Over the last couple of weeks we’ve been discussing topics such as creating an intelligent Accounts Payable (“AP”) operation and turning data into value. Transforming AP from a transactional department into a more strategic, value-adding business function requires a change of mindset when it comes to the management of data. Modern AP teams need to prioritize data management with a focus on extracting intelligence to improve performance and make smarter decisions. Accounts Payable teams need to collaborate across the enterprise to ensure that what they are doing aligns with the greater mission of the enterprise. They need to ask smart questions of stakeholders and of themselves – questions like:
- Should we pay suppliers early, on-time, or late?
- Are we compliant with local, federal, and foreign tax rules and regulations?
- Do we have the controls in place to help minimize and prevent fraud?
- Are we set up to handle foreign payments electronically?
- Are we helping to improve supplier satisfaction when dealing with us?
- Are we making the process easier or harder for internal stakeholders?
- Are we an easy organization to work with?
- Have we prioritized the capture and extraction of data?
- Do we have the technical analytics to view and analyze the data, and do we possess the capabilities to use the information to impact decision-making?
If intelligent leadership is critical to an AP team’s success, intelligence is equally important at the organizational level. Accounts Payable leaders know that they must develop and expand the organization’s intellectual capacity and invest in ways to fully leverage it across the entire scope of operations. But while intelligence can be a great asset, if it is not applied or not applied correctly, its value is considerably lessened. The same thing can be said of an organization’s resources, efforts, and focus. Intelligent AP teams need to look outside the box to consider the broader impact of the capital flowing through their department to make sure they optimize cash to their advantage.
All of this requires developing a plan for AP that prioritizes the management of data, aka information. Yes, I am advocating that AP develops a formal plan that can be leveraged as a tool for guidance, progress, and ultimately success of the initiative. This plan should be reviewed and updated at a minimum on an annual basis. Planning and thought needs to go into who needs the data, where is it going to be housed, how is it going to be accessed and by whom, does it need to be normalized, what reporting and analytic tools will be used, how the information will be disseminated to those who need it, how do we measure the value of the information being provided, and much more.
This plan should be shared with other departments outside of AP as they are the customers of the AP function and should be allowed to provide input and feedback as to the data they want and need to do their jobs better. This plan and the results should also be shared with senior management such as CFOs, controllers, VPs of Finance, etc. They need to know that AP is thinking and acting more strategically and providing real, value adding services to the greater organization. Obviously, prioritizing data management and moving AP to a more strategic function is predicated on first optimizing and automating the transactional tasks that AP performs. If you don’t already have a plan in place, there is no time like the present to begin formulating one and starting to put it into place.
RELATED RESEARCH:
Download the State of ePayables 2019: Driving Value in the Age of Intelligence Report
Monday First Thing: Developing an “Intelligent” AP Operation
Monday First Thing: Converting Data into Value in Accounts Payable
The State of ePayables 2019: Intelligence in Action
