Making Accounts Payable More Than About Automation: Putting Supplier Data First Jason Busch - October 5, 2016 6:00 AM | Categories: Accounts Payable, Supplier Information Management | Tags: Accounts Payable, Process & Best Practice There’s nothing attention-grabbing at the board level about efficient transactional processing (unless of course you put a clever spin on it and simply call the latest instantiation of it “AP robotics”). Yet sexy or otherwise, processing transactions is the traditional role of AP. But given this constraint, how can AP rise up in strategic value and do more than just become more efficient? Perhaps the function needs to explain the value it can bring in terms that executives and stakeholders in the business, customers, suppliers and shareholders can appreciate. What better way to do just that than put better information — in this case, supplier information — first? When it comes to accounts payable processes, supplier on-boarding today is foundational to nearly all activities the function measures itself on (e.g., processing efficiency, reducing payment costs through ACH, avoiding duplicate payments, etc.). Supplier on-boarding can take many forms, but top-performing AP organizations realize the ongoing maintenance of supplier data is as important as initial data collection. The types of data AP organizations need to collect as a strong operating foundation include very specific types of information — banking information, contact details, tax ID (TIN) numbers and related fields. Despite the importance of maintaining as close to 100% accuracy as possible across all these fields in a vendor master file, AP organizations historically have failed to maintain accurate details across their supply bases. Gauging the Accuracy of Your Supplier Information How can you gauge the accuracy of your supplier information today? One test you can try is to see whether your organization, if tasked with successfully notifying 90% of suppliers about an extension in payment terms, could accomplish this goal in two weeks, confirming that suppliers did receive some type of confirmation via a letter, email or fax sent to the live, “right” person. All too often, the number of AP organizations able to accomplish this is a small minority of those asked. In practice, it’s actually not hard to enable this level of outreach and communication. To start, it requires: ● An efficient means of data collection (through purposefully built AP technology) ● Accurate and current data files and maintenance across the “long-tail” of suppliers in a vendor master ● An efficient means of scaling and collecting information beyond “walking” approaches, including email, fax and phone ● The capacity to correspond rapidly and efficiently with suppliers There are numerous ways to enable the foundation of better, accurate and consistent supplier master data. One is putting in place a supplier portal (for data capture), supplier management and e-invoicing foundation on top of an existing ERP environment to help drive the collection and maintenance of vendor file data. The benefits of this approach can be of significant value outside of AP. In doing so, this can help raise up the value of AP to finance, procurement, legal and other functions in the business. In short, good supplier data is more than simply foundational to more effective and process-optimized AP efforts. It also shows that AP is front and center when it comes to managing essential supplier information across suppliers of all sizes as an enabler to the business overall. How to Make Friends and Influence Vendors Just as sales is the primary interface and face to the customer, accounts payable is the interface with suppliers and the supply chain — with as much opportunity to harm relationships as to build them. There are numerous reasons why AP can do more harm than good when it comes to impacting supplier relationships. Whether it’s being at the front lines (and in the crosshairs) around consistently paying invoices according to terms, or being difficult to reach when suppliers have questions, or even providing standardized and reliable processing times for invoice approval, AP has just about as many opportunities to damage vendor relationships as any other function in the business. But when AP does things right it’s just “business as usual” — not exemplary performance! Procure-to-pay and AP automation technology can play a significant role in improving overall supplier relationships and helping befriend suppliers, helping them see AP (and finance) as an ally rather than a necessary evil to get paid. How? ● Electronic invoice submission, workflow and approval processes can dramatically improve visibility for suppliers and reduce the time for invoice approval ● Supplier portals can provide a means for suppliers to gain access quickly to information and to feel they have “information parity” with the AP clerk or manager they may need to reach out to. Portals level the visibility playing field (when tied into broader automation processes) ● AP automation can ensure communication and payment consistency, as well as flag any potential hurdles (e.g., match discrepancy) before they result in delays AP can and should be at the forefront of improving supplier relationships for companies. Yet a friendly face is the last thing most vendors want to see (if speak to virtually). AP automation and P2P technology (inclusive of supplier portal, profile maintenance, full process status/visibility, alerts, e-invoicing/connectivity, dispute management, etc.) can replace unnecessary interactions, saving as much time for vendors as internal staff. As a final point, it’s important to note that AP process standardization and managed services is not the same as automation — at least from a supplier perspective. Even if you’ve optimized your own processes and moved AP staff to specialized centers or even offshore (or outsourced the operational elements of the function entirely) it doesn’t mean the experience will be any better whatsoever for suppliers without putting a self-service, technology-centric approach at the core of AP digitization — rather than as an adjunct or afterthought. Related ArticlesAccounts Payable: The New Tax DepartmentTransforming Your Accounts Payable Into a Profit CenterReframing Accounts Payable — A Function in Need of More Than BotoxDispute, Payment and Cash Management – Exploring Accounts Payable Automation and E-Invoicing LinkagesExploring Accounts Payable Automation and E-Invoicing Linkages – Entering, Validation and Matching First Voice Derek Cheng: 05.10.2016 at 3:31 pm This is excellent. As they say, “garbage in, garbage out.” Having suppliers self-manage their data is a big part of the equation to reducing AP payment errors. Maybe it doesn’t matter if you only have a few suppliers, but when you start getting into hundreds or thousands, and you’re onboarding an increasingly large amount, the problem becomes more complicated. Reply Discuss this: Cancel reply Your email address will not be published. Required fields are marked *Comment Name * Email * Website Notify me of follow-up comments by email. Notify me of new posts by email.