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Posted November 10, 2015

accounts payable data

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Thanks to big data, accounts payable is more than a cost center churning out transactions. It’s becoming a profit center, ripe with information decision-makers need to evaluate and maximize their game plan. Results from a survey by Audimation Services are presented in the article Top 10 Areas Where Data Analysis is Adding the Most Value—and AP/AR takes the top spot, due to the large amount of data they generate.

There could be a goldmine sitting on your servers, but data alone doesn’t guarantee results. It’s what you do with the data—collecting it, crunching it, and delivering it to decision-makers in a way that makes sense—that matters.

With Data, Knowledge Is Power

Business leaders are finding that insights into a company’s spend are extremely valuable, especially once you’ve achieved end-to-end visibility and can apply metrics across the organization. But even when limited to AP use, data takes on new meaning when it helps to detect fraud, leverage prices and discounts with suppliers, streamline operations, and answer to compliance concerns. And when you learn how to take control of your data, you not only support strategic decision-making—you also lessen the need to rely on suppliers for information that’s critical to your competitive position.

A powerful real-world example of analytics in action is shown in KPMG’s ebook Big Data: The Risks and Rewards Locked in Vast Oceans of Data. While investigating payments made by contractors and third parties, a corporate compliance department identified over $30M in duplicate checks and payments, unsubstantiated payments to contractors and employees being paid simultaneously by both the company and third-party, and internal control deficiencies across the company’s legacy ERP system.

Putting Data to Work: Start Small, Scale Later

Launching a Big Data initiative can take months, even years, of planning. It takes a keen understanding of your organization’s goals and internal resources, and answers to a long list of questions. For starters: What data do you have? What format is it in? What do you need to know now? Where should you focus your efforts today vs. tomorrow? Do you have C-suite buy-in? Are there dollars to invest in new technology resources?

A Blue Hill Research article, Analytics – Transforming Accounts Payable into an Intelligence Center, shares the four things their consultants believe are required to derive true value from the data collected day-in and day-out: accurate data at the point of entry, adequate controls to maintain accuracy, accessibility to that data when needed, and the availability of tools through which the data could be analyzed.

It’s easy to get overwhelmed with the concept of Big Data, let alone its potential. But you can start small and scale later. And seeing what other AP organizations are doing with their data can be helpful. Respondents in the Audimation Services survey noted they are reviewing data within the vendor master file as well as these specific areas:

  • Purchasing to payment analysis
  • Review of operating disbursements, with primary focus on AP
  • Validation of payments to vendors
  • Analyzing AR open order data for system deficiencies within processes
  • Evaluating AR aging files for internal and external financial reporting
  • AR testing and searching for duplicate payments

Prepare for Challenges Along the Way

One challenge many organizations face when taking on big data is aggregating all of their data out of disparate systems. And then it comes down to a question of quality. You need assurance that your information is accurately sourced, clean, relevant, timely, and dependable—and confidence that it can be used to answer strategic questions.

The author of the Blue Hill Research article points out that even a seemingly simple AP question like “Do you have adequate cash on hand” involves intelligence from the treasury, sales, procurement/supply chain, and AR. This goes to show that effective use of data requires interdepartmental collaboration, including IT, to uncover what information is already available within the organization. Big Data isn’t a job for AP alone, but with the potential to provide substantial business value, AP can get the conversation started.

We will continue looking at big data and how AP professionals can make it work for them.

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Corporate Payments Insights