Accounts payable excellence is founded on the critical, day-to-day components of its operations, processes, and overall program management. As AP departments seek to advance their position and improve performance, it needs to take certain steps in order to enable this transformation. The following strategies will support greater success as the enterprise ensures continuity, builds resilience, and positions itself for success not only today but in the months and years ahead when local and national economies recover and begin to grow again. The recommendations that follow have been designed to map a linear path back to normalcy, however, as we all know, there are no guarantees that the near-term direction of an AP department, its enterprise, and/or its industry will be straight and steady. AP departments can, nonetheless, draw confidence from knowing they are taking the steps necessary to automate their function and prepare for whatever the future holds
Across each of the three phases provided, it is important to focus on developing a proactive and agile operation. As we have all seen over the past year, and even prior to that, markets have become more unpredictable and are experiencing faster shifts than ever before. In order for Accounts Payable to keep up with the necessary transformations (both strategic and tactical) to thrive in this ever changing and more challenging world, enterprises must develop and lean on agile operations. The ability to respond in real-time to dynamic business challenges is what sets enterprises up to compete aggressively and succeed in an ever-changing marketplace, and AP must actively contribute. Everything from menial and tactical processes to the infusion of intelligence and knowledge into key decision-making should be executed with agility in mind. Accounts payable leaders must stay focused and work to make the function more collaborative, communicative, and agile.
Benjamin Franklin once said “If you fail to plan, you are planning to fail”. As we head into 2021, it is imperative that AP leaders develop a plan for the year ahead. If 2020 taught us anything, it is to expect the unexpected and make sure you have plans and technology in place to handle unforeseen developments. Below are recommendations to keep in mind as you develop, or review if you have already created one, a business plan for AP. The suggestions were developed with continuity, resilience, and growth, in mind. What follows is not intended to be all encompassing as you develop your plan but rather a list of key areas to consider.
- The adage of moving away from paper and enacting a digital transformation could not be more applicable today. With the pandemic, businesses experienced first-hand what happens when manual-based processes drive operations and are severely impacted (in this case, by social distancing and the closure of office spaces). Those AP departments awash in paper should use the need to better manage vendor payments as a catalyst to invest in ePayables technology. These solutions’ core benefits, such as reduced costs, shortened approval cycle times, improved visibility, and increased control, are particularly valuable in today’s disruptive climate. Certainly, funding for new projects may be a challenge for many, but when the opportunity presents itself, AP leaders must be ready to develop a business case and embrace digital transformation.
- Understand and react to changes in business and supplier payment strategies. “Unprecedented” has been a popular word during the challenging times of the past year. Unprecedented is how this global crisis unfolded and how it affected most businesses and people. Accounts payable leaders must become agile tacticians ready to react dynamically to major shifts in the market and economy and/or directions from above in their organizations.
- Align AP operations with the CFO and their team to ensure liquidity. The link between AP and overall cash management has never been more appreciated. The financial and business knowledge that flows in and out of the AP group (i.e., cash flow, liabilities, organizational spend, supplier satisfaction, etc.) is valuable to CFOs, treasurers, business unit leaders, and their teams. In a time when liquidity and cash management trump any other objective, it is crucial that AP ensures that it can provide intelligence around cash management in a timely and accurate way and that it also have the ability to incorporate real-time directions as to how it executes its B2B payments.
- Expand all cash management tactics and strategies. Cash is the lifeblood of any business and it has become more important than at any other time in recent years. Businesses that have been ravaged by the economic fallout of the pandemic must ensure that their cash reserves and access to credit can get them through tough times. By the nature of its processes, AP plays a pivotal role in cash management. Its ability to provide visibility into overall invoice- and payment-processing, as well as the planned timing of payments, can be vitally important to CFOs and treasurers who may need to slow the flow of payments and/ or better regulate the cadence of key payment activities to ensure that the other cash demands of the enterprise can be met.
- Maintain and build organizational expertise. AP leaders should take a high-level look at their staff and understand current gaps in knowledge or expertise, and make necessary adjustments to ensure that the AP function remains (or becomes) highly-productive and highly-relevant. Based on current staff (and capabilities), the AP leadership team, in concert with finance leaders, should build a long-term vision of how it wants its team structured from a talent perspective. What future skills will be needed to take the AP unit into the future? Which roles will be obsolete? Which should be redeveloped to account for dynamic shifts in the technology and business markets? As the AP function continues to evolve, it will be important to have a staff whose skillsets encapsulate the changes occurring outside of the organization.
- Invest in and develop an agile AP workforce. Ardent’s contingent workforce management and Future of Work research often refers to talent as a company’s top competitive differentiator. The workforce of today, owing much of its skillsets to non-employee and “agile” talent, can be a dynamic force in responding to real-time business challenges. AP units that invest in and develop curated pools of talent will be the ones that can weather the relative storms to come.
Next week we will look at more important areas to consider as you develop your plans for the year ahead.
