The KPIs that Finance Pros Love
In the current landscape of constrained discretionary spending and heightened pressure for revenue growth, CFOs are placing a paramount focus on cost optimization. Grant Thornton’s 2023 Q2 CFO survey underscores this trend, revealing that cost optimization stands out as the primary area of concentration for CFOs in the coming six months. Amidst these challenges, CFOs are strategically turning to accounts payable (AP) automation to achieve three key performance indicators (KPIs) that hold significant importance in their financial strategy.
One of the primary KPIs that AP professionals love is the drive towards cost optimization. By leveraging AP automation, CFOs can proactively allocate and manage costs while eliminating activities that hinder earnings growth. The adoption of automation in key business functions is on the rise, particularly in IT and digital transformation spending. This marks a notable shift since the fourth quarter of 2021, indicating a recognition among CFOs of the value brought by automation in enhancing operational efficiency and cost-effectiveness.
The second cherished KPI is the improvement of cash flow. AP automation accelerates the invoice-to-pay process, allowing finance departments to avoid late payment penalties, capture early pay discounts, and gain better control over payment timing. The expedited approval of invoices contributes not only to financial agility but also provides businesses with negotiation leverage during contract discussions, potentially resulting in favorable discounts. The enhanced visibility into accruals further strengthens the CFO’s ability to manage and optimize cash flow effectively.
The third beloved KPI is the enhancement of working capital management. AP automation provides CFOs with real-time insights through graphical dashboards, enabling them to monitor cash flows, identify spending patterns, and make data-driven decisions on the go. With working capital improvements, CFOs gain more financial resources to invest in organizational growth. Moreover, self-service online portals for suppliers streamline the invoicing process, contributing to stronger supplier relationships and reducing the likelihood of payment delays.
In conclusion, the adoption of AP automation emerges not only as a strategic move for cost optimization but also as a powerful means for CFOs to elevate their organization’s financial performance. From driving cost efficiencies to improving cash flow and optimizing working capital, AP automation stands as a key ally for CFOs navigating the complex landscape of financial management in a dynamic business environment.
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