There’s a lot of talk going on right now about accounting becoming more strategic. Automating payments is a great place to start, and a golden opportunity for AP to show strategic leadership and position itself for the future. A new generation of solutions is making that possible for a wider range of businesses than ever before.
What do I mean by strategic? I define ‘strategic’ simply as a much smarter way of doing something that has a lasting impact and change (for the better!) to your bottom line.
There’s strategic finance — being smart about the way you plan for, budget and finance your business. And strategic sourcing — being smarter about what and who you purchase from. But the core accounting functions—accounts payable and accounts receivable—are not often thought of as strategic. Opportunities for core accounting functions to be strategic are few and far between, but they do exist. Payments is a big one.
Why payments? It’s easy to move from paper based check writing to electronic payments and it has a big impact in terms of saving time and money. It’s a quick win that elevates AP, and the credibility and savings achieved can be leveraged to take on bigger strategic initiatives such as automating the front end of AP, or streamlining supplier invoice processing.
Automating the front end is what normally comes to mind when people consider AP automation, because they can see and touch all that paper. But automating the front end involves more heavy lifting than automating payments. There are a lot more moving parts, and you have to change workflows, behaviors, and communication between departments.
You have to put new processes in place. Departments have to work together to decide if they’re only going to pay when there’s a purchase order. They have to collaborate in looking across the supplier base, to focus on certain categories of suppliers and reduce the vendor list. These are all worthy initiatives, but they are more difficult, time consuming and costly in terms of money, time and personal capital.
Automating payments requires much less change and generates immediate financial benefits.
The new generation of cloud-based solutions takes just weeks to deploy and goes far beyond what the bank solutions we’ve had for the past several decades have provided for automation. B2B payments are now as easy as clicking “pay” on the front end, without all the manual collection and tracking of vendor payment information that bank solutions require. On the back end, these solutions handle all the details related to making sure payment is made, ending the follow-up hassle that eats up so much of AP’s time.
No more checks and fees
By eliminating bank fees, paper, and the time and costs associated with it, automating B2B payments typically cuts costs by about 75 percent and returns about $225,000 for every $100 million in accounts payable. You earn cash-back rebates and reduce costs, so it’s double hit. You can use these benefits to fund other initiatives.
This is an opportunity for accounting teams to demonstrate leadership. Getting rid of archaic payment processes qualifies as strategic in my book. It has immediate impact, and causes a ripple effect on making the business more strategic and competitive in the future. Strategic Payment Solutions also pave the way for the next generation of strategic accounting professionals.
AP is an aging profession, with a lot of seasoned professionals who know their way around current systems and how to get things done. Few people want to spend time perfecting ACH files, taking calls from suppliers, and chasing down payments. It’s a relentless routine and almost no one enjoys it. These tasks have been necessary evils of the job, but it's no longer that way.
Millenials who find their way into AP aren’t likely to tolerate the painful manual processes people put up with today. They expect visibility, transparency and ease of use. They expect to tackle high order problems and use their brains in better ways for the benefit of the company.
Instead of writing checks all day, strategic AP can spend time on cash forecasting, or contributing to supplier intelligence, or enterprise performance management initiatives. Those are forward looking accounting functions, far more impactful than spending time chasing down errors from the past. That’s not something anybody wants to do, and in today’s competitive landscape companies can ill afford to use resources that way.
Strategic payment solutions provide a huge opportunity for AP professionals to step into the limelight and deliver a transformational change that has both immediate and lasting impact. The profession may not see a leadership opportunity this big for some time. Savvy professionals should reach out and grab it.
**This article originally appeared on Let’s Talk Payments.
About the Author
Karla is Chief Executive Officer, Co-founder, and member of the Board of Directors at Nvoicepay. She has 20 years of experience in management, finance, and marketing roles in both large and early stage companies. Along with the founding team, she has grown Nvoicepay into a leading B2B payment network.Follow on Twitter More Content by Karla Friede