The accounts payable (AP) team of the future – it’s a conversation being forged in the finance world as automation of back-office functions like AP becomes more sophisticated and widely adopted. But defining how that team functions in daily operations and the tools, skill set and training needed to support this evolution has been somewhat intangible…until now. Advanced analytics empower AP teams to be more strategic and add more value as they evolve into the AP team of the future.
Future success in business will be highly dependent on data – collecting it and using it to quickly anticipate your next move. This is exactly what predictive analytics do for the modern finance organisation by enabling users to leverage data from across the Source to Pay (S2P) cycle so they can analyse the probable outcomes of processes, make better decisions and drive wins.
Advanced analytics empower AP teams to move away from being data entry clerks and become problem solvers – here are 5 ways they will drive more value:
1. Prevent late payments: Intelligence built into AP automation solutions scans historical trends and identifies patterns, then aggregates the data into predictive analytics that predict the probability of on-time payments in the AP process. AP teams will easily see invoices at risk for late payment and be able to drill into the details to determine what actions need to be taken to prevent late payments, ensure early payment discounts are not forfeited and streamline the overall process.
2. Increase e-invoice rates: Dashboards showing arrival times of invoices into the AP process allow the AP team to analyse payment times and pinpoint potential delays due to entry methods. This information arms them to approach suppliers about sending e-invoices and demonstrate how much faster invoices can be processed and payments released if they start sending e-invoices.
3. Capture more early payment discounts: Visual representation of early payment discounts by invoice shows AP teams their capture rates. They will be able to use this information to analyse possible reasons why certain invoices miss discounts and identify opportunities to increase capture rates for eligible invoices.
4. Resolve process bottlenecks: Analytics related to processing times enable AP to better understand why certain invoices take longer to process, have more exceptions than others, and tend to get delayed in the workflow. With this data, they will be able to detect and resolve process bottlenecks and streamline back-office functions. And, increased efficiency fuels faster payments to support other strategic initiatives, like capturing more early payment discounts.
5. Improve supplier relationships: Speeding up cycle times and getting suppliers paid quickly puts AP teams in a position to collaborate with their colleagues in procurement to improve supplier relationships. By helping suppliers with cash flow needs through faster, reliable payments, AP will contribute to mutually beneficial buyer-supplier relationships and make it easier for procurement to negotiate better contracts with happier suppliers.
Solutions delivering advanced analytics are improving every day to integrate more machine learning, predictive analytics and artificial intelligence so users can make the most of their financial data. There is no doubt these advancements will continue to propel AP into a strategic arm of the business.