Accounts payable departments are making automation their top priority for 2019. But it’s really digital transformation that they should be after.
Transforming manual and semi-automated accounts payable processes with digital technologies such as robotic process automation, artificial intelligence, mobile and analytics is proven to reduce costs, improve accuracy, accelerate cycle times and decrease supplier inquiries regarding invoice and payment status – all while providing transparency across the invoice lifecycle.
But some organizations mistakenly believe that digital transformation is too complex to deploy or too risky.
Digitizing accounts payable doesn’t need to be a painful or risky process, but without forethought it can be. Here are six steps to ensuring that your digital transformation project is successful:
#1: Identify your pain points.
Understanding your current accounts payable challenges is the first step towards a successful digital transformation project. This information will ensure you develop a sound problem- and solution-based premise. For instance, Ardent Partners finds that the top pain points of accounts payable departments are a lack of real-time visibility into finance data, high processing costs, long exceptions resolution cycles, too many lost or misplaced invoices, and missed opportunities to capture early-pay discounts.
Uncover your organization’s accounts payable pain points by identifying and documenting the procedures that are now in place, and the challenges and hidden costs that are tied to each one.
#2: Define your objectives.
There are many reasons that accounts payable departments want to transform their processes. Ardent Partners finds that reducing costs, enhancing reporting and visibility, and better aligning accounts payable with procurement are among the top drivers of accounts payable automation. Collaborating with other stakeholders to set clear objectives early-on ensures that your automation project will succeed. Establish a project management team that includes stakeholders from departments such as information technology, finance and procurement, as well as front-line accounts payable staff. The team should create a prioritized list of objectives based on the business needs of stakeholders, and be sure the objectives address the pressures and priorities of your senior management. Setting these objectives will keep your project team focused as it evaluates potential automation approaches and will help avoid the possibility of your project costing more because of delays or unexpected risks
#3: Find the right partner.
The number of technologies and approaches for transforming accounts payable can be overwhelming. With a little planning, you can ensure that prospective vendors meet your objectives for functionality and performance. Create a matrix to evaluate each solution based on: functionality, ease-of-use, flexibility, reliability, scalability, integration with your legacy systems and processes, security, compliance and support options. Additionally, be sure prospective technology partners can provide digital approval and exceptions workflows and real-time visibility into your processes and financial data. Make sure potential partners are investing in key digital transformation technologies such as mobile, machine learning and analytics, which will be critical to the future of our profession. Prospective technology vendors should be able to provide a ‘yes’ or ‘no’ answer to well-defined business requirements, or a brief explanation for ‘areas of grey.’ Also, never take a “canned” product demonstration at face value; ask technology vendors to demonstrate how their solution will handle your approval workflows or business requirements, preferably using your actual documents. Be sure to validate vendor claims through end-user references. Ask references about their experience during implementation, the ease of use of the system, the vendor’s level of support and compliance with service level agreements and their satisfaction with enhancements to the solution. Don’t hesitate to ask references whether the vendor is meeting their business case for their automation initiatives.
#4: State your (business) case.
Developing a solid business case is the linchpin of any digital transformation project. A business case for transforming accounts payable should include hard savings, soft savings and risk mitigation. The hard and soft savings should include conservative, moderate and aggressive estimates. The good news is that accounts payable organizations that process 5,000 invoices per month can reduce their invoice processing costs by 85 percent by migrating from a manual operation to a highly automated one, according to benchmark data from the Institute of Finance and Management (IOFM) and the Association for Intelligent Information Management (AIIM). Once you have built your business case, create a summary page highlighting the hard and soft savings, risk mitigation and the assumptions used to create them. When all these elements are well-defined and properly articulated in a business case, it accelerates senior management approval and keeps your project on track.
#5: Prioritize user experience.
It makes no sense to deploy a digital transformation solution that your staff won’t use. Be sure to choose a solution that stakeholders will want to use (another reason to involve key staff in the evaluation process!). Look for an intuitive design and logical, configurable workflows. Also develop a communications strategy to explain why the new technology was necessary, how the organization will operate after adopting the new technology, the benefits it will accrue and how the technology will affect staff. Consider a formal announcement from senior execs, as well as e-mails, breakroom posters, announcements on the corporate intranet and “lunch and learn” sessions. Ideally, improvements in workflows will be obvious to most staff, but take time to listen to staff who are unsure about the new technology.
#6: Measure, measure, measure!
Measuring the performance of your digital transformation solution on an ongoing basis will prove the success of your project and identify areas for improvement. Following the implementation, begin monitoring how invoice approvals and exceptions are flowing, track the savings and accelerated cycle times and log the reduced number of supplier inquiries, duplicate payments, late payments and missed early payment discounts. Periodically update stakeholders and senior management on the results.
These six steps will ensure your organization achieves the full benefits of digital transformation.
Learn additional strategies for a successful automation project.