The current issues of the day, such as the evolution of networks and continued impact of mobility and other types of innovation, dominate long-term business planning. After all, no true organizational leader wants to ignore what’s happening outside of their company, especially if modern advancements are to play a vital role in the very future of the enterprise. Lost in this mix, however, is the importance of more traditional functions that have long served as a foundation to the standard operations of a typical business.
Accounts payable (AP) certainly fits this description, long a silent (and ignored) facilitator of invoice-processing and minor cash management. In fact, Ardent Partners research has discovered that only 33% of businesses today view their AP operation as either “exceptionally” or “very” valuable. Organizations often emphasize tactical execution at the expense of creating strategic value. These tactically-focused AP teams do themselves and their enterprises a disservice, however, since leading AP departments have shown that transforming AP is a wholly worthwhile venture that can deliver both strategic and bottom line value. As more and more organizations seek to expand the value of AP from tactical to strategic, a problem that stands in the way is the role of legacy, archaic processes that promote manual-intensive capabilities for managing invoices and invoice-related programs.
Archaic Processes
No matter how “current” an organization may seem on the surface in regards to technology or innovation, there are almost certainly some back-office processes or functions that are run in the same fashion that they have for years. Too often, the archaic nature of traditional AP processes is what repeatedly sinks long-term efficiency efforts; in an age when most successful businesses seek to drive value from every facet of the greater organization, an AP function mired in paper-laden, manual processes will derail cost reduction and cash management efforts. One main issue lies with the weak perception of the AP function. Departments that are not historically viewed as strategic within the greater mindset of enterprise operations are often far back in the line for technology upgrades and talent enhancements (or, not even in line at all). As businesses begin to pursue superior financial visibility, as well as the tactical benefits of improved AP processes, the legacy approach to accounts payable will surely evolve to support more critical notions, particularly invoice and cash visibility and intelligence.
Automation of Front-end AP Systems
As finance and AP professionals attempt to tackle the critical, problem at hand (archaic, manual processes), improvement on the “front end” of the AP arena (invoice receipt and invoice-processing phases) has long been a boon for those enterprises that have decided to invest in their AP departments. If enterprises that are seeking to transform their AP functions can hone in on the improvement of key AP processes through automation, it will become a catalyst to enhancing or improving the crucial components of the function. These improvements include:
- Automating all processes inherent in receiving invoices, collecting information from invoices, and processing them without human intervention
- Reducing the number of invoice exceptions
- Decreasing invoice approval times, which allows the AP department to keep up with the influx of invoices
Final Thoughts
With automation as a key cog in the AP machine, businesses can expect to experience the elimination of legacy processes (that were once dependent on manual- and labor-intensive procedures) and the ultimate enhancement of invoice and financial visibility, which will, ultimately, boost the true strategic value of the accounts payable function. The time has come for businesses to realize the true value of the AP function. By removing it from its once back-office standing and placing strategic emphasis on the value and intelligence it can deliver in the future, enterprises can transform their AP departments.
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