Accounts Payable Automation: The Often Neglected Opportunity
The past ten to fifteen years have seen significant advancement in the body of knowledge around best practices in Accounts Payable processing. Despite all of that expertise available to anyone on the internet, virtually every document management engagement we address raises the question of how to achieve the benefits of these best practices. On the surface, we all know it is quite simple…receive a bill, process it, and pay it. As a business grows, the issues that come with a growing vendor pool and a growing accounting department bring to light paper-based inefficiencies that can easily be solved with process automation. A balance of business knowledge, process experience and technology can place a business on a path that can actually turn an accounts payable unit into a profit center rather than just another administrative operation with an unacceptable budget.
Automation and Best Practices
Best practices in Accounts Payable cover a wide variety of areas, including automation. Unfortunately, there is very little guidance available which helps you understand the most beneficial strategy to achieve the potential benefits. You can invest in imaging and workflow technology within your business and most will achieve some level of success with this approach. Or, you may consider using contracted “service bureaus” who have already invested in the technology and utilize those services to enhance your A/P staff’s capabilities. Ultimately this investment comes down to a balance of benefit, controls, and eventually, belief that the solution will enhance the business operation. However, when automating Accounts Payable, you are dealing with an area where a little bit of knowledge can be dangerous when balancing the personnel, business process, and technology aspects of improving the cost-effectiveness of an accounts payable operation.
Charting a Path Forward
The single most common problem occurs when the business develops too narrow a solution scope. Automation allows you to think bigger and turn your accounts payable operation from a cost into a profit center. To achieve this lofty goal, the business owner must take a holistic view of the entire process. This starts with the vendor database and vendor maintenance function, flows through the purchasing and contracting process, includes the invoice processing step, and incorporates the payment process to your vendors. An automation solution that only considers part of this process will limit its value. Similarly, it is important to realize that most businesses cannot achieve a complete change in just one step. Almost all businesses have to map a strategy with multiple steps over time to ensure the business is able to avoid the negative impacts of a significant change.
While it may seem like a time drain, I recommend that you spend the time mapping out the change from your current process towards a completely automated accounts payable solution. Most importantly, you should consider the dollar value of your accounts payable in the market. When considering internal investment in technology versus outsourcing, most companies underestimate this critical component. In some cases, it is never considered in developing the business case for the best automation solution. Process automation, when applied to accounts payable, is a complex task requiring thoughtful consideration of many factors and inputs. It also requires that you take a different, more holistic view of accounts payable and that there are benefits to a business that can be achieved from this enlightened view. It is an effort that should not be undertaken lightly but if your business is growing there is a substantial financial benefit to be achieved from taking a different view of accounts payable.