The competitive marketplace drives businesses to strive for ever-greater productivity and efficiency, finding better ways to do what they do and eliminating unnecessary work and cost. This applies not only to a business’s production of goods or delivery of services, but also to its supporting operations, including accounts payable. Given a flat economy that has stymied growth, organizations have looked more closely at operational process savings to improve the bottom line. Add regulatory scrutiny of financial operations, combined with advances in information technology, and the stage is set for the evolution of accounts payable (AP).
Automation is the key enabler. AP is in transition from a worker-intensive manual, clerical cost center to a leaner, automated and analytical operation that can contribute greater value to the organization. AP process improvements might initially target such tactical goals as reducing errors and bettering paid-on-time rates, but these are steps toward more strategic goals that move AP beyond mere efficiency to becoming a contributor to the organisation’s bottom line. Cost savings are a key driver, but real-time information in support of better cash management, discount capture, and reduction in COGS through provision of spend data for analysis are becoming the new “product” of AP (not to mention the possibility of rebates for payments through bank card accounts).
That’s the vision. What’s the reality?