AP Control Panel: Automation enables performance transparency

One of the issues accounts payable departments wrangle with is moving beyond the traditional transactional focus toward a higher, more holistic view of the accounts payable (AP) operation. Yet this insight is fundamental to improving overall performance.

Accounts payable automation can provide that additional business intelligence, offering visibility into the operation at a higher altitude than just resolving problems with individual invoices or getting a payables run done on time.

Yet many AP departments get bogged down with day-to-day processing tasks at the expense of valuable intelligence present within the data the automation solution collects. The pressure mounts to earn fast-pay discounts and make vendors happy, and therefore the team concentrates on putting fires out and pushing work through. We don’t consider important insights that might make processes less unwieldy and more efficient long-term because they take a back seat to the daily grind.

This is not a new problem for AP. No matter the size of the department and the level of automation it possesses, getting out of the weeds of daily transactional processing and gaining the perspective necessary to make significant process improvements is always a challenge. However, accounts payable automation should make that easier — at least in theory.

The survey methodology

The recent AP Control Panel survey conducted in partnership with Hyland and the Institute of Finance & Management (IOFM) polled respondents about their levels of automation and how much insight that provides into their operations.

While the results showed that automation certainly makes tracking invoices and developing performance metrics easier, we wanted to get a little more specific: What advantages do those respondents with significant automation have in terms of being able to search on various criteria associated with their invoices?

We asked survey respondents several questions about how automated their AP departments are and what capabilities they have when looking for invoices. We asked the question, “By which of the following methods can your organization search for invoices?”

They were free to choose any number of these eight possible responses:

  1. Date of receipt
  2. Due date
  3. Invoice amount
  4. Invoice date
  5. Invoice owner
  6. Invoice number
  7. PO number
  8. Supplier

Below are the aggregate results of the responses.

 

But what does this tell us?

Transactional vs. performance insight

Note that the four most common methods of sorting invoices (by invoice number, supplier, PO number and invoice amount) are primarily transactional in nature. That is, if you were looking for a specific invoice, you’d probably search on one of these attributes. That’s important to resolving one-off issues—answering a vendor inquiry about a late payment, for example.

However, if you were looking for trends that might help you tune up your overall performance, you might want to know:

  • Date of receipt

At what point during the week or month do you receive the most invoices? This would be valuable for staffing and work-balancing purposes.

  • Invoice owner

Are there approval backlogs associated with certain people or departments? Do there appear to be irregularities associated with a particular buyer that might indicate fraudulent activity?

  • Due date

This is key to capturing fast-pay discounts. If you need to fast-track payments to capture those discounts, being able to search on this field is essential.

  • Invoice date

This information can show where the peak buying periods of the organization lie. You can also compare invoice dates to receipt dates to see how long they’re taking in transit. If snail mail is taking too long, another method of receiving invoices may allow for better discount capture.

Sorting these key search fields into two groups — transaction-based (choices 1–4) and performance-based (choices 5–8) — and comparing that to level of automation, reveals the following:

The percentage figures indicate the number of search capabilities available to respondents vs. the maximum possible score segmented by respondents’ degree of automation.

While most respondents can sort by transactional criteria, fewer than half are able to sort by performance-related criteria — in some cases, significantly less than half — and that number is in direct proportion to respondents’ degree of automation.

Gaining higher altitude on AP performance

While respondents were usually able to search invoices by transactional-type criteria, the kinds of sort parameters that can lead to performance insights were less readily available for all respondents. While those with significant automation come by this information more readily than their counterparts, this information is still much harder to acquire than the transactional data used in day-to-day operations.

Whether the accounts payable automation tools in use by respondents simply don’t offer this capability, the respondents don’t take advantage of it or the software solution isn’t configured to report this data, your automation tool should do more than just mimick a manual invoice lookup process. It must also provide insightful reporting about the AP process as a whole in an understandable and actionable way.

If your automation tool isn’t offering you that level of visibility into your operation, consider how you can better meet your performance assessment needs. Brainware, Hyland’s intelligent capture platform, is capable of processing and capturing data from extremely complex documents and then leveraging human-like intelligence. Brainware facilitates extracting data that is essential to process improvement  ̶  enabling you to track metrics and KPIs to tune up your accounts payable automation.

The AP Control Panel

To help, Hyland and the Institute of Finance & Management have partnered to create the AP Control Panel, a first-of-its-kind tool to evaluate AP departments’ level of control over operations, cash flow, compliance and security.

Ready to learn more? Check out the Control Panel here.

The Institute of Finance and Management

The Institute of Finance and Management

The Institute of Finance and Management (IOFM) was founded in 1982 and since then, its mission has been, and continues to be, to align the resources, events, certifications, and networking opportunities it offers with what companies need from the accounting and finance functions to deliver market leadership.

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