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4 steps to unlocking value in accounts payable

How can you ensure that your accounts payable (A/P) department provides strategic value for the company? There are many factors that can slow down and clog up the A/P process, from over-reliance on paper-based documentation, complex and outdated legacy systems or under-resourcing. So what are the adjustments corporates can make that could improve the efficiency of A/P and make it “a strategic business lever for the company”?

Often it's easier to visualise the wish-list of benefits, rather than the steps on how to achieve them. Slow, clunky A/P processes are frustrating for the employees having to process and approve the payments, as well as for the suppliers waiting on the other end. It's common for companies to want to achieve lower operating costs, improved capital management, reduced risk, instant visibility into spend and as little manual intervention as possible. Getting there is not always straightforward. Coupa Software, a provider of Cloud-based spend management services to corporates, has published a report that outlines some of the ways companies can improve their A/P processes and unlock potential:

1. Look at the broader impact of A/P across the company

“AP is a critical function that the entire finance team relies on, and with the right changes it can deliver tremendous business impact to the entire organisation,” says the report. Rather than seeking to simply speed up the current processes with technology or other resources, companies should try to understand how A/P has an effect across the company.

2. Are your current A/P processes 'best practice'?

How many suppliers are still submitting paper invoices? Do some invoices still require manual review? Automation is one answer to this problem but before implementing technology that replicates old processes, consider where processes could be improved and simplified. Coupa suggests measuring the efficiency of the current A/P process against key performance indicators: “[this] will give context for this review, helping you to understand where you are now and how big the opportunity to improve might be.”

3. Define your criteria for success

The aim for an A/P transformation project should be to improve supplier relationships and get better visibility and control over spending. The overall aims of the project should therefore be to implement processes and automation that make the new system easy to use for suppliers, easy and effective for employees, and, above all, the system needs to be end-to-end. Coupa says that to really make a difference in A/P, it's essential for suppliers to adopt e-invoicing.

4. Get support from all corners

All interested parties need to be on board with the goals of improving the A/P process, including: finance, suppliers, the board, all employees that have relationships with suppliers and external workers. Another important role in the A/P process are the managers that need to approve and sign off invoices – and often need to do so quickly or on the go.

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This item appears in the following sections:
Payments - Disbursements
Accounts Payable Management
Paying Suppliers
Factoring

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