CFOs and the New Accounts Payable Department
In today’s fast-paced business world, it is more important than ever for accounts payable (AP) departments to be efficient and effective. Manual processes can be time-consuming and error-prone, which can lead to missed payments, financial penalties, and a loss of control over cash flow.
That’s why it’s important for CFOs to embrace the new technological adaptations of the modern AP department. By investing in advanced AP software solutions, businesses can automate many of their manual processes, making their operations more efficient, accurate, and cost-effective.
How is AP Changing?
Businesses today are in a constant state of change, and the AP department is no exception.
Here are some of the biggest changes companies are facing in 2023, and the impact of these changes on the accounting department.
The Rise of Automation in the Workforce
Accounts payable automation is now a mainstay of the modern CFO’s back office. Software solutions can now automate a wide range of AP functions, from invoice processing to vendor payments to fraud detection and more.
This technology improves teams’ straight-through processing rates and minimizes the number of exceptions, freeing up AP staff to focus on more strategic tasks like risk management and supplier relations.
The Move to the Cloud
More and more businesses are moving their AP operations to the cloud. In fact, Gartner predicts that by 2025, 51% of IT spending in application software, infrastructure software, business process services, and system infrastructure markets will have shifted from traditional solutions to the public cloud.
The cloud shift offers a number of benefits, such as increased security, scalability, flexibility, and collaboration.
Cloud-based AP automation solutions offer anywhere access to payment activity, which helps businesses improve their cash flow management. They also offer greater cost efficiency by eliminating fees associated with hardware/software upgrades and maintenance.
The Generational Workforce Shift
Millennials and Gen Z are now the largest workforce generations in the United States. These workers are more ingrained with technology than any before, and they expect state-of-the-art solutions to streamline their day-to-day.
To effectively engage with these digital natives, AP departments need to embrace cutting-edge automation solutions that eliminate tedious tasks and offer more time to focus on strategic planning and critical thinking.
Companies that fall behind in prioritizing these initiatives will likely encounter challenges in attracting and retaining top talent, as these generations are unlikely to consider positions that involve filing or other paper-intensive tasks when higher-level automation is so readily available.
Prioritizing automation is crucial to meet the expectations of the next generation of workers and to ensure long-term success in talent acquisition and retention.
How has Technology Changed the Role of AP?
Digital solutions have changed the role of AP teams by allowing them to take a more collaborative role with other departments and do more strategic planning.
In the past, AP teams were often seen as a back-office function that was responsible for processing invoices and making payments. However, with the advent of digital solutions, AP teams are now able to play a more strategic role in the business.
Thanks to digital solutions, the modern AP team now plays a pivotal role in the following additional processes that drive bottom-line results:
- Data analytics – By generating custom reports, teams can identify payment activity trends, like the percentage of payments made by credit card, direct bank transfers, or checks. By understanding their customers’ payment method preferences, teams can make recommendations to streamline processes, such as promoting the use of more efficient payment methods.
- Process improvements– AP clerks can use their knowledge of the accounts payable process to identify areas where it can be improved. By observing workflow bottlenecks, for instance, they can develop new invoicing procedures that are more efficient and accurate.
- Supplier relations– AP specialists can build relationships with suppliers by ensuring that invoices are processed accurately and on time. This strengthens the company’s reputation and allows them to capitalize on dynamic discounting.
- Risk management– AP teams play a critical role in identifying and mitigating risks associated with AP processes, such as fraud and non-payment. They protect the company’s financial assets and reputation by understanding cash flow patterns and proactively identifying areas of risk.
- Compliance– By ensuring that the company complies with all applicable regulations, such as those governing payment terms and supplier relationships, AP teams can help protect the company from financial penalties and legal risks.
The Role of the CFO in the New AP Department
The changing role of the modern AP department can yield significant business benefits. Here’s how you can support those efforts in your team:
Invest in Advanced Technology
One of the best ways for CFOs to help their AP teams adapt to the changing landscape is to invest in advanced technology–namely, enterprise AP solutions that offer AP automation, data analytics tools, and supplier management from a single cloud-based platform.
By investing in best-in-class technology, CFOs can help their back-office become more efficient, accurate, and compliant.
Facilitate Interdepartmental Collaboration
The AP department is no longer an island. To be successful, AP teams need to collaborate with other departments, such as procurement, treasury, and receiving.
By implementing software solutions that facilitate interdepartmental collaboration on processes like e-invoicing, CFOs can improve visibility and communications across their organization. This ultimately allows teams to collaborate for more informed decision making, resulting in fewer expenses, better budget management, and stronger financial health for the organization as a whole.
Implement Effective Change Management
The world of AP is constantly changing. Amid the turbulent past three years, a steady constant has been the role of automation in businesses that have managed to get ahead of their competition.
However, adding or upgrading your automation solution requires more than investing in new software. In fact, a Gartner study suggests that 50% of business change initiatives fail without executive support and a proper change management strategy in place.
Ensuring the success of automation in your business hinges on the support of your CFO and the rest of the C-suite. It is important for these leaders to implement a strong change-management strategy that includes specific procedures to ensure the sustainability of these efforts in the long term.
By investing in an AP solution that offers continuous support, you can effectively facilitate these efforts and maximize the benefits of automation in your organization.
Embracing the changing role of the AP department hinges on the CFO’s openness to introducing new tech solutions into their workplace that improve business processes and offer a competitive edge.
If you’re a CFO, now is the time to invest in enterprise-level AP solutions that give your teams the flexibility they need to succeed in today’s constantly changing landscape. Solutions like iPayables scale with your business, allowing you to navigate what’s to come in the future.