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Invoicing

AP Automation Superheroes Assemble

by Steve Carter

What is stopping your AP Team from Being Superheroes?

During these tumultuous times, achieving AP automation superhero status may seem an impossible task, as you continue to battle disrupted supply chains, high costs and general chaos. Although it may seem hopeless, opportunity awaits with the right transformation strategies, and Invoice to Pay solution. Recent data from the Hackett Group reveals that AP teams that have achieved Superhero status can save up to 54% on invoice processing costs with a third fewer employees — but are those savings achievable through automation alone? According to Hackett’s Nicolas Walden, it’s a bit more complex than that. 

In a recent webinar hosted by Ivalua, Walden explained that the key is a multifaceted approach. Top-performing AP 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 AP organizations future-proof themselves by overcoming barriers to digital transformation and benefitting from massive cost efficiencies and productivity gains. 

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

3 Top Digital Transformation Blockers:

Although 86% of AP professionals served by Hackett Group say digital transformation of the Purchase-to-Pay (P2P) process is of “critical” or “major” importance, few have been successful in making it happen. According to Walden, the three main barriers to digital transformation are a lack of supplier adoption, poor matching rates and broken 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 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 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 Traits AP Automation Superheroes share:

Walden’s research revealed that top-performing AP 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. 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. Technology: AP 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 portals are a key feature — as are chatbots — for employee and supplier support.
  5. 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. Analytics: Without 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 organizations have set themselves up for success. They can achieve significant cost savings while optimizing resources, and free up staff to focus on delivering additional value. 

To learn more about Hackett’s research and what steps to follow to ensure successful 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. 

 

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Author

Steve Carter

Senior Product Marketing Manager

For almost 30 years, Steve has worked as a Senior Product owner and Business Director in organizations selling procurement, Accounts Payable and Billing solutions into the Public and Private sectors. This involved designing and delivering products that support the Source to Pay and Order to Cash journeys for both Buyers and Suppliers. Steve’s last role was in the Crown Commercial Service working with Government Digital Services (GDS) to design the next generation of Public Sector cloud catalogue and marketplaces. This covered specifying market requirements, service design, end-to-end market engagement and sitting on the UK P2P central government working group. 

Over the years Steve has been involved in a vast number of invoice automation and billing projects and has seen technology come and go; from early OCR to the establishment of the e-Invoicing Networks, to new Self-service capabilities. When this is coupled with his all round knowledge of the systems and the processes used within procurement, Steve has a unique perspective on how we should be transforming procurement and more specifically Invoice to Pay in today’s Digital age. Outside of working life, he is a published author and 17th Century historian.

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