As digital transformation is taking place in the accounts payable function, fleets are starting to see the strategic value AP can bring to the organization.
According to The State of ePaybales 2019: Driving Value in the Age of Intelligence, a report from Ardent Partners, 55% of businesses perceive AP as “very” or “exceptionally” valuable to the overall enterprise.
The AP industry is in the midst of change. And while it has made many strides, it still faces challenges before it reaches a point where it is considered a core enterprise function.
Let’s look at some of the gains made by AP in recent years, per the Ardent Partners report.
- Developing more effective process-led capabilities that transform tactical execution into strategic value. Traditionally, AP was fairly inefficient because of the amount of paper it had to handle and the manual nature of its processes. Today, more AP leaders are using technology to streamline the invoice receipt and approval workflow process and eliminating paper in the operation.
- Serving as a valuable conduit for more strategic activities like spend management and cash management. AP has been able to close the procure-to-pay loop and now can provide the executive management team with day-to-day insights on the financial health of the business.
- Sparking the Age of Intelligence in the way the business ultimately perceives the output of the AP function. AP has access to a goldmine of data. There is enough data in AP to provide real information that can be used to improve spend management and cash management for the entire organization.
While AP has made strides, it still has work to do in order to be of real value. Barriers that need to be overcome include:
- There are still a high percentage of invoice exceptions. Sixty two percent of survey respondents said exceptions were still a significant problem.
- Invoice/payment approvals take too long, according to 51% of survey respondents. This creates bottlenecks that affect efficiency.
- Lack of respect/status within the organization continues despite some of the strides made by AP.
- There’s still too much paper involved in the procure-to-pay process. This, coupled with the length of the approval process, make it difficult for AP to move beyond its back-office reputation.
- Getting the budget to invest in automation is preventing some AP operations from making the changes needed to turn the department into a strategic asset.
- Lack of visibility into invoice and payment data is the result of not being able to automate the procure-to-pay process.
To move forward, according to the report, AP needs to devise a plan to overcome the challenges. For starters, AP needs to solve most of the tactical and manual-based issues by investing in process automation. Then it must “develop an intelligent function that uses its evolving business perception to engage more stakeholders, gain greater investments and support better business outcomes through intelligence-based insights.”
This type of intelligent operation cannot exist if the AP staff is spending its time processing paper and performing manual activities. Process automation is the best path to AP providing real value.