Bean counter, value-adder, strategic advisor, confidant, bookkeeper, controller, CEO-in-waiting, devil’s advocate. How should CFOs most credibly describe themselves in the 21st century? How do others perceive, and then describe their work? One of the few eternal iron laws of the office is you get associated with the work people see you doing. Sensible, no. Understandable, yes.
However, it is not just the CFO that suffers this occupational hazard within the finance department. The Accounts Payable function, for example, has long been thought of as a cost center with little potential for generating profits.
Think of the situation as two different questions- what do you do? And what should you be doing? The answer to the first is easy. Accounts Payable pay bills and invoices, manage expenses, maintain vendor contract information and report sales taxes. In most cases, these things are done well. The thread between them all is obvious. Lots of doing, lots of function, but arguably not enough what is euphemistically called value-add.
Value-added activities are those things that 21st-century finance departments should be constantly striving for- supporting the wider goals and objectives of the organization, getting involved in forward-looking decision-making processes, and being a resource for other departments to make the right decisions. In short, going from counting beans to planting seeds.
It is not that Accounts Payable do not have ambitions and aspirations beyond all the doing. In fact, given the correct tools and resources, AP absolutely has the potential to free up time for value-added activities and transform into a profit center.
Embracing Automation in Accounts Payable
While an 80% reduction in cost that comes from adopting an automated accounts payable solution is very welcome at a time when customer demand is potentially on the floor, there is also that more intangible idea of reinventing the AP department itself, allowing it to shift upward and offer contributions to the wider organization beyond their current manual tasks.
Shifting the axis of Accounts Payable towards a value-added contribution is best achieved by removing routinization whenever an opportunity arises. The Covid-19 pandemic is truly one of those opportunities. Embracing digitization and automating the routine, yet very time-consuming tasks is a must for AP teams working remotely. Manual invoice processing is difficult enough when in the office, so a switch to automation will free up time for AP staff to perform more value-added activities.
But what are the areas or activities that open, if this move is made? Here are five brief value-added areas an Accounts Payable team could newly focus on:
5 Value-Added Areas for Accounts Payable
1. Using skills with numbers – outside the finance department
The finance department is about numbers, but not just the numbers contained within its four walls. Modern organizations produce reams of data and metrics; can the AP department members play a more widespread role? Can they help to look at sustainability goals and results for example, are they fit for purpose? What about the corporate governance statement? What of the sales team’s measurement dashboards? What other non-financial KPIs might be looked at? The rigor and insights of the finance team are theoretically deployable across the organization, wherever data lurks. Why not let this force for positivity loose where it is needed, but may not have been utilized before?
2. Liaison with valued third parties
Any modern finance department will likely use third parties, outsourced providers and vendors. But the relationship may have become stale, now is the time to revisit it, maybe recalibrate it? As an organization becomes more reliant on certain vendors the AP team should collaborate with them to create more value from existing relationships and benefit from increased efficiency, improved reliability/quality and improved compliance.
3. Go data fishing
In a world where virtually every transaction or digital activity is recorded and leaves a digital trace, is it time for your AP team to start adding value by refreshing the financial data that your organization works with? Get around the organization and see what is out there, what is being measured and what should be measured? Maybe then, the financial reporting you traditionally do can be richer, more intuitive, and more impactful at committee, management, and board level. The accounts payable system itself is a place to start, centralizing financial data and elevating the AP team to the position of gatekeeper of such data.
4. Taking responsibility for another business line or initiative
No, not more work per se. However, the AP team members can pull an organization-wide project into their orbit, allowing members of the team to contribute beyond the normal confines. Maybe the company’s sustainability drive could be led by finance team members, maybe a new regional initiative or a crisis team is required as part of the pandemic response. Often working groups are just looking for a leader to lead them, but if team members are snowed under with routinized work, they are never going to be in the queue for such opportunities.
5. Job swap
In time could members of the team, freed up from key routinized workstreams, swap into another organizational department for a time to broaden their perspective and bring back learnings to their original team? This is one way to address the ghettoization of the finance team. This can be made even more interesting when someone from HR, marketing, operations, legal, etc comes and spends some time with the finance team.
The accounts payable department has always had an important role to play, performing essential operations in the running of a business. However, in many cases, there exists untapped potential in elevating the department to drive extra value and become more of a decision-maker. For as long as your AP team are stuck doing routine, manual, time-consuming tasks they will always be looked upon as a cost to the business. Central to unlocking the departments’ potential is embracing digitization and making the switch to automation.