When it comes to accounts payable priorities I’m reminded of a quote I seem to see every December that claims “I don’t want to enter next year with the same problems I had last year.” I think it’s a sentiment we can all relate to – a desire to let go of old habits that are holding us back in favor of a better, more effective mode of operation. To that end, here are 4 accounts payable best practices you should focus on adopting in 2019.
Abandon the old ways
Good old-fashioned paper has served the payments industry admirably since the dawn of time. Checks are reliable workhorses that dutifully transfer funds where they need to be and printed invoices are tangible proof of cash flow priorities. But in this age of rapidly growing technology, paper invoices and manually processing are now more of a hindrance than a help, causing payments to be slow, costly, cumbersome and error prone.
Just look at the list of challenges faced by today’s AP professionals. As you can see, far too much time and money is being wasted on old ways of doing things… and it’s holding you and your organization back.
Automate, automate, automate – that should be your mantra for 2019 if you want your business to move forward, and following are a few examples of why. If you need more convincing on how important this move is to your business, there’s plenty of information out there on the benefits of automation and the ROI it can deliver.
Remember the Payment Part of the Process
It’s easy to focus solely on improving the invoice processing part of the AP function – but the payment aspect is equally important. As Ardent Partners notes, “AP can dramatically improve controls, accuracy, and access to data by paying electronically. With all the different forms of ePayments that are available, taking a portfolio approach that utilizes the right form of payment for the right supplier or spend category has become an industry best practice. Optimizing the various forms of payments has the potential to deliver more efficiency, higher savings, and better relationships with suppliers.”
Improve Reporting and Analysis
Did you know that “Top performing finance organizations spend 20% more time on analysis versus data gathering?” That’s great news for the “61% of AP teams that are dedicating more time to high-value work such as data analysis.”
Why? Because the bottom line is that AP professionals want – and absolutely must have – real-time visibility into all financial data in order to gain business intelligence and strategic insights. For example, advanced reporting and analytics can help you:
- Identify trends and bottlenecks in AP processes
- Monitor the volume and value of invoices, related documents, and payments
- Improve cash analysis, cash planning, and liquidity management
- Speed up accrual reporting on financial reports
- Lower security and compliance risks by providing an audit trail of all activities
- Improve fraud monitoring and prevention
Transform AP into a Profit Center
Only a third of AP organizations (31%) are currently using business/payment networks. That’s surprisingly low when you consider the fact that these networks can centralize purchasing, supplier management, invoicing, communication, and payment activity. But the payment network can provide a benefit above and beyond even these unquestioned advantages: if the payment network facilitates rebates for early payment, it can literally transform AP from a cost center into a profit center. In fact, I’ve seen one organization earn $270K in cash-back rebates in one year on $82 million in ACH transactions and another earn $1.1 million in cash-back rebates in one year on $168 million in ACH transactions.
By using these best practices to guide your strategy and decisions in the coming year, you can easily make 2019 the year of AP. Continue to deliver on the core functions, but within the larger enterprise context. Doing so will make it possible to move beyond simply being a back office function that is isolated and ignored, to a strategic voice at the table, contributing value across the organization.