleeding money through the multitude of inefficient workflows spread throughout the organization. As a result, the focus in AP switched to reducing costs, which is a laudable goal, and one that many enterprises focused on for quite some time. In 2014, reducing costs was far and away the top priority for AP teams, with a full 63% of respondents to that survey noting it as their top area of focus.
Times have changed a scant year later. In 2015, reducing costs is no longer the primary focus of most AP teams; in recognition of AP’s new position as a strategic value-add, instead of a transactional function, the top priority in the 2015 ePayables study population was actually to improve AP reporting and analytics (40% of respondents). This is a huge change in mindset, and reflects the new perspective that many in the executive suite have of internal departments like AP that have labored mostly in the back office until now.
To be fair, cost reduction remains a high priority—37% of respondents selected it as a top area of focus, securing it the number two spot—but a 41% reduction in importance over the course of a year is impressive. Attitudes have changed significantly in just 12 months, which makes clear that more enterprises see the potential value living in the AP workflow. This is why it stands to reason that reporting and analytics took the top spot in 2015; without detailed reporting, it is unlikely to unlock any of that potential value.
Rounding out the top three priorities in the 2015 ePayables respondent pool is a desire to improve collaboration with procurement (31% in 2015 vs. 27% in 2014). Collaborating with procurement, and really with other internal stakeholders in general, can make AP’s work that much easier; a tight relationship with procurement gives AP a window into contracted payment terms, additional data to help with invoice approval, and even the ability to influence negotiations by sharing supplier performance information as it relates to invoices.
Final Thoughts
The accounts payable team has undergone a seismic shift in importance since the early 2000s, but particularly so since the financial crisis of 2008/2009. The top three priorities in 2015 reflect this change, as cost reduction is no longer the primary focus of most AP teams, which is indicative that more organizations view the function now as a possible strategic partner instead of just where invoices go for approval. This priority shift thus reflects a new reality in AP, and one that could possibly mean the only way for the function to go is up.
Check out these related articles for more:
ePayables 2015: Moving From the Tactical to the Strategic
ePayables 2015: Reaching for “Higher Ground” in Accounts Payable
The ePayables 2015: Higher Ground Report is Now Available
