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 here, here, here, and here.)
AP’s Role in Collaborative P2P
A move toward greater collaboration with internal and external stakeholders is one of the most persistent trends in the business world today. This new business reality comes on the heels of many enterprises realizing that it is imperative to drive value from their global supply chains, as well as find a way to communicate effectively with trading partners and coworkers spread throughout the world.
Effective collaboration is also of particular importance as more enterprises realize that it is imperative to drive value from the internal business operations, and not solely in terms of cost savings. Historically siloed departments have an important role to play in driving financial value to the organization. One such case is the relationship between AP and procurement, two teams that each manage one part of the larger procure-to-pay (P2P) workflow. Not many organizations have, in the past, considered P2P as a holistic process—a failing that needs to be remedied if enterprises wish to remain competitive in the long term.
How Much Does AP Collaborate With Procurement?
Many organizations now recognize that procurement and AP must collaborate in order to drive real enterprise value from the P2P process. In fact, nearly two-thirds (62%) of respondents to Ardent Partners’ ePayables 2015 survey have moderate to heavy collaboration in place between AP and procurement already, which is a good sign that enterprises have rightly concluded that creating a strong linkage between AP and procurement is critical for their organizational goals.
That such a high percentage of organizations have created a close relationship between procurement and AP is a good sign that the industry at large acknowledges the importance of this relationship. Of the remaining 38% of respondents, 22% enjoy task- or project-based collaboration between AP and procurement, and only 14% have little or no collaboration between the two groups.
Task- and project-based collaboration is better than nothing, but it does not really allow organizations to accrue the benefits (explained below) inherent in a fully connected process. Similarly, the enterprises wherein AP and procurement do not collaborate at all miss out completely on the efficiencies and visibility that occur when AP and procurement work together.
The Impact of Good Collaboration
It is important to bear in mind that AP and procurement function as the two sides of the P2P workflow. As such, collaboration between the two—typically through automation—can result in several key benefits for the enterprise at large. These benefits include:
- Improved processes: A connected P2P workflow makes the entire process flow much more smoothly in the long run. The reason for this is because AP has access to the documents procurement manages, and procurement has access to the documents AP manages. This allows AP to easily access the documents it needs for invoice validation and approval, such as contracts, goods receipt notes, etc., and procurement can become more efficient in their supplier relationship management duties.
- Better data visibility: One of the most critical benefits to a connected P2P process is visibility into data from both sides of the workflow. If AP has insight into contracted payment terms, for example, then they can make a more informed decision about when to schedule a particular supplier’s payment. If procurement has access to invoicing data, they may negotiate differently with suppliers that submit invoices late or cause issues in the invoice approval process.
- Easier supplier management: When AP and procurement are part of a collaborative P2P workflow, procurement can better understand supplier performance. This also means that procurement does not need to log into multiple platforms to manage the supplier relationship; on the supplier side, there is no need to log into one platform to fill an order and another to submit an invoice. Everything runs more smoothly overall, which makes life easier for internal and external stakeholders alike.
Final Thoughts
When AP and procurement work together, typically in the form of the P2P workflow, the enterprise enjoys key benefits in the form of process efficiencies, improved data visibility, and better supplier management. The P2P workflow can function without strong collaboration between these two groups, but not possessing a collaborative workflow can result in inefficient processes that end up costing the enterprise more in staff time and resources. Because of this, it makes sense for most, if not all, organizations to possess a collaborative P2P workflow.
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