Understanding the accounts payable (AP) department’s priorities can be an important first step in improving current AP operations and better aligning the function with core enterprise objectives. Figuring out the best way that those efforts can align with the near- and long-term goals of the AP department is just as important a step for any transformation project. The AP leaders that are best able to prepare for future business needs are the ones most likely to establish a robust AP brand that will have a much stronger influence and impact within their organization in the months and years ahead.
Ardent Partners’ 2016 State of ePayables market research study, discussed the top two-year goals of nearly 300 AP and finance professionals. Here are the top three goals that AP leaders have, and why:
1. Automating more AP processes (55% of respondents) was the top objective for these organizations, and rightfully so: automation creates scalable, repeatable processes that can result in higher cost-savings and allow for greater visibility into AP’s data (as well as bringing more efficiencies across the board within the greater finance function). So it is a good sign that more than half of the respondents understand the value that automation brings. Automation is often considered one of the core attributes of what Ardent defines as its “Best-in-Class” businesses, who drive top-tier performance across a variety of finance-related metrics (such as invoice-processing costs, invoice approval times, etc.). As time has gone on, and more and more AP technologies have become available, the transition for AP departments has become more seamless and cost effective for organizations. As accounts payable technology has become more accessible to organizations of all sectors and sizes (partly due to the advent of cloud-based software and improved user interfaces), more and more AP units have become holistic, seamless “machines” from a process and efficiency standpoint.
2. Improving collaboration and process linkage with procurement (40% of respondents) was another important goal for forward-thinking AP leaders. Procurement and AP represent the two sides of the procure-to-pay (P2P) process. While many enterprises in the past have not always considered taking a holistic workflow process, it is encouraging to that AP department heads perceive collaboration as a crucial goal. Better linkage between the two departments can help foster healthier communication and deeper insights into corporate spend (and the business’ key suppliers). Procurement can utilize AP data to inform its supplier and spend management activities, while AP can similarly use procurement’s supplier data to better track the causes of invoice exceptions as a means to alleviate those issues
3. The long-term goal of transforming AP into a more strategic and agile business function (34% of respondents) can be challenging, but that doesn’t make it any less viable. This goal requires a multi-step process that involves enlisting the aid from multiple corners of the enterprise and a long-term strategy to move the department away from a tactical focus into one that provides more strategic value. Having process “agility” allows the AP enterprise to address new, dynamic problems that arise, better account for various financial and corporate risks, and better adapt to changing business priorities and market fluctuations.
In order to transform an accounts payable department into a streamlined function that can provide strategic value, enterprises must first figure out how to enhance their existing operations to better position themselves to provide long-term value. Automation, collaborating with procurement, and becoming a more strategic and agile business function are all goals that AP and finance leaders can work towards to bring their departments (of any size, scope, or industry) to the next level of performance within the organization.