Technology innovation has impacted every business finance function.
For enterprise-level accounts payable departments, technology transformation is creating a truly unique opportunity to reinvent AP’s role within the modern organization.
Many AP departments already recognize the strategic value of data and insights, as indicated by the 48% of respondents to a recent survey who selected “enhanced AP reporting and data metrics” as their top priority. However, a small but growing number of best-in-class AP departments have reinvented their roles as a strategic business function. The aim is to create value for their organizations with new insights into supplier relationships, new sources of operational intelligence, and better ways to combat payment fraud, among other contributions.
Maximize efficiency, visibility and security by automating the entire invoice-to-pay process
If your AP team is still using paper and manual processes, you’re going to love this. Paymode-X streamlines, automates and accelerates every AP process, from taking in invoices to getting approvals to making payments. It’s fast, it’s fraud-protected and it’s a whole lot more efficient and transparent than the old way.Explore AP Automation
"We wanted to automate and streamline the entire AP and payables process - all the way from receipt through approvals and payment. Most importantly, the technology had to integrate with our ERP and enable mobile invoice approvals." Kim Hughes | VP & Controller | Taubman Centers
The big three
3 Best Practices for Strategic Impact
1. Holistic view of the AP function
Adopting a holistic view of the AP function by tearing down functional silos and embracing a complete invoice-to-pay process.
2. Continual process improvement and workflow automation
Thinking in terms of continual process improvement and workflow automation, especially when choosing and implementing technology solutions.
3. Rich source of strategic insights
Transforming once-overlooked AP data into a rich source of strategic insights for enterprise stakeholders.
How are AP departments achieving best-in-class results and strategic impact, and how can you do the same?
By embracing these three critical best practices that have helped AP departments transform their processes and reshape their companies’ perception of the function.
Implementing these best practices requires a commitment to change that touches every aspect of the department’s people, processes, technology, and data — a commitment that starts with the CFO and includes every member of the finance team. For AP departments that commit to change, the advantages of best-in-class performance more than justify the effort.
Why transform your AP department?
55% of finance professionals
say their organizations now view AP as a “very valuable” or
“exceptionally valuable” function.
Only 25% of AP departments
describe their processes as being “highly automated.
Only 21% of business executives
say that AP is a back-office function without strategic value
Ardent Partners, 2019
Best Practice One
Think holistically about the AP process
While many departments currently automate the three phases of the AP process — invoice receipt, processing, and payment — most also treat these as three separate, largely disconnected processes. Best-in-class AP organizations, however, bring together all three phases within a single integrated, invoice-to-pay automation solution.
This integrated approach to process automation delivers several important benefits:
Provides a more consistent flow of data across the entire invoice-to-pay process, helping accounting, cash management, and treasury functions to better manage cash flow, in addition to helping the AP team elevate its own performance measurement and benchmarking activities.
Gives organizations enhanced visibility into their vendor community, yielding new insights into vendor needs and preferences and suggesting new ways to optimize relationships.
Supports collaboration and communication with treasury, finance, procurement, and other stakeholders, allowing these groups to benefit from improved visibility into the invoice-to-pay process and new operational intelligence.
One caveat: When an organization adopts AP automation, it must thoughtfully reevaluate its existing technology partnerships. Not every solution provider is able to support this type of holistic approach.
Best Practice Two
Adopt continual process improvement
Best-in-class AP teams work constantly to update and improve their processes, which helps ensure they are always prepared to accommodate new growth, adjust to change, and stay ahead of fraud and risk challenges.
When these high-performing AP teams implement process improvements, they consistently rely on three best practices:
Leveraging automation to eliminate low-value, “checkbox” AP tasks and to engineer simpler, streamlined business processes that can accommodate change.
Working with technology providers that can help them identify and implement targeted process improvements — for example, by sharing the latest insights and technology solutions for managing an AP team’s vendor relationships.
Emulating the ways that best-in-class AP teams leverage technology. Research shows that these team members are more likely to show a mastery of their chosen solutions, and thus they adopt technology more often (see chart), use more features and capabilities, and display a better grasp of how technology creates business value.
Best Practice Three
Unlock the strategic value of the AP department's invoice and payment data
Many enterprises today are discovering and taking advantage of previously overlooked sources of strategic value within their business data. Best-in-class AP departments exemplify this trend. Businesses are leveraging invoice and payment data to combat payment fraud, optimize business processes, achieve cost and efficiency gains, and build stronger relationships with suppliers.
Many best-in-class AP departments are also exploring cutting-edge artificial intelligence and machine learning (AI/ML) capabilities to reduce errors and maximize the value of these data-driven insights. For example, machine learning can help reduce manual data entry by improving the quality of an organization’s invoice capture process. It can also be leveraged to help identify unusual and potentially fraudulent invoices or evaluate the security of each payment before money goes out the door. Machine learning can also raise the bar on vendor engagement by optimizing payment types utilized with specific vendors based on their past behavior and interactions.
Third-party AP automation solution providers can be a critical success factor in both cases by giving AP departments cost-effective access to aggregated sources of high-quality data. Solution providers can also give these departments expert support from data scientists, security experts, and other specialized functions — a source of advice and insights that many organizations would find cost-prohibitive to keep on staff.
6 METRICS THAT MATTER
Benchmarking best-in-class AP performance
Why are best-in-class AP teams such a distinct and influential group?
In a recent benchmarking exercise, which used a series of key invoice performance metrics, we compared the top 20% of AP teams to all the rest.
The time is right to reinvent your AP organization
AP professionals have a unique opportunity to transform themselves, their departments, and their organizations by bringing together the data, technology innovation, and process improvements needed to become a strategic, high-value business function.
These best practices, combined with the right advice from experienced technology partners, give AP teams a clear path to follow as they begin their own journeys to achieve best-in-class results.
Watch the video to discover how one business was able to leverage AP automation to help their business.
Are you ready to reinvent your AP department and achieve best-in-class performance?
Get started by downloading our new 2020 Guide to Accounts Payable Transformation.
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