The accounts payable (AP) function as a whole is in the midst of an automation transformation. And slowly but surely, the perception of AP is slowly changing as well. It is important for AP departments to continue to spearhead this shift and align the priorities of the AP department with the priorities of the entire business. AP must continue to improve and expand upon the value that the function can deliver to the greater organization. This article will review the top three priorities that AP organizations are focused on in the year ahead.
During Ardent Partner’s 2016 State of ePayables market research study, which included the feedback of close to 300 AP professionals, we found that reducing processing costs (41% of respondents) was the highest priority for the AP department over the next 24 months. Cost reduction has always been a high priority for AP and it will continue to be so in the years ahead. In the highly competitive business world, reducing costs always is a major focus for a business. It is something that can be directly supported by AP, and one where the results can be easily presented to the C-Suite for review.
Visibility into invoice and payment data (40% of respondents) was the next highest priority for AP departments. Process improvements are next to impossible without first establishing baseline metrics, and AP teams would be unable to determine any level of improvement without them. Improving visibility into invoice and payment data is a clear sign that AP departments are beginning to understand the value in deepening their level of insight into the day-to-day operations of the function.
Likewise, improving AP analytics and reporting (28% of respondents) was the third highest priority identified in the study and further evidence of its primacy to business leaders. Advanced data remains a very important way for AP to show their real value beyond processing invoices and payments. Executives frequently make decisions based on metrics. Being able to present on data like payment metrics (timeliness, accuracy, number of duplicate or payment errors) or financial metrics (rebates earned, early pay discounts taken, etc.) will go a long way in gaining budget from the CFO for improvement and drive benefits throughout the organization. Taken together, better data and analytics/reporting capabilities can help organizations better understand their internal processes and performance and ultimately help them make better decisions.
Understanding AP’s priorities and how to align to enterprise objectives are vital first steps to improving AP operations and changing the perception of AP as a whole. Reducing costs will always be a top priority for AP, and we have seen how automating the AP function can go a long way to drive down those costs. Automation also plays a major role in tracking invoice and payment data and providing AP leaders with analytics and reporting. Currently only 44% of AP departments possess the ability to measure key AP metrics. While that figure alone is disconcerting, AP appears to trend in the right direction with a goal of increasing their knowledge of their performance. By setting goals for the department and executing on a plan to accomplish them, AP will be able to provide greater strategic value and reach a more important place within the enterprise.