Brought to you by:

Brought to you by Ariba.com

Fire Police or Ambulance: Which are you?

999

An Accounts Payable department can often be seen as either Fire, Police, or Ambulance. Let me explain.

We had an anniversary recently for the 999 Emergency number which was introduced in the UK 75 years ago (other countries such as the US were much later). In the UK, when the number is dialled, the operator always responds “Fire, Police, or Ambulance: Which do you require?”

Fire

This is a completely reactive organisation which is just involved in putting out fires. This might take the form of responding to make an express payment to a supplier because we have lost the invoice, or it may be staffing an ever-expanding supplier help desk.

If you seem to spend all of your time putting out fires, then it’s time to stop and consider your processes. Real-world fire departments encourage the use of fire prevention. Why does it take so long to approve an invoice?

Police

The Payables department is seen by the suppliers as merely policing their invoices. It can be a case of telling suppliers why they can’t be paid. Being the enforcement agency is no fun. If you and yours seem to be stuck policing deals, there are a couple of things you can do:

Review your approval policies to see if you are spending your time on the invoices that make a difference. Look at the causes of invoice rejection to see if they could be eliminated by providing the supplier better information.

Ambulance

Just like the real-world ambulance, pricers often get involved in scraping invoices off the road, applying resuscitation techniques, and setting them in the road to recovery. This could take the form of adding a back-dated PO so that it now matches. However, as in the real world, casualty (ER) departments are much more expensive than primary care services.

Tough on exceptions, tough on the causes of exceptions

In the UK, the Labour Party had a slogan, “tough on crime, tough on the causes of crime.” For an accounts payable team, this could read, “tough on exceptions, tough on the causes of exceptions.”

A business network is a way of greatly reducing these emergencies.

  • A supplier portal allows the supplier to “self-medicate”, solving many of their problems themselves so that they never show up at the Emergency Room.
  • By sending orders to a supplier electronically, you are giving them the opportunity to service you better, and eliminating some of their costs. This information can be used as the basis of the supplier’s invoice back to you, which eliminates many of the suppliers.
  • Rather than merely policing suppliers, you are now able to collaborate with them. This can reset the relationship into something less adversarial, so they can introduce additional value into the business.

So, although it might be exciting to be a “first responder”, we could all do with fewer invoice emergencies.

 

About the author
James Marland
Vice President of Network Strategy - Ariba (Twitter: @JamesMarland)

James is responsible for defining and rolling out strategies for the Network with particular focus on Europe. He joined Ariba at the launch of the Ariba Network in 1998 after previously being a Solution Consultant at SAP America. In addition he ha... Read More >>>

Be the first to comment!

Leave a Comment