The True Mission of Accounts Payable and Its Guiding Vision

data is kingAccounts payable (AP) is traditionally seen as overhead. Most organizations have a negative view of accounts payable. I can’t tell you how many times I’ve heard: “You people never pay the supplier on time”. In reality, it is the process that is broken and AP is just the last step in a very chaotic buying process. It is also because most AP organizations focus on being the best invoice processor. That is what AP does, but it is not APs mission/vision.

The mission of AP should be to create a strong relationship with the CFO and Financial Controller, and be seen as their Financial Consultant who can bring real savings to the organization.

The vision of AP should be the path that will get them there. Design an AP process which will remove roadblocks to ensure an efficient, compliant, cost-effective process.

This requires a system that can help AP gain control over paper invoices with an electronic workflow that tracks every invoice and provides metrics that can be used to evaluate the process. By removing maverick spend an effective end-to-end process that achieves bottom-line savings through a compliant process is created.

“Data is King”

How many times have you heard “Cash is King”? Well when it comes to AP, I believe “Data is King”. When the data is studied and someone leads the charge to take the data and make changes to their process then the result is real bottom-line savings!

Unfortunately, most AP departments do not have systems that provide real-time metrics. Which leads accounts payable to react to the ‘noise’, spending most staff time on the people who demand attention to their issues. If AP had data, they could spend their time on issues that occur most often (following the 80/20 rule). Of course, you have to handle the noise makers, but by working the 80/20 rule and not just fixing errors but removing the cause of errors, the ‘noise’ will go away permanently. But again, this requires data.

The best way to get your project on the board and upper management to take notice is by building a solid business case, which requires doing your homework first. There are many world-class companies who are perfect examples to cite as they’ve proven that a system able to manage paper consumption, provide impactful statistics, and alter the AP process to eliminate maverick spending, enable success in the more important mission of freeing AP staff from manual tasks to work on:

  • Discount management
  • Spend management
  • Dynamic discounting and cash management with the Financial Controller
  • Further process improvements based on data collected

 

Judy Bicking

Judy Bicking is a 27 year veteran of Johnson & Johnson. Her career has been focused on Procure-2-Pay, Order-2-Cash, and developing Shared Service Center in the U.S. and Europe; earning high recognition for process improvement and major cost savings. Today she is a Public Speaker, does consulting in O2C and P2P and has played a major role in writing and conducting certification training in these fields. She also owns and operates a 4,000 sq. ft. Retail Department Store along with her passion in doing mission work at home and abroad.

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