CloudX Blog

What To Do When Your Accounts Payable Process Sucks

Posted by Chris Cosgrove

Sep 5, 2013 7:35:00 AM


 Don't let your Accounts Payable process suck!

Let’s face it…self-improvement is a major industry in America today.  It seems like new diets are invented, popularized, and circulated perpetually. What was in 6 months ago is out, and what was popular 10 years ago, get modified and comes back to the forefront of public consciousness.  Contributing to the fitness craze is the whole concept that we, as Westerners, hold about our image, identity, and the race to compete with those standards.  Sometimes, that competition is a good thing, and legitimately focuses us on ways we want to improve our physical fitness by pumping iron, running longer, eating healthier, and ultimately shedding pounds and shredding down.  At other times, it creates an unhealthy obsession with unrealistic standards for our personal health and can foster complexes, especially among impressionable age and people groups, as is the case of bulimics, anorexics, and others.  With that said, Accounts Payable process improvements aren’t altogether different.


In many cases, as in the drive to improve our physical bodies, there is a knowing that our current state is not good, let alone optimal.  And so, we begin the quest to improve….by initially gathering information about how to improve and then progressively shaping a vision and ultimately a plan for what that improvement will entail.  This is often accompanied with a counting of the costs associated with what it will take to pull off the improvement.  For our health, it’s the cost of nutritional advice, healthier foods, personal trainers, gym memberships and the like.  For Accounts Payable process improvements, it’s assessing our state of operations, analyzing the best approach to improving them, and then determining the cost to bring about the improved state.


Begin At The Beginning


1.  The first thing to do after recognizing that you have an Accounts Payable process that sucks is to document your current state.  By doing this you can begin to pinpoint areas where there may be excessive or redundant labor steps, bottlenecks, risks or other tie-ups.


2.  The second thing you need to do is educate yourselves on ways to improve.  Just like you would turn to a personal trainer, instructional videos or books, you need to begin to learn about methods to improving.  We’d recommend ingesting quality e-Books or webinar content that shows how other organizations have stopped sucking wind and transformed their Accounts Payable process into powerhouses.  To get a jump on that , check out these resources here!


3.  The third thing you need to do is a quantitative analysis.  If all you’ve done is documented the Accounts Payable process steps without associating the cost factors that swell your CPI, then you’ve done yourself a disservice…especially if you are trying to sell this to the boss.  By all means, you’ll want to aggregate all the gripes and challenges lobbed by the AP staff and Approvers and GL Coders throughout the organization.  However, without the financial piece, your CFO or Controller is unlikely to be vastly swayed by your petitions.  With that said, when you do have the financials in place, you really have something special, kind of like the rug in The Big Lebowski, which we all know, as the Dude infamously said “Really tied the room together.”  If you have gotten shot down by Executive leadership on this before check this post out on how to succeed when pitching Accounts Payable automation.  To go a step further, we’ll happily help you pull together a Rapid AP assessment and business case if you click here!


Wrapping Up


Getting fitter is a great thing, though it certainly can become an obsession (have you ever met someone sold out to the Crossfit lifestyle…talk about committed!).  The key is coming to the realization that there is opportunity for improvement and then figuring out and mapping out the yellow brick road to the end state.  If there’s anything we could say about Accounts Payable automation projects and shaping future Accounts payable process maps, it’s imperative to put the legwork in upfront in planning and strategy, so you have a clear vision to run with.  At times, selling change within the organization can be a daunting thing, irrespective of the fiscal and productivity aspects, because people are people, and averse to change.  The good news is that that the reward for those who diligentrly overhaul and revamp their Accoutns payable process tend to have better insight, less risk, and lower invoice processing costs than their peers who stay mired under paper.

Download CloudX\u0026#39\u003Bs eBook...Uncovering the 7 Costs to Process an Invoice \u0026amp\u003BWhat To Do About Them!
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Topics: Accounts Payable Process, Accounts Payable Automation, Improve Accounts Payable, accounts payable improvement, ap automation

5 Accounts Payable Automation Factors To Consider in Managing AP

Posted by Chris Cosgrove

Jun 20, 2013 1:52:00 PM

 Accounts Payable Automation Questions?

