Breaking Through the Glass Ceiling of AP Automation

A dramatic change is occurring in the perception of the worldwide market about the strategic importance of the accounts payable department. Business leaders are beginning to understand its importance in the making of primary monetary decisions. This is a clear win for businesses everywhere. In spite of this, stubborn perceptions still exist at the level of the average business.

The perceived value of the accounts payable department has a direct effect on the resources that will be allocated to invest in AP automation. If business leaders are going to release the finances necessary to convert to electronic invoicing, they must first be able to understand that the accounts payable department has a much greater value for the organization than its simple day-to-day clerical functions. The key question is how to overcome misperceptions about departmental value.

The Critical Role of the AP Department

In a recent article titled, “ePayables 2016: AP’s Perception Problem,” the authors Andrew Bartolini and Matthew Delman make the case that the accounts payable department in any organization is not only important to its success, but it is a lynchpin around which the activities of other departments revolve. The data collected through cash transactions that are made in accounts payable have a bearing on virtually every other department. The truth is that accounts payable has always had this potential, although it is only now being realized, with the emergence of automation that allows better data retrieval and analysis.

Conditions are now ripe for a change in perception. Once perception comes in line with this reality, financing will be allocated to integrate accounts payable automation so that AP can become the intelligence hub it was meant to be. Accounts payable can then utilize e-invoicing data to influence cash flow analysis, supplier rationalization and performance, and primary decisions about the effective use of working capital. Such tools as dynamic discounting can be used to increase cash flow.

Steps to Overcoming Stubborn Misperceptions

Changes in perception are often slow, but they can happen more quickly with the right steps taken. AP team leaders can take an active role in driving the change in outlook, by first demonstrating the increased value of their department.

Similar to an employee whose ultimate goal is to ask for a raise, the AP department should be willing to go beyond its normal boundaries in order to prove its budgetary value. Mr. Bartolini and Mr. Delman suggest that the best way to do this is to increase collaboration and communication with two of its closest partners: treasury and procurement.

In order to cement these relationships, AP team leaders can give procurement and treasury better access to their internal data to fulfill common goals. They can assist treasury in developing better management strategies and providing more concise forecasts. They can help procurement to develop a stronger supplier base that is more effective and more contract compliant. They can also prove the relevance of the AP department by adjusting daily departmental strategies so that they better conform to those of the company at large.

Offering such assistance without being asked will put the AP team in a better position to receive the advocacy they need to get budgetary approval of AP automation. When business executives realize that the accounts payable department has potential for valuable intelligence that can lead to increased cost savings, investing in automation to enhance its capabilities becomes an easy decision.

Referenced Source:

Andrew Bartolini and Matthew Delman, “ePayables 2016: AP’s Perception Problem”: June 24, 2016

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