There is no doubt that the accounts payable (AP) process is one of the most cumbersome and inconsistent of all financial processes in organisations today. But there is a cure. Organisations that leverage AP and invoice automation not only achieve operational excellence but can also provide greater value across the enterprise.
While AP may be a prime candidate for automation, it is not a priority for many firms. AP is often seen as strictly back office, but times are changing, and organisations can benefit greatly by improving AP process efficiency.
The reasons for this are clear, with best-in-class AP boasting impressive improvements across the board: lower processing costs, rapid approvals, lower exception rates, a higher rate of straight-through processing, and increased transparency and control.
Still, organisations need to look beyond improving tactical operations. The endgame is to provide strategic value to the extended organisation. Automating tactical processes in AP is often a first step in a strategic evolution of the back office. Starting with efficiency gains won by automation; digitising the process builds a foundation for business intelligence. Increased efficiency also elevates the role of the back office, enabling staff to focus on more strategic and value-adding tasks.
For AP, this can involve closer collaborations with procurement, finance and treasury, and supplier relationship management, as well as providing actionable intelligence for risk mitigation, cash flow management, compliance initiatives and more.
Today, most executives agree that AP automation is of high strategic importance and provides cross-departmental benefits. A recent report by research and advisory firm Ardent Partners indicated that more than half of organisations perceive AP as either very or exceptionally valuable to the organisation.
AP is uniquely positioned to provide great value to a wider organisation. It touches nearly all aspects of business – from handling payment of spur-of-the-moment one-time-buys to strategic contract spend. By automating the AP process, the foundation is laid for an extensive data lake of financial information that can be leveraged far and beyond the traditional scope of AP.
Keeping an eye on this endgame is essential when building the strategic plan for achieving operational excellence in AP through automation. While most AP automation solutions provides rapid ROI, often in less than six months, understanding and exploiting the value of the data provided enable organisations to bridge short-term goals of increased AP process efficiency with the long term business evolution made possible by spend and invoice process analytics.
Understandably, AP process automation is the first step, but it is the foundation that builds the greater value that is realised further upstream. Accounts payable automation elevates the role of accounts payable to become the best friend of not only the CFO but the CPO as well.
Torbjörn Thorsén is head of marketing at SignUp Software
This article was originally published in the Autumn 2020 issue of The Record. To get future issues delivered directly to your inbox, sign up for a free subscription.
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