5 Things CFOs and Controllers love about AP Transformation

Posted by Greg Bartels on Jul 31, 2019 11:04:30 AM
Greg Bartels

Having trouble winning approval for your accounts-payable transformation proposal?

You may not be emphasizing the benefits that management cares about most.

Fifty-three percent of accounts payable leaders believe that CFOs and controllers will champion their department’s automation efforts over the next three years – surpassing every other enterprise stakeholder, including accounts payable, procurement, treasury and information technology.  

That’s according to the Institute of Finance and Management’s (IOFM) 2018 Future of AP Study.

IPS believes it. 

There are five things that CFOs and controllers love about accounts payable transformation:

1. Working capital optimization.

CFOs - AP Transformation Blog
  1. Automated accounts payable solutions put real-time decision-making into a CFO’s or controller’s hands like nothing else. Graphical dashboards provide instant visibility into invoices approaching the expiration of their early payment discounts as well as Key Performance Indicators such as total invoice value, accrual reporting, percentage of early payment discounts captured, and cash back rebates earned.  It is no wonder that nearly two-thirds of accounts payable leaders surveyed for IOFM’s 2018 Future of AP Study expect greater demand for visibility into accounts payable information over the next three years.

2. Tight control over corporate spend.

The graphical dashboards and rich reporting built into automated accounts payable solutions provide the real-time insights into corporate spending that CFOs and controllers require to help their business stay within budget, improve cash forecasting and financial planning, identify opportunities to reduce suppliers, avoid contract compliance issues and gaining leverage during contract negotiations with suppliers.  

3. Early payment discounts.

Many suppliers are willing to exchange a discount on the invoice-due amount for earlier payment.  The earlier the payment before the invoice due date, the larger the discount suppliers typically will accept.  The standard early payment discount is 2 percent.  But many buyers regularly capture larger discounts from suppliers.  Early payment discounts strengthen supplier relationships (i.e. suppliers attain much-needed cash flow), head-off potential supply chain disruptions, and reduce an organization’s total cost of goods and services purchased.  But none of these benefits are possible without an automated accounts payable solution that enables buyers to approve invoices within the early payment discount window.  Seven percent of accounts payable leaders expect their department to capture 25 percent more early payment discounts three years from now, IOFM says.

4. Cash-back rebates.

Paying suppliers with virtual cards enables businesses to earn cash-back rebates.  Cash-back rebates are calculated based on the total amount of spending made via card and can be used to offset the operational costs of an accounts payable department or to fund automation projects.  This is music to the ears of CFOs and controllers looking for ways to improve net profit margins.  Fifty-seven percent of accounts payable leaders expect to capture more card rebates as a total percentage of spend in the next three years, per IOFM.

5. Longer Days Payable Outstanding (DPO).

CFOs and controllers are on the lookout for ways to free up cash to pay down corporate debt, make capital investments, increase research and development, or support other growth initiatives.  One way to do this is by extending the average amount of time it takes to pay suppliers.  Paying suppliers with certain virtual card programs enables buyers to instantly extend their Days Payable Outstanding (DPO), without changing their payment terms.  Since the funding for the payment program is provided by the buyer’s bank via card, and the payback period to the card issuing bank doesn’t kick in until the payment is initiated, businesses can extend their average DPO by three weeks or more.

Each of these benefits is compelling to CFOs and controllers.

Together they form a winning business case for automating accounts payable.

If you want more strategies for convincing CFOs, controllers and other stakeholders on automation, contact IPS today!


Tags: Accounts Payable, Digital Transformation, AP Automation, Productivity Wrx