How to Use Accounts Payable Time More Strategically
If it feels like you don’t have enough time in the day to focus on the activities that could make the biggest difference to your organization, you are not alone.
One-quarter of accounts payable professionals recently surveyed by the Institute of Finance and Management (IOFM) cite time management among their top concerns, surpassing hot-button issues such as reducing paper, lowering costs, capturing early-payment discounts, and mitigating fraud.
The root of the problem is that most organizations rely on time-consuming manual processes such as paper check disbursement and reconciliation. An eye-popping 84% of accounts payable’s time is spent on transaction processing, as IOFM’s research finds, leaving only 16% for value-added activities.
PriceWaterhouseCoopers estimates that 27% of accounts payable activities can be automated, saving 8 to 10 hours per week. What types of value-added activities could accounts payable departments focus on with this newfound time? Here are some suggestions:
1. Enhanced working capital management. Spending less time on transaction processing frees accounts payable staff to dynamically negotiate lucrative early-payment discounts. Accounts payable staff also will have more time to routinely audit invoices against contracted pricing. And, staff can more easily provide the procurement department with the supplier spending data it needs to negotiate better pricing.
2. Faster electronic invoice adoption. Automation provides staff with more time to enroll suppliers into electronic invoicing, creating better workflows and streamlined approval processes.
3. Improved reporting. Most accounts payable departments surveyed by the Institute of Financial Operations (IFO) report that their demands for financial visibility have increased over the past two years. Automation provides staff with the time and tools to generate richer information for CFOs and other stakeholders within the areas of working capital management, spend analysis, and operations management.
4. A cleaner vendor master database. It is not uncommon for two-thirds or more of the vendors in an organization’s vendor master database to be inactive or duplicate entries. A cluttered vendor master database opens the door to compliance issues (and large fines) such as payments to vendors involved in nefarious activities. In an automated environment, accounts payable staff has more time to check active suppliers against sanction lists (such as OFAC) and validate supplier addresses and banking information.
5. Tighter security. Freed from the drudgery of transaction processing, staff has more time to develop processes for preventing and detecting activities such as check fraud, Automated Clearing House (ACH) phishing schemes, and fraudulent card usage.
6. A better trained staff. Automation creates opportunities for accounts payable staff to cross-train or shadow their counterparts in procurement and accounts receivable, improving collaboration and efficiencies between the departments. Staff also have more time to become certified online through organizations such as NACHA.
Want to learn more about how Paymerang can create 27% more time for your staff? Contact Brian Cook at firstname.lastname@example.org.