 There are no dumb questions!


If you’ve ever been around a 2 or 3 year old child for an extended period of time, it’s a remarkable thing.  Their seemingly insatiable curiosity is simply amazing, as they incessantly ask dozens of questions about everything in their surrounding world.  Like children, we too can learn quite a bit from asking good questions, and we here at CloudX wanted to share with you some answers from others interested in learning how to improve their Accounts Payable processes.  With the breadth of experiences we’ve had in Accounts Payable automation, we wanted to address a question that came up the other day:


“What factors are there to consider in Managing the AP process with regards to AP automation?”


That’s a broad question to be sure, but there are some major themes that we see to ensure successful Accounts Payable automation initiatives.  Also, this answer is relative to the user role within AP, ie. it’s different for AP Processors, Supervisors, Managers, Controllers, and CFO’s depending on where you sit in the stratosphere.


So, we’ll take a general look at the following 5 areas:

  1. Invoice Capture – There’s a lot of movement in the market to electronically supplied invoices.  However, despite advances in technology like EDI and E-Invoicing, for most companies, electronic invoicing simply means supplying a PDF or Tiff image on an e-mail transmission.  For AP staff, this adds additional processing steps and complexity as most organizations will first output the invoice and then proceed to physically route, and key the data off the invoice.  To improve this area of AP, it’s necessary to have a flexible capture component that is capable of processing invoices without reliance upon manual data entry. Ideally, this component can handle scanned invoices, emailed attachments, invoices posted to a website (through a crawling & extraction tool), EDI (by producing an imaged transaction record), and faxed invoice.  This way, you can begin to leverage the strengths of automated data capture to drive the process, while addressing pretty much every way an invoice is delivered to the AP process.
  2. Process Centralization – This has been a trend in recent years for most organizations, who have either gone to a central AP organization or to a Shared Services model.  With that said, we still talk to companies who have a distributed AP organization, and when we do, the issues around processing standards, efficiency, and benchmarking are glaring.  Further issues arise from a process cost perspective as a dispersed labor force can mean volatility in labor costs and higher CPI.  As much as possible, it’s better all around to centralize the process, especially to gain tighter process controls and have insight to what your AP staff is actually doing on a day to day basis and whether or not they are working to their potential.
  3. Benchmarking Performance – Which leads to the next point. We were recently on a call with a Corporate Controller for the North American market of a global company with revenues in the multi-billion dollar range.  Even with the aide of the North American Accounting manager, the two were not tightly clued in to their own KPI’s within their AP process.  By looking to post Accounts Payable automation benchmark data coupled with our client experiences, we were able to shed light on what optimal invoice processing looks like, but the conversation highlighted the latent need for improved process insight and reporting.  Like it’s been said, ‘if you can’t measure it…you can’t manage it’.  If you are presently not benchmarking your departmental effectiveness, then chances are you’re not as productive as you could be.  Take the time to figure out where you stack rank to industry data and it will be revelatory as you gauge what Accounts Payable automation could mean to you.
  4. Visibility – This is the big kahuna…and for those functioning in an entirely manual AP process replete with data entry manual validation, manual routing and exception handling really have no empirical knowledge of this.  However, if you’ve transitioned from an organization that has visibility into AP and dynamic payables reporting to a manual AP organization, you’ll instantly know what your missing.  No other aspect is as decisive at mitigating late payment fees, providing audit trails to invoice approval processes, delegating invoices for approval when there are bottlenecks, improving audit cycles and for boosting capture of early payment discounts.  Make sure that when you automate you have graphical reporting and dashboarding built in to your new AP automation system.
  5. Fraud Prevention – Another important area that rarely gets the attention it merits is with respect to preventing Accounts Payable fraud.  However, by leveraging the approach we’re advocating here, you an utilize capture, workflow, and business intelligence tools to catch potential duplicate payments by checking against vendor data, invoice amounts, and invoices consistently running within a close percentage of various invoice approver’s maximum thresholds. 


