Last week I discussed the importance of converting data into value in Accounts Payable (“AP”). This week, I want to focus on how to go about creating an ‘intelligent’ AP operation. The first thing to keep in mind is developing an intelligent AP operation is a marathon – not a sprint. Accounts Payable leaders and their teams need to have the motivation, stamina, and long-term vision to go the distance. Along the way, there are numerous places and ways in which they can stray off course. Successful leaders keep their teams on track by continually assessing progress and correcting course as needed. These leading teams are well-equipped and strive for continual performance improvement. High-performing teams tend to be agile and nimble, allowing the enterprise to take advantage of efficiency and visibility gains, make more-informed decisions faster, and be more responsive to market opportunities. The more value an AP team delivers, the easier it will be to win support from enterprise stakeholders to continue to invest in an intelligent AP function. It is important to remember that the value AP is delivering must be regularly communicated to the enterprise.
While intelligence is critical, a precise measure of AP intelligence is less important than the performance it generates. In point of fact, as a department (and the entire profession) matures, the definition of AP intelligence becomes a moving target; and it becomes relative to nearly all stakeholders in the Receive, Process, and Pay spectrum. After all, being “intelligent” means something slightly different to different functions and stakeholder groups within the enterprise.
- For CFOs, VPs of finance, and department leaders, it means developing a wider range of analytics to process and parse more data. It also means strategizing and abandoning rigid “command and control” management structures, and empowering trusted finance leaders, treasurers, controllers and shared service center leaders to identify and respond autonomously to changing business needs and market conditions.
- For treasurers, this new definition means collaborating and working more closely with AP to optimize an organization’s use of its working capital. It means taking a data-driven approach to evaluating cash flow, having visibility into all corporate liabilities from purchase through payment. But, it also means being able to develop working capital management strategies that benefit both buyers and suppliers that aim to strengthen what should be viewed as a symbiotic relationship.
- For procurement, it means working more closely with AP to better understand traditional buying patterns and supplier relationships to develop optimal buying strategies. Accounts Payable and Procurement need to be closely aligned and join forces to optimize organizational spend while also taking into account how to strengthen supplier relationships.
- For the budget holders and stakeholders in the business, the demand for business intelligence means being able to have 360-degree visibility into their spend in order to know what is going on. Stakeholders can leverage this information to make more informed planning, budgeting, and buying decisions for their businesses.
Accounts Payable possesses a significant amount of data that should be leveraged throughout a business to make better and more informed decisions. The “age of intelligence” can have a dramatic effect on operations and results, and extends across the enterprise. AP departments need to move beyond judging themselves, and being judged, solely on operational improvements, they need to be evaluated on the value they are bringing to, and the impact they are having on, the greater enterprise.
Related Research:
Download the State of ePayables 2019: Driving Value in the Age of Intelligence Report
Monday First Thing: Converting Data into Value in Accounts Payable
The State of ePayables 2019: Intelligence in Action
