Top Performing AP Teams Add Strategic Value Through Automation Technology

Accounts payable departments in organizations around the world are slowly but surely embracing new technologies to streamline their processes, save time and money, and improve supplier relationships. But “best in class” AP teams are quickly discovering that their strategic value continues to emerge as they automate their most tactical work.

Functional Competence vs. Strategic Capabilities

Ardent Partners’ new research report, ePayables 2016: Eyes on the Prize, shares an assessment of the various functions performed by today’s AP departments. Here’s a look at the average level of competence for a number of capabilities:

AP’s Operational Capabilities

Two- or three-way matching capabilities 68%

Standardized AP processes across the enterprise 64%

Ability to automatically route invoices for approval 58%

Ability to process invoices straight-through 47%

Ability to measure key AP metrics 44%

Linkage throughout the procure to pay process 41%

Ability to match invoices to contracts or payment plans 39%

Most companies perform reasonably well with everyday, core AP functions, but less than half are able to demonstrate a mastery of more strategic tasks, such as measuring key metrics that can be shared and leveraged for organizational decision-making. This suggests that most accounting departments haven’t established themselves as strategic partners in their organizations.

Moving along strategic lines requires an ability to tackle the basic AP tasks (e.g. the routing, processing, and matching of invoices) so they (WHO IS THEY?) can place more attention on making use of data. And while data can be used to optimize AP processes and improve AP performance, it can also be used by other partners within the organization, from procurement to sales. Where does an AP organization begin to gain access to data—collecting it for crunching and informing decisions, and adding organizational value?

Read Unlock a Treasure Trove of Insights in AP Data for more.

Automation Technology Delivers Data and Efficiency

It’s important to note that a third of AP teams don’t count two- or three-way matching capabilities and standardized AP processes across the enterprise as among their strengths. Ardent Partners suggests that this could be due to a lack of adequate technology infrastructure. It makes sense: if an AP team is dependent on manual processes, they’re likely unable to efficiently route and process invoices, match transactions, and create standard practices on a company-wide basis. They’re limited in their ability to push through the tactical work to get to more strategic activities.

Automation removes these limitations. When invoices can move through the process with minimal or no human intervention, costs and time get cut, and AP employees can work on projects that are more strategic in nature. Take, for example, the impact of using a procure to pay (P2P) solution that’s built for information sharing between the two functional areas of procurement and AP. While helping to automate much of the P2P process, it gives procurement visibility into enterprise spend and supplier performance and gives AP insight into supplier contracts. Professionals in both areas have the tools they need to collaborate on improving their processes and adding bottom-line value.

Get more insights in Exploring AP Technologies: Complete Procure-to-Pay Solutions

Who’s Unlocking Strategic Value?

Automation technology has already proven to help accounting departments build—and ultimately showcase—their capabilities company-wide. Ardent Partners identifies these “Best in Class” AP departments as those who leverage technology, demonstrate greater efficiencies, and drive improved financial results.

When compared with all other companies in their study, Best in Class enterprises are 89% more likely to view AP as exceptionally or very valuable from a strategic perspective. They’re also more often involved in activities that leverage AP’s financial and operational data that’s used in decision making, especially in the areas of forecasting, budgeting, and planning; understanding the impact of cash; and developing better payment strategies.

Becoming Best in Class

Aside from embracing automation solutions, AP professionals can start thinking outside of the box. Ardent Partners identified game-changing innovations for AP that survey respondents believe will help them focus on tasks that are of a more strategic nature:

• Moving to a truly “touchless” invoice environment (58%)
• Agile reporting dashboards (47%)
• Mobile solutions for invoice approval (42%)

Read Great Expectations For The AP Evolution on PYMNTS.com for more insights into the study.

We’ll explore these innovations in upcoming articles, but consider how tools like e-payments and virtual card numbers (VCNs) can help further AP’s movement toward a more streamlined, paperless, and data-rich organization. For many companies, VCNs have become an important part of their payments mix, aligning AP with organizational goals and delivering data that adds value to decision-making.