ePayables 2015: How Improved Exception Handling Can Drive AP Performance

Posted by Andrew Bartolini & Matthew Delman on August 4th, 2015
Stored in Articles, Process, Strategy, Technology

It is with great pleasure that Ardent Partners announces the publication of its latest state of accounts payable (AP) research report—“ePayables 2015: Higher Ground.” Like the annual reports that came before it, the 2015 ePayables report focuses on the state of the AP function as well as assessing how AP teams leverage ePayables solutions to improve business results and offering up Best-in-Class metrics that allow readers to benchmark their own operations against top performers. (The report is available for download hereherehere, and here.)

How Improved Exception Handling Can Drive AP Performance

Enterprises of all sizes—small, midmarket, large, and global—are concerned with performance improvement of their internal departments, and rightly so. The modern business environment is incredibly competitive, and becoming more so with each passing year. New entrants into the field looking to disrupt the market, combined with traditional competitors seeking innovation, make it imperative that every organization considers how best to make their internal processes run so they are not spending money where they do not have to.

Accounts payable is not immune to this drive for better performance, and in fact improving AP can only help enhance financial results for the wider enterprise; this is especially true because AP is often an integral part of the financial supply chain in many organizations, so it only makes sense to elevate the function to higher levels of performance. To that end, one of the key ways to move AP into a higher performance bracket is to improve how exceptions are handled.

Without question, exceptions are the bane of the accounts payable department. The AP process is designed to operate as a smooth, efficient workflow that runs straight through without hesitation or delay. When an exception occurs, whether it is for something as innocuous as a missing zip code or an altered price, the process derails and several dominos begin to fall: supplier payments are delayed, critical financial data is incomplete, and internal stakeholders start to see gaps in the department.

Because exceptions can have such a negative impact on AP performance, it comes as little surprise that improving exception handling—and the ability to determine root causes—is the top enhancement that AP professionals believe will help push accounts payable to the next level of performance. Fifty-six percent (56%) of respondents to Ardent’s ePayables 2015 survey, in fact, noted the importance in enhancing how well their organization handles exceptions. Technology improvements (53%) was the only other enhancement that more than half of respondents picked as instrumental to improving AP performance.

Improving exception handling and root-cause analysis can result in better AP performance for a few reasons. Getting better at handling exceptions means the AP team spends less time handling each error, which means the consequences of exceptions are not quite as prolonged as they might be in an AP department that does not handle problems well. Improving root-cause analysis can allow AP to determine what the most common causes of exceptions are, and how to counteract or eliminate the possibility of those exceptions happening again. For example, if the same type of invoice is missing the same information multiple times, good root-cause analysis will be able to determine what is causing the problem and figure out a solution that can be implemented easily and stop that exception from happening again.

Basically, better exception handling ends up saving the organization money because cycle times are reduced and the AP team is not spending their day constantly tracking down missing or delayed information. Then AP performance will improve, and accounts payable will be able to showcase its strategic importance to the wider organization.  This can only be a good thing in the long run, particularly as more organizations look to drive value from other parts of their organizations.

Final Thoughts

As the accounts payable team becomes more strategically important to the wider enterprise, it becomes more critical to push the function to a higher level of performance. Improving how exceptions are handled when they occur, and root-cause analysis to determine why the exceptions occur, can help with this goal of pushing the AP team to perform better than the current state. Better performance of AP, and other internal teams, can only positively impact business results in the long run, and should be a goal of every enterprise looking to compete in the modern business world.

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ePayables 2015: Moving From the Tactical to the Strategic

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The ePayables 2015: Higher Ground Report is Now Available

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