The Accounts Payable (“AP”) function sits in a prime position to become a central hub of value, insights, and intelligence for the average enterprise. AP and finance professionals that either own or comprise the AP function should always be looking ahead and understanding ways to provide more business value. As Ardent Partners’ research shows, more and more businesses are turning to automation and collaboration as the foundational components of transformation projects to improve the performance of the function.
Reaching New Strategic Business Territory Through Automation
If AP is going to move to the next level of performance within the enterprise, the function must develop the capabilities to get them there. Technology is a core component of the forward-thinking AP department. Automation helps create scalable, repeatable, and more-efficient processes, which drives down costs and speeds up the entire invoice and payment processes. Automation can also enable better back-end reporting that can be used to improve financial results.
Over the years, AP technology has become more seamless, more accessible, and in the age of global commerce, more critical to the success of global business networks and supply chains that unify the world’s enterprises.
Working with Procurement to Improve Performance
Within an enterprise, the level of AP and procurement alignment can vary dramatically. But the organizations that effectively use their procure-to-pay (“P2P”) operations gain a competitive advantage over their rivals. Organizations without a seamless P2P process typically see an erosion of value as they move across the entire process. It is important for AP and finance professionals to have good visibility into other areas, like procurement, to get a broader view of the process. A P2P process that is well-aligned from an organizational standpoint and tightly-linked and automated from a process standpoint will present a series of opportunities that procurement and finance can jointly pursue to the benefit of the entire enterprise. Many of these opportunities are made possible through better visibility into spend, invoices, and processes across the P2P spectrum. The potential benefits of a successfully combined P2P process include:
- An ability to optimize working capital across the P2P process by developing proactive payment strategies and pursuing dynamic discounting opportunities
- Improved supplier relationships aided by an ability to pay suppliers on time (or early) and accurately as well as better data to improve inquiry response times
- Better identification of sourcing opportunities through more accurate spend data from invoices (and payments)
- Improved contract compliance and reduction of maverick spend by linking invoices and payments to contracts
- Better success with supplier enablement by leveraging a ‘one-time’ on-boarding process for procurement and AP systems
Solutions
Efficiency is the foundation of any next-level AP function. But in order to attain strategic value within the organization, AP departments must first start producing tactical value. Leveraging technology for straight-through processing is a great goal for any AP department’s transformation project. Straight-through processing exemplifies a highly efficient AP operation and ties together strong technology implementation with a mature business process that functions based on well-defined rules.
While straight-through processing is a great first step, the goal should be to adopt a complete P2P solution that links both the AP and procurement systems. It is the most complete way to automate the entire process and it also allows for greater visibility. A shared interface results in faster processes and more accessible information across the entire workflow. Sharing information allows both AP and procurement to make more informed decisions. This data allows for richer reporting, and as a result, can help the business create greater efficiencies, better compliance, and improved financial results.
Final Thoughts
While the advances in AP automation continue to expand, there are still major challenges for AP groups seeking a way to provide more business value to their organization. As more enterprises adopt and leverage ePayables, there are plenty of opportunities for AP and finance to make a concerted effort to drive their department to the next level of performance.
RELATED ARTICLES
Blockchain for Accounts Payable – An Introduction
AP Automation: How to Maximize the Value of Accounts Payable
3 Ways Accounts Payable and Treasury Can Collaborate
