Strategic Impact of AP Automation

Strategic Impact of AP Automation

Automation Can Transform AP from a Cost Center to a Strategic Asset

For accounts payable leaders that understand the value of process improvement and truly believe that their team can contribute strategically to their organizations’ goals, a recent report from Ardent Partners explains how critical it is for AP to speak the language of corporate executives and to understand their values and vision.

Changing Perceptions and Elevating AP

The perception according to Ardent Partners’ recent industry benchmark survey, is that few enterprises view accounts payable as valuable collaborators. One third of firms surveyed viewed AP as “not strategic; tactical processors.” One third were seen as somewhat valuable, occasional collaborators. And only 15% were viewed as exceptionally valuable contributors.

That isn’t to say that senior managers don’t value the work of their AP teams; they just regard them as tactical. Over half of executives surveyed by Ardent either said, “They are efficient and accurate (20.4%) or “They get the work done” (29.6%).

So, how do you elevate the role of a team that is acknowledged as hard working, accurate and efficient, but may not be empowered to contribute to the greater good.

The first step is to make sure that AP is aligning it’s goals and metrics with those of leadership.
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Measuring and Managing AP’s Strategic Impact

According to the Ardent survey, the top 3 metrics AP & Procurement departments say are important include:

  • Invoices paid on time
  • AP processing time and backlog
  • Days payable outstanding

On the other hand, CFOs surveyed by Ardent, when looking at AP performance consider:

  • Volume-based metrics (number of invoices processed)
  • Payment metrics (number of payments made)
  • Financial metrics (rebates earned, early pay discounts taken, etc.)

There is some overlap here in terms of metrics, though the perspective is clearly different.
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At the same time, CFOs look at other quantitative and qualitative data that does not align, including:

  • Internal stakeholder feedback and surveys
  • Department budget performance
  • Process, regulatory or financial compliance metrics

Reaching the Next Level through Automation and Data-Driven Processes

While many corporate executives don’t see AP as a strategic asset today, they DO recognize the potential. Among those surveyed, 40% of AP & finance leaders said they plan to “improve collaboration and process linkage with procurement” over the next 24 months. And most know how they are going to get there. More than half (58%) of AP and finance leaders say that new or improved technology is critical for AP to reach the “next level.”

Executives focused on financial metrics (e.g. early pay discounts), compliance, performance against budget and process efficiency clear see that ALL of these metrics can be improved through process automation holistically, rather than trying to tackle each one individually.

Let’s start by considering the most fundamental tasks within accounts payable—handling payables invoices and related documents, entering and processing transactions and securing payment approval. Today, intelligent capture technology can extract data from scanned paper and digital invoices, quotes, orders and receipts. By integrating intelligent capture with ERP and ECM (enterprise content management) systems, AP can eliminate the process bottlenecks associated with manual filing and data entry. With the proper data captured within those systems, AP can automate matching processes for PO-driven purchases and automate approval routing based on business rules for exceptions or for non-PO purchases.

The pay-off isn’t just cost reduction and efficiency gains—the metrics most likely to be managed by AP today. Pay-offs like early pay discounts, as well as reduced errors, better transparency/auditability are all relevant and valuable to the CFO and the executive team.

Furthermore, those kinds of innovations, when they clearly demonstrate ROI, can provide a model for automating and improving other processes within an organization, allowing AP to actually set the standard for business process management.

Taking the next step

The good news for many firms and their AP departments is that they may have existing processes and systems in place to help them elevate their efficiency, transparency and compliance.
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Getting existing systems to work together and streamlining processes to capitalize on that integration can reap huge rewards. Best of all, “no code” digital transformation platforms to automate processes for vendor invoices or customer sales orders don’t require costly or complex coding.

And, as Ardent’s results suggest, executives are receptive to technology to automate manual processes, so long as the business case is clear.

Learn More

To learn more about AP automation, intelligent capture, digital transformation and how to elevate the role of your AP operations through automation, contact your Artsyl Technologies representative.

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