Your accounts payable function is due for automation if you haven’t already undertaken that process, accounting consultants say. The potential to turn it from a back-office cost center to a money maker can attract young finance professionals who have little interest in joining a company that still does manual processing.
Automating AP becomes a profit center by enabling you to systematically speed payments to vendors, reduce the cost of paper checks and late-payment fees, and earn early-payment discounts that today you’re not always getting, Joseph Dworak, business development manager at software company Esker, said in a CFO.com webinar. “AP is not just a back-office function,” he said. Esker is a sponsor of the webinar.
You can also reduce losses from duplicate payments, catch more instances of fraud or incorrect payments, and free up staff to do work that adds value to the finance function, said Jess Scheer, executive editor at the Institute of Finance & Management.
What's more, you can get more visibility into your payments pipeline, reduce approval bottlenecks and improve vendor relationships by speeding up payments. Scheer said he works with a large company in western Canada in which invoices sit for three months before being approved and a check is cut. “The payment just sits on the executive’s desk,” he said.
Impact on staff
Scheer called it a mistake to think of automation as a way to manage the AP function with fewer staff, because the real value comes from freeing up staff from manual tasks so they can concentrate on higher-value work.
“Organizations think if they’re more efficient they can reduce people, but you add more value if you apply people to higher tasks,” he said.
He recently worked with the medical center at the University of Maryland to automate its AP function and after the transition the finance department increased the team from 10 to 15 people. Automation had cut the amount of time the team was spending on lower-value functions in half, creating so much demand for them to do analytical work for other departments that more staff were needed.
“That’s at the heart of what digital transformation means for AP,” he said.
Given today’s tight job market, having your AP staff do higher-value work will also enable you to compete for accounting graduates in the job market as older staff retire.
“The new generation has a totally different mindset,” Dworak said. “Not a lot of people say they want to sign up for manual tasks. But if you give those people a higher-level task it will be more attractive.”