Accounts payable has a well-earned reputation as the quintessential back-office function.
Most accounts payable professionals toil away day after day receiving, processing and paying invoices, with little time for value-added activities. In fact, 84 percent of the typical accounts payable practitioner’s time is consumed by heads-down tasks such as data entry and paper shuffling and filing, leaving only 16 percent of their day for valuable functions such as data analysis, supplier management, and vendor master cleanup, the Institute for Finance and Management (IOFM) reports.
This leaves a major opportunity for data errors and missing invoices and lack of opportunity to leverage all that JD Edwards has to offer in analytical tools.
It is for this reason that only 15 percent of senior finance executives perceive accounts payable as being “exceptionally valuable” and “an extensive collaborator,” according to Ardent Partners.
But the accounts payable function’s standing is rising.
Over the next three years, nearly two-thirds of accounts payable leaders expect that their department will become more strategically important to their organization, IOFM finds. Accounts payable has an opportunity to serve as a hub for finance stakeholders, supplying critical insights and knowledge that can arm decision-makers. This, in and of itself, is a move beyond the “basics” of the function.
If the accounts payable function is to seize its opportunity, with the help of IT, as a strategic partner to finance stakeholders, it will need to respond to three strategic trends that will shape finance in 2019:
1. Greater focus on cash management: Cash management is more important than ever. Improving cash flow analysis is the top finance and administration priority of senior finance executives, per IOFM. Finance must harness the collective ability of the entire organization to help drive internal process efficiencies and optimize working capital. One of finance’s largest opportunities to impact cash and the financial performance of the enterprise lies within the accounts payable department. Automating the accounts payable function enables organizations to improve working capital management through extended Days Payable Outstanding (DPO), payments optimization, more early-payment discounts capture opportunities, and the ability to earn cash-back rebates on supplier payments made via card. In fact, optimizing cash management with an automated accounts payable solution delivers five times as much financial benefit as simply automating invoice processing, studies show.
2. Better supplier management: More finance leaders are recognizing that suppliers can be leveraged for a competitive advantage and mutual gain. How accounts payable departments approach their supplier interactions and the results derived from them will have an increasing impact on enterprise operations and overall financial performance in 2019. Although many of the more critical elements of supplier management will and should remain firmly in the hands of procurement, there are some supplier management elements that can be augmented by accounts payable. For instance, 75 percent of best-in-class accounts payable departments are responsible for managing real-time supplier inquiries and requests, according to Ardent Partners research, while 62 percent of best-in-class accounts payable departments are responsible for managing the vendor master file. Forty percent of best-in-class accounts payable departments are actively involved in sourcing. By automating invoice receipt, matching and processing, accounts payable departments can help ensure efficient and effective supplier management and avoid supply chain disruptions and cash flow problems.
3. Enhanced business intelligence: More finance leaders are adopting data-driven approaches to accelerating financial performance. The invoice and operational data that flows through the accounts payable function presents a deep well of untapped financial and business data that can be extracted and converted into intelligence. Twenty-six percent of finance leaders say that data is critical to their function, Ardent Partners reports. Yet, 45 percent of senior finance executives lack visibility into invoices and payables information, and 42 percent of senior finance executives have difficulty managing and finding invoices, per IOFM. Automation provides accounts payable with the ability to monitor relevant Key Performance Indicators, access real-time financial data, drill-down into data for better decision-making, instantly export information to decision-makers, generate ad hoc reports, and provide management with easy access to the information they need, how and when they need it.
Accounts payable leaders recognize the need to elevate their function from a back-office task. Responding to the three finance trends described above will enable accounts payable to do just that.
As your organization explores solutions and system enhancements to align with these trends, collaboration is key. IT and business should partner to select solutions which accomplish the goals of both departments to ensure the solution meets long-term enterprise goals. The more you can ensure centralized information and quality of information in JDE, the better equipped employees are to take your accounts payable to the next level.
Want help developing a plan to automate your accounts payable function? Contact us.
This post is brought to you from our partner, Canon Information & Imaging Solutions (CIIS). Learn more about setting your strategy for the future of accounts payable in Canon’s sponsored Infographic: “Setting your P2P Strategy for 2018 and Beyond”
About Canon Information and Imaging Solutions, Inc.
Canon Information and Imaging Solutions, Inc. (CIIS), a wholly owned subsidiary of Canon U.S.A., Inc., brings together Canon's world-class imaging technologies and information management expertise to assist organizations in achieving their digital transformation objectives. With a focus on innovation, CIIS's software development and solutions delivery capabilities scale across several practice areas: Business Process Automation - including Procure-to-Pay & Order-to-Cash automation, Document Solutions, Information Management Services with a focus on content capture, management and collaboration, and Security and Infrastructure Management. With expertise in emerging technologies such as artificial intelligence, machine learning, and big data analytics, CIIS deploys its solutions in partnership with leading technology providers and offers comprehensive consulting and professional services that are trusted by organizations of all sizes. Additional information about the company, its programs and mission can be found at ciis.canon.com.