The face of AP is changing. What was traditionally a department with a tactical, task-oriented focus is transforming into a leaner operation with a stake in strategic business outcomes. A new study from Ardent Partners calls accounts payable “a function that, when improved, drives financial and operational value on a grand scale.”
Lexmark recently partnered with the Shared Services Outsourcing Network to collect survey responses from 181 Finance and Accounts Payable professionals about both the current capabilities of their AP departments, as well as their plans for improvements in the near future. The findings highlight three major areas within these accounts payable departments that are slated for upgrades, including invoice processing time, workflow and visibility.
Not surprisingly, these areas fall in line with the aggressive push to change traditional perceptions of the AP department by the best-in-class organizations highlighted in the Ardent Partners’ study. Let’s dive in and take a closer look.
No more hurry up and wait
The first two areas flagged for upgrades by survey respondents, faster invoice processing and workflow, are actually not two separate areas at all. A sub-system in the overall invoice-processing framework, workflow enables the routing of invoice information for validation and approval. Even if an AP department has capture technology for getting documents into their systems, a basic workflow that relies on a manual system for routing the information will stall invoice processing times and keep them from taking advantage of early payment discounts.
48% of those surveyed by Lexmark and the SSON put faster invoice processing at the top of their list of priorities. Almost the same percentage (47%) called out an improved workflow as a top target and 49% plan to invest in or improve their workflow automation in the coming year.
With only 25% designating their cycle time as good or excellent, the need for improvement is clear. And Ardent Partners’ ePayables 2016 report agrees, explaining that “over the next 12 months, more AP departments are focused on improving the activities around invoice processing than any other area.” Invoice approval and workflow as a whole were also the largest priority in that survey, which gathered data from professionals in over 24 industries worldwide.
You might be wondering how invoice processing time and workflow relate back to the shift toward a more strategic AP department. Reducing manual tasks and increasing the amount of invoices that can be processed straight through doesn’t just increase efficiency. Improvement in these areas gives AP teams the ability to take on more strategic roles, learn new systems and have insights into more data than ever before.
More than analytics: Visibility
The third area of improvement prioritized by survey respondents is “increased process visibility.” But what is “visibility”? 32% of those surveyed had implemented analytics for workflow to monitor straight-through invoice processing. And analytics can certainly give you insights into metrics like per invoice cost and volume.
But there’s more to it than that.
Visibility is a clear view into all of your financial data streams and processes with up to the minute access to critical information. Analytics solutions that provide such a high level of clarity with business processes are becoming a major priority for enterprises, with 37% planning to invest in a solution in the next 12 – 18 months.
According to Ardent Partners, top performing AP teams are more likely to use analytics for tasks like “forecasting, budgeting and planning; understanding the impact of cash; and developing better payment strategies.” A view into audit trails and the ability to perform ad hoc reporting are two more areas where analytics for true visibility can prove invaluable.
Respondents to the SSON survey demonstrated a clear alignment with these areas for implementing analytics, with “predictive analysis” coming in as the top driver for adopting or improving analytics solutions. Monitoring straight-through processing of invoices, productivity and compliance followed closely behind.
The road to greatness
Let’s face it, twelve to eighteen months isn’t much time. But the fact that companies have set their sights on these major areas of improvement in the near future has some big implications. Not only do they recognize that processes can be more efficient, they see that Accounts Payable has big potential to become a source of deep insights and intelligence for their companies. With the availability of advanced technologies that align with these goals, AP departments are positioned to become strategic collaborators that can influence a company’s overall financial outlook.