There are many factors to consider when tackling a broad initiative like Accounts Payable automation.  To be sure there are components on the Procurement as well as the Payment sides that haven’t been addressed in this brief article, but also merit consideration for a total AP overhaul.


To learn more about the costs associated with invoice processing check out our eBook below. 

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Topics: Accounts Payable Automation, Improve Accounts Payable, Invoice Processing, accounts payable improvement, accounts

AP Automation Improvements Should Be Process Not Cost Centric

Posted by Chris Cosgrove

Jun 5, 2013 12:08:00 PM

Happy loves AP Automation!

Improvement is an interesting thing. 


Take a hobby/sport (though that is a debate unto itself that rages on) like Golf.  As Mark Twain said ‘Golf is a good walk spoiled.’  For many aspiring golfers, there is a latent desire to improve.  Lower scores mean getting one up on your friends, relatives, cohorts, and dare to say clients.  What, you’re saying you’ve never played with someone that is irksome…I mean, what gives with someone offering tips to you, when they’re spraying the ball all over the place and netting a higher score than you? It’s almost a proverb that once a weekend warrior hits the links, they suddenly become more sage like than Ben Hogan….but I digress. 


You shouldn’t approach improving your golf game by saying I’d like to drop my score by 10 strokes per round this year.  You need to get granular and understand where you’ve got excess strokes that can be eliminated…ie. you’re three putting half the holes on a course, and there’s an opportunity for about 9 strokes, so maybe you don’t need major adjustments to improve the result as a whole.  Perhaps, it’s your short game, or you’re putting all of your drives out of bounds.  The point is that when you look at the process ... you identify areas for improvement, which have the result of improving the score.


The same is true of the Accounts Payable process!


That’s why it’s not shocking that in this year’s Accounts Payable Network’s benchmark survey that one of the core shifts for AP overseers is that there is less a focus on improving the costs of the process and one that is more heightened around improving the process.  The a-ha moment here is again that the process improvement implications are a more cost effective process.  It stands to reason that if you’re currently in a manual, data entry and validation mode, there are going to be errors and inefficiencies.  However, if you move some of the big rocks out of the way for your teams to improve (ie. AP automation software.) the process will get more accurate, faster, and productive.  Less manual, physical work should equate to a more cost effective process.  That is assuming of course you drive adoption in your organization and execute upon redeployment or reprioritization opportunities for your staff when possible.


When we consult with customers, we give full disclosure of the capabilities of a smartly architected and well deployed solution of its potency.  However, what they do organizationally and operationally after that fact, is a choice that is left entirely up to them.  If, as a recent customer we spoke with, they elect to keep extraneous people around that are underutilized and inefficient, well don’t cry when your CPI is not really dropping like you’d hoped.


What to do?


So based upon that and the thrust of this post, take time to do an effective review of your AP process and identify the areas where you think (know) there are redundancies and drags and then set about improvement.  Think of it as the office equivalent of time on the range with your favorite golf pro.  You may want to consider bringing in outside consultants to facilitate this, though that can often get costly, especially if you’re doing elaborate on premise, time in motion studies.


Alternatively, with a pretty straight-forward analysis, you can also get a rapid, benchmark assessment and quickly identify the major brushstrokes of your process to focus in on.  After that, you can delve into the niche areas of invoice processing that may be anomalies within the process.


Either way, don’t get so hung up about the CPI, and instead focus on improving the core areas of the process.  Things like data entry, validation, routing, matching, posting, and the like are the areas that form the aggregate and dictate your efficiency.  When you improve these, you’ll be in a position to have a leaner, meaner CPI, so begin with the end in mind and get better!


To learn more Accounts Payable best practices and about Accounts Payable automation click here to access some great eBooks!

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Topics: Accounts Payable Process, Accounts Payable Automation, Invoice Processing, accounts payable improvement

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