With all the advances in information technology, Accounts Payable departments still lack a cohesive product set to take them to the next level. This does not mean companies have not made some strides in certain areas of their AP operations, like document capture for instance, where there are numerous product offerings that can deliver value to specific functions. What is missing in many organizations however is a more “holistic” strategy that combines numerous technologies – document capture, OCR, vendor portal, dynamic discounting, collaborative dispute processing, etc. – along with process re-engineering and implementation of best practices. This may sound expensive and complicated but that reality is the benefits far outweigh the costs.
One of the inhibiting factors to AP departments taking the next step has been budgets and visibility. Too often companies view their AP departments as necessary evils, a non-strategic cost centers. Managers and directors responsible for Accounts Payable can change this equation by bringing high-value solutions to senior financial management to change that perception. In a large distribution company, a very robust upgrade of AP department technology and processes was undertaken, funded, and paid for by the savings generated from a dynamic discounting program. Preceding this upgrade was the development of a long-term vision and a holistic approach to upgrading the department. Not only were all current processes and systems evaluated, but a vendor stratification exercise was undertaken to understand the make up of their vendor base. The information gathered through this process informed their decisions on technology and process change. For instance, they learned that while a large percentage of their spend came from those vendors who were taking advantage of EDI, a large volume of the transactions were still paper based because those vendors lacked the IT resources to participate in a formal EDI relationship. The company decided to implement an e invoicing initiative of those non-EDI vendors as part of their new approach. Today, over 3,000 invoices per week that used to come in via paper are now submitted electronically through a vendor portal.
One thing that all AP practitioners will agree on is that there is no “one size fits all” answer. The good news is if they step back, identify their goals, take a big picture view, and bring high-value solutions to the table, they can build a world-class organization that fits their company, industry, culture and vendor community. And do it far more efficiently than in years past.
