Reframing Accounts Payable — A Function in Need of More Than Botox

e-invoicing

I was on a call earlier today with a bunch of my colleagues, as well as a half-dozen people from a firm that serves a range of markets, including bringing particular capability and expertise to accounts payable automation, e-invoicing, payables and related areas. It was the first time in years that a bunch of folks came together and, on an unplanned basis, started a brainstorm about ways to rethink this market segment, much in the same way Ariba originally came up with the concept of spend management to reframe procurement.

I believe accounts payable (A/P) is a sector, and profession, in dire need of a remake to get the respect and attention it deserves, similar to how procurement has been gathering steam for well over a decade. Why? I’ll share a few quick thoughts and invite others to chime in.

To begin, accounts payable is:

  • Typically tasked with implementing policy and programs but does little to set them in the first place (see payment term extensions, below)
  • Seen as a cost center where reducing headcount and automation is seen as the primary goal, rather than creating new value for the company
  • Almost always has limited interaction in broader working capital-centric programs involving order-to-cash, sales and operations planning and the like
  • Generally disconnected, at least from treasury, which dictates working capital availability and programs, and procurement, which manages suppliers, supply and, let us not forget, spend from the rest of the business
  • Often forced to implement policies that run counter to how peer organizations are measured. For example, procurement usually cares about unit cost and supply risk and has no incentive to extend payment terms, which might be a goal of A/P on a KPI basis.
  • Generally using technology that is out of date even by the time it’s implemented, such as optical character recognition and workflow tools going back to the fax age
  • Only a contributor to the conversation and decision process when it comes to broader areas that it can — and should — influence, including broad-based supplier onboarding and enablement efforts, payables financing and invoice discounting.

Accounts payable needs a new rallying cry to transform itself like procurement has, away from tactical-only purchasing activities of old. A/P sits at the nexus of so much, including the opportunity to more effectively manage the flow of capital and cash throughout the supply chain for companies.

I’d be curious to crowdsource ideas here and create a collective discussion about how we can make A/P into what it is capable of becoming, not just a place to cut costs. And in the coming days, I’ll continue this discussion by suggesting what hasn't worked in terms of transforming A/P, including the overused “finance + procurement” alignment mantra, which has been played to death by technology vendors — with very little to show for it.  

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