Evolving AP: Becoming a Collaborative Partner

In the year of 2015, where data analytics plays a critical role in strategic decisions, companies have implemented technology to capture data about procurement, manufacturing, sales, and financial projections. Although, when one looks at Accounts Payable (AP) technology there has been little change. AP is more of a “back office” function than a collaborative partner to other business units. Why has AP been regulated to tactical transactions only, when they have access to spend across all business units? Is it due to the nature of Accounts Payable tasks? Is the available software designed to improve AP transactions? We will explore many of the options for automation and spend analysis tools that can help Account Payables evolve into a collaborative partner.

Traditional ERP:

There are many businesses that have implemented a form of enterprise resource planning (ERP) into procurement, manufacturing, and financial (accounts payables included) business units only to realize that these systems function as spend analysis platforms. There is some functionality of automation with ERP, but it can be limited to one type of automated transaction and customizing can be costly.  With only a few options of automation, this system could be too rigid for suppliers and customers. Before considering an ERP system, take into account the upfront licensing cost, expert service, migrating data, loss of productivity, and resistance to change. An additional factor to be aware of is the culture of the company. If the company’s culture does not fit into an ERP system, it might not be the best solution for process automation.

Hybrid ERP:

A hybrid ERP is a cloud-based business application that can be a standalone system or integrated into a traditional ERP system. The benefits of hybrid ERP is customer/vendor engagement improvements, procurement management, employee engagement, and implementation speed.  Customer and vendor engagement improves due to the less rigid portal designs, and ease of navigation to process transactions. Procurement management becomes transparent due to having a centralized location to be able to solicit, source, procure, and invoice from one system. Accounts Payable can use such a system to provide options to vendors for payment and improve the approval process. A company must still consider all factors associated with traditional ERP when thinking about a Hybrid ERP, thankfully the cost and time of implementation is much less compared to traditional ERP.

Cloud-Based Spend Management Systems:

Cloud-Based Spend Management systems take the best of ERP system (spend analysis platform) and the cloud (easy interface and accessibility) to focus on managing spend, running procurement events, centralized supplier information, multiple options for vendor invoicing, and an added bonus of being used as an interface to a current traditional ERP.  Due to the multiple options for invoicing in a cloud-based spend management system can help reduce transition cost, better engage with the suppliers about their options for payment and take advantage of discounts with quicker invoicing process through the cloud. Cloud-based systems can help reduce spend and they are easy to implement into one's company, even a small business, of course be aware of security concerns that could arise with information on a cloud system, along with internet connections speeds, and  mobile application being slower than a desktop application.

Implementing any of the spend system options above helps to gain insight on spend, although the tactical transactions of Accounts Payable have to become automated with options for suppliers to transition AP from a tactical partner to a strategic partner.  Procurement and AP working together with an integrated hub of information can elevate them to a center of excellence.