The Hackett Group published a research article entitled A Checklist for Developing a Future-Proof AP Organization that showcases what successful organizations have in common in their Accounts Payable (AP) departments.
The report focuses on the benefits of modernizing your AP department to a digital platform and creating successful AP management habits within your company and workforce.
Key Summary: AP Automation
The Hackett Group's research shows:
- Organizations that modernize with automated AP save as much as 43% on their invoice processing costs.
- Automated AP means businesses use 1/3 of AP department man-hours to get payments out.
- AP automation pays invoices on time (potentially reducing late fees, sourcing and credit challenges).
Successful AP at Top-Performing Organizations
Don't Focus Strictly on Automation
The most successful businesses use a multi-pronged approach in their payables department. Every organization they studied is unique, but The Hackett Group noted similarities like:
- Centralized invoice receipt
- Careful management of services performed both in-house and outside
- Digitizing all information
Read that last one again, digitizing all information. That's a massive task even for small businesses. We wanted to highlight that specifically so you can start considering all the information that comes through, even at the simplest level. Now you can start churning some ideas to get all that data entry done if you decide to move forward with AP automation.
Master data strategies are essential in this endeavor for midsize to large organizations. They'll need to be implemented and refreshed regularly.
However, hard work can reap great rewards! The Hackett Group's research suggests that AP automation will better manage your working capital, support sourcing savings, and ultimately make for happier stakeholders!
The Procurement Process Matters to AP: End-to-end Ownership
Top performing organizations utilize an end-to-end ownership process that melds communications between procurement and payables. From the earliest stages of inventory management and purchase orders, through final payments of invoices; they use automation to project, order, manage distribution, and finally pay for goods.
- Highly successful businesses use a formal channel strategy.
- Nearly every purchase they make is included in a contract or purchase order.
Ownership is assigned to monitor specific purchase orders, merchants, or inventory segments from cradle-to-grave.
Getting Started
Every business is unique, and every AP department faces its hurdles and goals. The Hackett Group’s checklist on page 7 delineates preparation for the AP automation process and offers a good starting point for AP managers.
It's broken into sections as follows:
- Human Capital - hire, train, and maintain the best employees, focus more on strategy than transaction processing.
- Organization & Governance - implement end-to-end accountability procurement and payables.
- Technology - implement self-service options for customers wherever you can, automate invoice receipts, approval, and payables. Transcepta's Supplier Network does just that.
- Service Design - develop source-to-pay channel strategies as often as possible.
- Analytics & Information - capture as much spend data as possible, formalize a master supplier file and define accountability among staff. Analytics are a cornerstone for Transcepta's Solutions.
Utilize Supporting Technology
The report also noted that at the top-performing organizations, 56% of AP inquiries were resolved without involvement from payables staff.
This is where we can help your organization make a huge difference! Transcepta features true e-invoicing, where your business gets invoices through a truly electronic process from the supplier into your system in minutes, not days or weeks.
For more information on Procure-to-Pay trends and how Transcepta can help, sign up for our upcoming webinar below today!
