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Why your Accounts Payable Process is the work of ‘Super’ Teams



How to get a ‘super’ AP Process?

Talking about Accounts Payable Process Automation and Superheroes in the same sentence may sound strange but we are living in strange times. During this past tumultuous year, your  AP process may not always have been front and centre, as you continued to battle disrupted supply chains, high costs and general chaos.

But, you would be wise to look at you accounts payable processes through the lens of a recent The Hackett Group report.  The research reveals that teams that have put focus on invoice processing software can save up to 54% on invoice processing costs with a third fewer employees.  However, Invoicing software will only get you so far.  According to Hackett’s Nicolas Walden, Accounts Payable process automation is a bit more complex than that. 

In a recent webinar hosted by Ivalua, Walden explained that the key is a multifaceted approach. Top-performing Accounts Payable organizations, he said, have matured in seven areas: human capital, service partnering, organizational design, governance, technology, service design and analytics. Strength in these key operational areas help organizations future-proof themselves by overcoming barriers to digital transformation and benefitting from massive cost efficiencies and productivity gains brought by overhauling their accounts payable process.

This post explores the key blockers to digital transformation and Walden’s checklist for overcoming them.

3 Top AP Process Blockers:

Although 86% of Accounts Payable professionals surveyed by The Hackett Group say digital transformation of the Purchase-to-Pay or P2P Process process is of “critical” or “major” importance, few have been successful in making it happen. According to Walden, the three main barriers to digital procurement transformation are a lack of supplier adoption, poor supplier matching rates and broken procurement process silos:

  1. Lack of supplier adoption: Suppliers have a wide variety of invoicing capabilities, depending on their level of technological maturity and the systems they use. AP organizations incur processing expenses dealing with inconsistent invoicing processes and low straight-through processing rates.
  2. Poor supplier matching rates: Non-PO matching issues introduce costs, yet AP automation often focuses only on digitizing processes or PO compliance. This creates a gap that leads to higher costs, as AP personnel struggle to manually correct matching issues.
  3. Broken procurement process silos: Most organizations lack clear accountability across the Source-to-Pay journey. Processes are managed in silos, which leads to data gaps and the inability to benefit from integrated analytics and data insights.

6 Accounts Payable ProcessTraits ‘Super’ teams share :

Walden’s research revealed that top-performing Accounts Payable organizations have managed to overcome these blockers by addressing all aspects of service delivery. Here’s what these organizations have in common:

  1. Human resources: Top performers implement formal training and hiring standards to ensure skill levels are consistently high across all staff members. Routine tasks are automated, so that staff can focus on high-value activities instead.
  2. Procurement Partners: Top performers have found a balance between doing things in-house and outsourcing. They also have a highly automated supplier onboarding process.
  3. Governance: Top performers have standardized policies and procedures across their organizations, with clear ownership and consistent enforcement. These organizations leverage the RACI model to enhance accountability, and they have implemented streamlined purchasing and approval workflows. 
  4. Procurement Technology: AP Process Automation is key to this category. Top performers have rolled out enabling technology across every aspect of service delivery, including invoice receipt and PO processing, business rules, data capture, workflows and approvals, supplier communication and more. Online supplier portals are a key feature — as are chatbots — for employee and supplier support.
  5. Procurement Processes: Advances in service design are characteristic of top performers, and this goes beyond process AP automation. Top performers exhibit a high level of coordination and have standardized supplier payment policies. They follow an end-to-end channel strategy with nearly all spend covered by contract or POs. Among top performers, 99% of all invoices are sent to a central location. Purchasing cards are also widely used.
  6. Procurement Analytics: Without supplier data and/or master data insights, real improvement is impossible. Top performing organizations leverage data in all forms — reports, KPIs, scoreboards, and unstructured data — and analyze it holistically for actionable insights. Top performers have standardized supplier master data, supplier payment terms, and policies and procedures, and they have dashboards and analytical tools that provide complete visibility into process performance.

By mastering these six categories, AP process excellence is possible. You can achieve significant cost savings while optimizing resources, and free up staff to focus on delivering additional value. 

To learn more about The Hackett Group’s research and what steps to follow to ensure successful procurement transformation in your organization, watch the full webinar on demand here. You can also download The Hackett Group’s Checklist for Developing a Future-Proof AP Organization, which provides a launchpad for teams looking to improve performance by transforming the AP process for the better. 

Steve Carter

Senior Product Marketing Manager

Spanning a 30-year career, Stephen has led successful global product marketing launches alongside procurement experts and finance professionals in both the public and private sector. As a longstanding contributor in the ever-evolving sourcing industry—from early OCR—to the establishment of eInvoicing Networks, Stephen now applies his extensive tech experience to Ivalua’s unified Procurement platform. A problem solver and industry thought leader, his product positioning is central to generating long-term customer value while streamlining user experience. In software development, adaptability is the key and Steve’s commitment to the future of procurement is propelling Ivalua toward the next generation of strategic payment solutions. Outside of his professional life, Steve is a published author and 17th Century historian.

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