At the moment, Ardent Partner’s research team is putting the final touches on its annual AP-focused market research report which will be widely available shortly – ePayables 2013: AP’s New Dawn. This report focuses on the evolving role of AP from a back-office function to one that adds value and supports other functions such as Treasury and Procurement; the report also enables AP groups to compare their performance KPIs to Best-in-Class companies. Make sure to tune in to Payables Place for extensive coverage and access to the final report.
As I was digging through the data (over 250 distinct accounts payable departments) it quickly became apparent that certain enterprises are currently operating at a very high level of efficiency, proving that there are clear benefits to be gained from investing in and transforming AP. It is also apparent that for a large portion of AP groups, there is still much room for improvement. With that, I thought it might be interesting to share the profile of one of these Best-in-Class companies. Below you’ll see a summarized profile of a Best-in-Class AP operation and its performance.
The company is a multi-billion dollar Pharmaceutical & Life Sciences Company that operates several shared service centers around the world. From a finance perspective these centers are responsible for AP, AR and other financial activities (e.g., general ledger, closing, etc) for the 100 plus subsidiaries that are located all over the world. The centers also provide IT, HR and procurement support and pride themselves on being in the top tier in terms of costs and efficiency.
Here are some of the key performance indicators that give this AP operation a Best-in-Class status:
By any measure, the above are impressive results for a global organization with multiple businesses dealing with hundreds of thousands of suppliers all over the world. Of course, it took a significant effort to get to where they are now and strong support from internal stakeholders to develop a Best-in-Class shared service center that leverages technology including the following:
ePayables solutions used by the example Best-in-Class AP Department shown above –
- Document imaging/scanning
- Automated data capture and extraction (e.g., OCR)
- Evaluated Receipt Settlement (ERS) – converts a receipt document into an invoice with pricing and payment terms based on a pre-existing contract
- Automated routing and approval workflow
- eInvoicing solution
- Supplier Network (B2B network or payment network)
Even at this level of performance there are areas that need work. For this shared service operation, improving the linkage throughout procure-to-pay process is next on the agenda as is improving the level of collaboration between AP and Treasury.
Striving to reach this level of performance should be a goal for any AP group whether in a shared service environment or not. This organization is proof that the cost savings and efficiency improvements can be achieved no matter how complex the structure.
Read more about specific AP solutions and best practices at www.payablesplace.com
