The Focus in Accounts Payable: Silo or Synergy?
On a February 12 webinar produced by the Institute of Finance & Management (IOFM), more than 100 AP professionals heard how Maxim Healthcare Services was improving alignment between accounts payable and procurement, by linking the “buy and the pay” sides of its business.
Getting procurement involvement in an e-invoicing initiative may be overlooked at first, but success does require that procurement and accounts payable work together to drive the business process improvement. That’s because the receipt of an invoice is not an isolated event requiring only the attention of accounts payable.
In fact, to achieve new levels of efficiency, cost savings, and compliance, high-performing organizations are driving more of their spend off purchase orders. Getting the order right on the front end of the procure-to-pay process makes it easier to handle the invoice processing on the back end.
Of course, few organizations will drive all purchases off POs; inevitably, some segment of invoices will arrive in accounts payable without one. Fortunately, these non-PO invoices are becoming easier to process. With advances in collaboration over business networks today, many non-PO invoices can be automatically matched to contracts, or invoiced from contracts much like a PO-Flip®, where an invoice is created from the data on a PO. This extends the potential for touchless invoice processing.
What this means to accounts payable is that the roles are shifting. In the old world, AP was consumed with “firefighting” or detective work: fixing invoice errors, responding to supplier inquiries about payment status, and investigating whether the invoice should be paid. In the new world of accounts payable, automation handles that overhead, freeing up AP to focus on higher-value activities that contribute to bottom-line results.
This issue was addressed during the February 12 webinar in one of our poll questions: If automation improved your straight- through processing rates, where would your AP staff spend more of its time? The number one choice, from 34% of respondents, was to enforce compliance of invoices to POs and contracts, followed by pursuit of more early payment discounts (at 20%) and monitoring AP performance around key benchmarks (18%).
As you begin to shift the focus of accounts payable to a strategic profit center, the roles and responsibilities in your AP organization will change. So let me pose this question to you: How would your AP staff spend more of its time in this new world of business commerce collaboration? Will the emphasis be on driving more synergy with procurement to enforce compliance? Expanding early payment discounts? Monitoring invoice processing performance? Or some other focus? I welcome your responses and the business reasons behind them.