This year, many accounts payable (AP) teams are positioned to move beyond increasing efficiency and removing paper from the invoice and payment process. These teams have the ability to function as a thriving intelligence hub and profit center for their organizations, becoming strategic partners with other departments to make an impact at the highest level of business operations.
How? AP Automation. Automation creates scalable, repeatable processes that can result in cost savings and allow deeper visibility into data. This means better data utilization for performance management as well as informing treasury’s cash forecasts and procurement’s sourcing and supplier management efforts. Automation does more than create efficiency, it transforms AP into a strategic and agile business function.
AP’s Current Goals and Challenges
According to a survey by Ardent Partners, a research and advisory firm, AP’s top priorities in 2016 include reducing processing costs, improving visibility into invoice and payment data, upgrading reporting and analytics, and improving collaboration with suppliers and procurement. 55% of survey respondents selected “automate more processes” as their top AP goal for the next 24 months. It’s clear that, by leveraging ePayables and automation solutions, AP departments can easily access and derive intelligence from data to drive improvement and transform operations.
Some of the top challenges for AP teams in 2016 include high processing costs, exceptions, and lengthy invoice and payment approvals. The top challenge, “delay in receiving (or lack of) matching information (42%),” is easily solved with a solution that allows the AP team to communicate with suppliers. By linking ePayables solution to the procure-to-pay process, teams can speed up the approval process and increase accuracy. An automated system pulls information from an electronic invoice and uses it to auto-populate documents, checking it against multiple sources. When it comes to approval, the system automatically conducts a three-way match, flagging any exceptions and routing them to an AP associate who can research the issue further.
Overcoming AP Challenges
As for invoice processing costs and invoice/payment approvals taking too long, these major challenges can be conquered with a combination of process improvement and automation. Approval timelines can be minimized with the application of business rules in automated workflows, which allow for automated routing in case an authorized approver does not act within a certain time frame. As timelines become streamlined, costs shrink. As old-school accounts payable teams know, paper-based processes exacerbate each of these challenges. Employees spend time keying in invoice data, searching for missing data, seeking out approvals, and hunting down information to resolve exceptions. In a manual environment, these time-intensive tasks drive costs upward as the process takes longer and are more likely to include errors.
Ardent Partners research has shown that automating accounts payable processes can cost between 40% and 90% less when compared to paper-based methods. In addition to cutting costs, automation provides real-time access payables for budgeting purposes, as well as the ability to monitor overall business spending so you can report to the executive team. CFOs and controllers can see and compare real-time metrics, such as days payable outstanding (DPO) and days sales outstanding (DSO), for an unabridged view of the organization’s financial health. This allows the AP team to be a stronger resource for the CEO and the Board of Directors in charting business strategy.
The Path Forward for AP Teams
Looking forward, there are three game-changing innovations that will transform accounts payable even further. The biggest game-changer: moving to a truly “touchless” invoice environment. By removing the act of processing an invoice from the day-to-day duties of the AP team, it allows them to process more invoices per full-time employee and focus on more high-level strategic tasks. Secondly, agile reporting dashboards will continue to help drive value from AP data. The ability to centralize, analyze, and share data quickly will lead to stakeholders receiving better intelligence and making better business decisions. Similarly, mobile invoice and payment approval solutions will be extremely valuable in a virtual business environment as well as those that require business travel. With anytime, anywhere access, staffers can approve invoices and payments with a few simple clicks.
In order to take advantage of these game-changing innovations, AP leaders must emphasize collaboration and communication. Through a commitment to functional excellence as well as the development and execution of smart strategies, success is possible. It all starts with changing the perception of the AP function and adopting best practices like accounts payable automation solutions.
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Article contributed by AvidXchange, Inc.