If we could re-think Accounts Payable, how would it look? – Part 1
Tuesday, 20 Oct 2015
Every year we hear more about the revolution, or evolution, of Accounts Payable. In fact, Basware has a guest speaker to address this very topic at a number of the Basware Connect events – these are well worth catching, if you can.
The idea that radical change in Accounts Payable (a revolution) is upon us isn’t necessarily new, and chances are that if you look back a decade or two, you would recognize that a great deal has already changed. This isn’t to say that change won’t continue. Quite the opposite. It will continue and probably faster than ever before as we embrace networked commerce and the new possibilities it brings all organizations (big and small).
But, despite the changes we’ve seen over the years, especially with regards to technology, I’d suggest we have not seen an equal change to the way Accounts Payable is viewed or functions. This then leads me to question anybody remotely interested in Purchasing or Accounts Payable – which is everyone – on how should AP be organized, what is its purpose, and what holds it back?
To be clear, these questions aren’t in reference to any particular processes, systems or technologies. In this regard, we acknowledge that it is a continuously changing beast – and the best practices of yesterday aren’t necessarily the best practices of today. These questions are intended to allow us to question the concept of Accounts Payable as a proposition, with a presumption that that this has changed, so that we can re-think the model to better serve our organizations and deliver on the “value” that is much talked about in this space.
I’ll use my experience to illustrate my point. I was first exposed to the world of Purchase-to-Pay whilst working in Accounts Payable for a large FMCG company in Australia. Back then, our proposition was relatively straight forward – process “your” invoices, accurately and timely. There was a large focus (and reward) on fast data entry whilst collaboration on challenges within the team, and outside it, was practically non-existent. You could say we had a very narrow focus in our organization – and our biggest problem was “the business.”
Naturally, our processes evolved when we introduced various Purchase to Pay solutions, but unfortunately our thinking did not necessarily keep pace. We “sensibly” operationalized parts of the process (think: requisitioning, coding and receipting) but, at the same time, failed to collaborate with the business in the spirit of service. For example, when it came to Purchase Order (PO) issues, we took the proverbial ‘stick’ approach. We chastised the business users who were not raising POs correctly or in a compliant way, and then felt good about praising those that were. The consequence was that aside from arriving at the overused “lack of training” assumption, we simply did not take the time to ask our users “How could we make it work for you?” Instead, for us at the time, it was a Procurement problem – forgetting that it really was our problem too.
The relationship between AP and the business began to transform when our thinking finally caught up with the reality. We started to work much more closely with Procurement, even taking on some of their administrative tasks in lieu of other operationalized tasks. We listened, and this allowed us to deliver solutions that worked for the people we served. You could say that our proposition to the business had changed from simply processing invoices, to supporting our people whenever they had a purchasing need.
This was all a few years ago and I’d say that the face of AP has started changing. In some circles, including some I’ve influenced, the shift includes a renaming of ‘Accounts Payable’ to the all-encompassing ‘Purchase-to-Pay’ moniker. I see this as an excellent opportunity to re-think the purpose and proposition of “Accounts Payable,” knowing what we do today - and to rebuild it accordingly.
So, over to you. How would you answer these questions?
- What does your organization expect Accounts Payable to do?
- What is your Accounts Payable actually doing today?
- How is this different?
- What else should Accounts Payable be doing, or rather, not doing?
Join me and my colleagues at our various Basware Connect events to explore the revolution in Accounts Payable, and more. I’ll come back with a second blog post after these events to discuss what we found out!
If you’d like to know more about how Basware can help you redefine Purchase-to-Pay in your organization, please contact Derek Wilson who heads our Business Consulting team.