In this post, I’d like to present the final two changes we see coming to AP, that will drive efficiencies and increase the value that AP brings to an organization. In two previous posts, we covered the first three changes:
1. More Importance Will be Given to the Quality of Supplier Information
2. Supplier Networks Become a Reality
3. Technology Provides New Ways to Automate AP Systems & Processes
Here, I present some ideas related to the final two changes:
4. Buyers & Suppliers Collaborate
5. More Cooperation between Finance & Procurement
All of these changes are discussed in a recent webinar I co-presented with Bob Cohen, VP Marketing at Basware, which can be viewed by clicking here. And, here is a quick overview of the final 2 changes.
4. Buyers & Suppliers Collaborate
The desire to bring buyers and suppliers closer to together is not a new concept, but it is one that is gaining more attention and momentum. The potential benefits — from reducing transactional and administrative costs, to streamlining business processes — are just too great to ignore or put off for some unknown future date. But, there are challenges that must be overcome, as each department has its unique set of requirements. These can be overcome by focusing on better connections between buyers and suppliers, which then helps drive more timely access to better data.
The first step in the process is to improve the electronic connections between suppliers and buyers. Moving away from paper-based, manual processes to electronic, automated processes serves to dramatically speed transaction times while reducing errors It also provides the opportunity to proactively use current data to drive better deals for your company. Timely access to current data will help in setting better terms, more advantageous payment schedules, the ability to leverage product delivery issues (i.e. shipment is delayed, so payment should also be delayed), or to best determine payment timing strategies. This all will help improve cash flow and streamline business processes for added cost savings.
5. More Cooperation between Finance & Procurement
Improving the working relationships between finance and procurement is another area of potential organizational benefits, and one we predict is already in play. Considering the different perspectives and roles that Procurement, AP, Finance, and Suppliers play within the P2P cycle, the potential for departmental disconnects are great, making the benefits to gain in harmonizing the connections equally as significant. Accounts Payable is in a unique position to be the key convergence point for Procurement, Finance and Suppliers. Placed at the center of these three entities, AP has the opportunity to add great value to the overall organization. For example, where procurement is focused on what is spent, AP has the data to know what is spent, and when it is delivered. With AP at the center of these three entities, they are in a position to deliver critical, timely data to procurement enabling them to negotiate better terms, improve deliver and receipt of goods, etc. In this scenario, AP takes on a much more strategic and indispensable role in achieving organizational goals.
This has been a very quick overview of what we see as critical changes coming to the AP environment. For a more in-depth discussion around these points, please download the webinar by clicking here.
We will be posting additional material on these topics over the next few months. We welcome your thoughts about changes you see which will impact AP and Procurement.
