In the past, the role of the AP operation focused primarily on data entry and manual activities. But that is changing – today, there is a great opportunity for AP professionals to improve their operations and ascend to a level that provides valuable financial and operational intelligence to the greater organization. Ardent Partners 2016 State of ePayables: Eyes on the Prize study identified the top three drivers that will take AP to this “next level” of performance.
- Better leverage technology: Nearly 60% of all AP (and finance) leaders view the use of new or improved technology as the top driver that can help AP ascend to a strategically valued position within the enterprise. AP can create enormous value for the enterprise but only when it is allowed to focus on more strategic aspects. Automation can help with this by removing paper at both the front- and back-end of the workflow, linking upstream and downstream processes and increasing efficiencies, while also decreasing processing times across the spectrum. As the process becomes more automated, it should become less expensive to process invoices and enterprises can reallocate resources to more strategic work like B2B/vendor payments and cash management.
- Improve exception management: Attacking the traditional challenges of the function, such as improving exception handling and root-cause analysis, is also needed to help AP evolve into a more strategic function. Exceptions are the bane of AP’s existence as they slow the AP team down significantly on non-value added work. A majority of AP professionals believe that being able to reduce exceptions, through better root-cause analysis processes (and investments in new or improved technology), can smooth the AP process and allow the function to create more strategic value.
- Gain executive support: Technology improvements may be the top requirement for moving AP to the highest levels of performance. However, AP teams will not succeed in reaching the “next level” if the executive leadership does not see the value in investing in AP and supporting its efforts more generally. Thus, gaining executive support to improve operations was the third most popular strategy identified by AP managers and staff as a key factor in driving more value. No matter how well conceived an AP team’s transformation efforts are, their efforts will be heavily constrained if they are unable to gain the support of the C-Suite. To win over the executive team, Ardent believes that it is incumbent upon AP leaders to develop a strategy to improve the AP brand and change the perception that AP is a tactical and less relevant role within the enterprise.
The AP function is well positioned to improve its ability to drive operational and financial value to the rest of the enterprise. To take advantage of that position, AP leaders need to better leverage technology, improve exception management, and gain executive support. But, even then, there is more work to be done. AP leaders will also need to emphasize automating the current process, addressing the capability gaps that are currently holding AP back, and linking the department-level goals with enterprise priorities to gain executive support. With that, AP departments will be better prepared for the future, and able to become a strategic partner for the enterprise. If you’re an AP or finance leader, what are your strategies for ascending to the next level of performance? What’s holding you back? Better yet, help us understand what these are in 2017 – please take the State of ePayables 2017 survey.