A couple of weeks ago, we announced the availability of our annual eBook, “Ardent Partners’ AP Metrics that Matter in 2019” (click to download) that I co-authored with Andrew Bartolini. This eBook presents a comprehensive, industry-wide view into what is happening in the world of Accounts Payable (“AP”) today, by drawing on the experience, performance, and perspective of AP and finance executives. The AP Metrics that Matter is a compilation of the industry’s best and most widely-used accounts payable benchmarks captured from the primary research, interviews, and surveys we undertake each year. Over the coming weeks I am going to highlight the key data points from this eBook.
This week I thought I would start with the top challenges plaguing AP. Not surprisingly, tactical issues still dominate this list and continually hold AP back from realizing its true potential. The two most reported challenges were ‘invoice exceptions’ and ‘invoice approval times’. 41% of AP departments reported invoice exceptions being a challenge. Exceptions create severe bottlenecks in the AP process that necessitate human intervention in order to investigate and track down missing or inaccurate data, and update with accurate information so that an invoice can be approved successfully and sent off ready for payment.
Next on the top challenges reported was lengthy approval times, with 39% of AP departments naming this as a major obstacle. One of the major causes of lengthy approval times is the aforementioned exception handling. Exceptions create severe bottlenecks in the overall AP process, adding to the time required to get invoices approved. However, exception handling is only one of a litany of things negatively affecting invoice approval times. Paper invoices are frequently a major culprit. Paper invoices first need to be printed and mailed by the supplying organization. Then there is the time required for the invoices to arrive at your organization. These invoices need to be opened and routed around for approval or entered into your AP or ERP system so workflow can be applied. At every step of the way paper invoices add to the time required to get invoices approved.
Approval times are impacted by lost and misplaced invoices. And then there are the ‘invoice approvers’ in every organization who are habitually poor at approving invoices in a timely manner. The list of reasons for delays goes on and on. Why does it matter so much? Simple, long approval times matter because they result in lost opportunities. Lost discounts, missed chances to improve working capital management, and negatively impacted relationships with suppliers, to name a few.
Final Thoughts
Invoice exceptions and lengthy approval times are but two of the challenges plaguing AP departments. Both issues can greatly diminish overall productivity and inhibit AP staff from attacking more strategic activities. It is key for AP leaders to recognize these challenges first before improvements can be made. Getting an understanding of the challenges holding back your AP team can better help you work to get a solution. If you are interested in learning more about the other challenges facing AP, as well as a wealth of other interesting research findings on the modern AP department, please download the full AP Metrics That Matter report by clicking below.
DOWNLOAD THE AP METRICS THAT MATTER
