Best-in-Class AP Departments: Well-Oiled Machines that Derive Significant Value from Automation

Vice President, Marketing, Basware, Inc.

Bob Cohen, Basware VP North America, recently spoke with Andrew Bartolini, Chief Research Officer, Ardent Partners and author of the recently published study e-Payables: The Quest. They discussed a range of purchase-to-pay trends including e-invoicing, e-payments, analytics and leveraging social, mobile and the cloud. Following is the first blog in a series based on that discussion.

Bob Cohen: What does it take to be a best-in-class AP organization?

Andrew Bartolini: Top performers derive real value from an optimized AP operation, which they run like a well-oiled, fine-tuned machine. Best-in-class companies process invoices more than four times faster than others in the marketplace and their processing costs are more than seven times lower.

Bob Cohen: What are the characteristics of these best-in-class AP departments?

Andrew Bartolini: First and foremost, they have standardized processes and are technology-enabled. They are utilizing solutions like e-invoicing to such a degree that they’re able to accomplish straight-through processing with more than 50% of their invoices. That means that these invoices are processed, set and scheduled for payment, or ready to be scheduled for payment, without any human interaction. Straight-through processing is brutally efficient – it’s the highest level of automation. Thanks to standardized processes, and the ability to leverage technology to a much greater degree than their counterparts, these top performers are able to drive down costs, speed up their processing and have greater visibility, which reduces the number of exceptions .

But best-in-class organizations don’t stop there - they are also focused on enabling and on-boarding suppliers. Because of this, more than 40% of their suppliers are using e-invoicing, which for many organizations is the Holy Grail or the end game. These accomplishments position best-in-class organizations to better collaborate internally and externally. Visibility into invoices and processing efficiency are also enabling companies to derive and add value to an entire set of partner companies.

Bob Cohen: What other strategic benefits are best-in-class organizations realizing through AP automation?

Andrew Bartolini: Best-in-class organizations recognize that investing in AP automation solutions can have a major impact on how they manage cash. When you compare the money that you pay to suppliers as a percentage of your revenue, it is a huge amount of money. So the ability to begin to track that more -- to have visibility into what you’re doing, and to make strategic decisions such as timing payments based on that visibility -- has a huge impact on working capital.


To download the complete Ardent Partners’ report, e-Payables 2014: The Quest, click here »

Category: Purchase-to-Pay