The typical AP function faces a bevy of challenges ranging from slow processing speeds to too many invoice exceptions and an overall pressure to drive efficiencies across its operation. However, as Ardent Partners research indicates, AP leaders have prioritized a series of strategies to break down these large barriers.
Technology Gaps a Leading AP Priority
Over the years, many groups that automated some (or all) of the invoice- and payment-processing operations experienced positive results, including process efficiencies, cost savings, better cash management, and faster invoice and payment approval times. Others have translated automation into improved working capital management, spend management, supplier relationships, and compliance, as well as reduced fraud and less time on tactical activities. Over the last decade, these benefits shifted from “nice-to-have” to “must-have.” And yet, many AP departments still have large technology gaps. Deploying AP automation (43%), improving reporting (41%), and enabling more suppliers to submit electronic invoices (40%) are top priorities for AP leaders this year.
Automation Critical to Data Capture
Only after AP processes have been automated and the function is able to focus on handling exceptions (and not handling every invoice), can it begin to move up the value chain and focus on the more strategic aspects of the operation, including data gathering, data analysis, and dissemination of data/intelligence. Ardent Partners believes that AP’s ability to leverage its data to provide actionable information to key stakeholders can be critical to enterprise operations and results. Capturing this data is only possible with automation tools.
Collaboration a Characteristic of a Modern AP Operation
Meanwhile, the drive to improve overall reporting and analytics in the months ahead is a clear signal of the function’s drive to become a “hub” of intelligence for its partners like procurement and treasury. Collaboration should be viewed as a fundamental strategy that will keep AP more relevant and engaged in support of overall business objectives. It is, therefore, no surprise that the improvement of collaboration and communication with its functional partner, procurement, is a top priority (31%) for AP teams this year. Partnership is a key characteristic of the modern AP operation.
Intelligence Hub Through Reporting and Analytics
Visibility is, for any team or organization, paramount to success and fundamental to mastery. Self-knowledge is the first and main ingredient to improvement. Visibility into key information enables awareness and intelligence and improves key decision-making and executive planning. AP’s prioritization of reporting and analytics (41%) shows that the professionals within this unit understand there is significant opportunity in capturing the streams of data created across and within the AP function. Better reporting and analytical capabilities will help define AP as an important player in business intelligence efforts. AP is already well-positioned to serve as a strategic intelligence hub. By enhancing reporting and analytics, this hub concept can help usher in a new age for the AP function.
Through comprehensive analysis of invoice data, accounts payable not only gains insights into spending patterns and vendor relationships but also contributes valuable information to strategic decision-making processes across the organization. This holistic understanding of financial and process flows empowers finance leaders to optimize resource allocation, identify cost-saving opportunities, and drive overall efficiency and profitability. AP can prove more of its value if, through real-time intelligence, it can proactively identify trends, mitigate risks, and enhance forecasting accuracy.
Time to Focus on Supplier eInvoicing
ePayables systems are among the few that require third parties (in this case, suppliers) to actively use them if returns are to be maximized. Buyer-centric solutions and approaches to supplier enablement may ultimately be the reason that such a high percentage of suppliers, including many small- to mid-sized suppliers, decide to “pass” on the idea of eInvoicing. This is changing, but it needs to change faster, particularly with the rise in global eInvoicing mandates. This year 40% of all AP leaders have prioritized getting more suppliers to submit electronic invoices, a number similar to 2023 (38%). It is time to focus more on this issue.
