No More Firefighting, Transform Accounts Payable from a Cost Centre to a Strategic Business
By Wendy St. Clair, Senior Product Marketing Manager at Kofax
Accounts Payable (AP) has often been considered the “costly but critical” part of every business. Now with work-from-home mandates and normal operations disrupted, the need to transform the AP function into a strategic asset has become glaring.
Invoice processing and management is a manual task – requiring time, attention to detail and manpower. AP teams find themselves bogged down fighting fires, leaving little time for strategic thinking to drive growth. Finance teams spend, on average, 49% of their time processing transactions, according to a recent assessment of finance organisations based on data from AQPC’s Open Standards Benchmarking Database.
Adding fuel to the fire, AP executives are constantly asked to speed up invoice processing times and reduce costs. Without contextual data and analytics, AP problems and bottlenecks slip by undetected. So, AP leaders ask their team to “do more with less.”
AP automation tools change the way finance teams operate and provide much needed leverage, especially during a crisis like the current pandemic. AP leaders can spend time on the transformation of their department from a tactical operation into a true driver of strategic business value.
Gain access to the boardroom with AP automation
AP teams who want to ditch their tactical position for a spot in the boardroom are turning to end-to-end AP automation. It delivers immediate ROI and helps identify and prioritise strategic projects that’ll have a measurable impact on the bottom line. Advanced analytics deliver metrics with:
- Number of invoices paid on time
- Invoice processing bottlenecks
- Time spent processing low-value AP transactions
- Overdue payment volumes
- Top vendors by spend
- Cash flow impact of invoice payments on time versus late payments.
But with intelligent automation, AP teams can proactively add strategic value through:
Reduced invoice processing times: Invoices are routed properly, and approval policies enforced. Duplicate invoices are flagged, customers are automatically matched to POs and accuracy improves. Artificial intelligence technology captures invoice data from any format and source. Extraction, classification and validation of data from PO and non-PO invoices reduces processing time and cost-per-invoice. Metrics identify which invoices take longer to process, so AP leaders can address bottlenecks.
Improved cash flow: Occurrence of late payment fees due to invoice processing errors are reduced. The ability to see where an invoice is in the workflow lets supervisors take advantage of early payment discounts. AP leaders have complete knowledge when payments are due, which can be used to maximise the company’s cash position.
Time for strategic thinking: AP workers use the data from advanced analytics to create strategies around improving cash flow, reducing costs and managing workflows.
Support for remote work: With reduced volume of hands-on work, AP teams make the shift to work-from-home more easily as they’re able to access documents and manage operations via the cloud.
Better compliance: Critical data required for compliance is captured and organised in real-time. Tracking information provides full transparency. Analytics identify potential violations of policy or procedural requirements early in the process, so they can be rectified before a penalty occurs.
Improved cross-functional collaboration: Information with key stakeholders is easily shared in procurement, finance and treasury. Every department benefits from AP automation. Procurement can identify top suppliers and negotiate better pricing, for instance. Collaboration frees up working capital and fuels growth.
Better supplier relationships: Self-service portals allow vendors to manage their information, improved relationships can translate to better contractual arrangements. Metrics also enable AP leaders to gain deeper insight into suppliers, identifying problems or bottlenecks that can be corrected.
Better position the company for growth: Visibility into valuable payment metrics that AP leaders can take to the executive level. For example, AP automation delivers data needed to map out payment timelines so businesses can attain early payment discounts or negotiate extended payment terms. Metrics uncover spending trends and provide insight into cash flow analysis. Reports on invoice processing, supplier performance and business spending inform decisions mitigating risk, increasing profits and giving organisations a competitive advantage.
Many AP leaders are already seeing success from automation and AP metrics. In its 2020 AP Metrics that Matter Report, analyst Ardent Partners found the perceived value of the AP department’s on the rise among senior leaders. More than 55% now say AP is exceptionally or very valuable to the organisation. Additionally, 52% of CFOs see AP automation as crucial to operational efficiency.
By embracing end-to-end automation, AP teams can finally step out of fire-fighting mode and begin working like tomorrow, today. With intelligent automation, they’ll gain the tools needed to transform their operations and add strategic value to business long term.