Editor’s Note: Over the next few weeks on CPO Rising, we’re publishing some “best of” 2018 articles as we reflect on the year and prepare for the new year ahead.
I’ve been working with Accounts Payable (“AP”) professionals for almost 15 years now, and it never ceases to amaze me how infrequently they get the recognition and credit they wholeheartedly deserve. More often than not, AP only gets mentioned when there is a problem. Maybe a vendor has not been paid and is looking for answers, maybe a vendor was short paid, or maybe a key stakeholder in a business unit is calling because a critical supplier has not been paid, and is refusing delivery of goods or services which creates the risk that an entire production line will be shut down.
This begs the question; why? Why doesn’t AP and its hard-working employees get their just rewards? Is it because they don’t do a good job? No. Is it because they aren’t hard-working? No. Is it because no one knows they exist? No. Then what is the problem? Personally, I think it comes down to AP needing to do a better job marketing themselves (and all they accomplish) to others within the organization, especially their Controllers, VPs of Finance, business unit leaders, and CFOs.
Despite significant industry advances over the past decade, the typical AP team still suffers from a perception problem – where its organizational importance is almost solely related to invoice processing efficiency. The common perception in many organizations is that all AP does is pay bills. While everyone would agree this is important, most people outside of AP do not realize the true strategic value it can provide to an organization. As a result, AP has historically been passed over for resource and enhancement investments.
What can AP do to change its perception and get the credit it deserves?
AP departments must transform the way they think and speak as much as they transform their processes and systems. They must learn to speak the languages of their stakeholders, understand their stakeholder’s goals, KPIs, and objectives, and provide data to show how they are having a positive impact on them. Today, CFOs typically evaluate AP departments based on the volume of invoices and payments processed. This is in keeping with the AP brand as a tactically-focused team. For the perception of AP to change, AP leaders need to change the conversation. They need to start talking about the strategic value that AP provides (or at least could provide). Start talking about how AP teams are impacting working capital management by better, and proactively, managing the outflow of cash. How AP teams are managing DPO (Days Payables Outstanding) to benefit the organization. Start talking about how the AP department is reducing risk and improving compliance by more intelligently onboarding suppliers. When AP stops speaking tactically and starts speaking strategically, the conversations and the perception of AP will change along with it.
Another way AP departments can change perceptions is via direct engagement with stakeholders. Since collaboration with functional partners is really no longer optional, AP has a great opportunity to be a strong partner and gain more visibility and influence via key partnerships with groups like procurement, finance, business units, and treasury. Working more closely with these stakeholders provides opportunities for AP to showcase the strategic value it can provide aided by the wealth of financial and operational data at its fingertips. AP is sitting on a gold mine of spend data. Leverage this data conversations with key stakeholders. It is this collaboration and the strategic value AP can provide that will inevitably lead to AP becoming a strategic business partner and change perceptions throughout the enterprise.
Final Thoughts
No matter how AP is viewed in the enterprise, the fact remains that the function is poised to improve its ability to drive operational and financial value. This cannot happen, however, without a strong focus on linking department-level goals with enterprise priorities nor without addressing the capability gaps that are holding the average AP team back today. Keeping your “eyes on the prize” can be challenging, particularly when an AP brand has lost its luster. It is the task of AP to show the rest of the organization the strategic value it can provide. AP leaders need to emphasize collaboration and improved communication with the rest of the organization. Once these changes start to happen, AP’s brand and perception throughout the organization should slowly, but surely, begin to improve.
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