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Why You Need To Create a Strategic Accounts Payable Function

Key Takeaways, at a glance:

  1. 88% of "Best In Class" AP departments are using e-invoicing to generate huge time-savings related to error-fixing and responding to supplier inquiries. 
  2. Strategic AP teams are using time savings from automation to focus on adding value to the wider business in areas such as improved capital management and supply chain visibility.
  3. With the right automated accounts payable platform in place, organizations can easily transition from tactical to strategic AP.
  4. Tradeshift’s technology facilitates a digital workflow across orders, invoices, conversations, and payments, with AI providing automated support.

If you’re wondering what separates a strategic accounts payable team from a tactical one, then start by taking a look around you. If you see a mound of paper on your desk, then it's very likely that your department is tactical. If, on the other, your desk and the desks of colleagues are clear (and stay that way through the month), then you’ve already taken the first vital step in taking your department to the next level to become more strategic

 

Still Need Convincing?

Then take a look at the findings from Ardent Partners’ AP Metrics that Matter report, which found that 88% of “Best in Class” AP teams have made the switch to an e-invoicing platform, and they’re reaping the benefits.

Ardent’s report shows that “Best In Class” AP departments spend less than half the amount of time fixing errors and fielding calls from suppliers wondering about the status of their invoices. They’re also processing invoices more than 80% faster, with far fewer manual interventions. 

Around a quarter (22.5%) of AP staff time is taken up handling supplier inquiries - approximately 9 hours out of a standard work week.

No doubt about it, when it comes to the kind of manual tasks that have long been the preserve of tactical AP departments, automation is better, faster, cheaper, and more accurate than any human being. And it’s only going to get better.

The percentage of executives that say that Accounts Payable is exceptionally or very valuable has changed dramatically over the past six years, more than doubling from 32% in 2017 to 66% in 2023.

If data entry is what gets you and your team up in the morning then this might be a little scary. But if you’re willing to view this as an opportunity to reimagine the scope of your role across more value-driven lines, then AP automation is a gift. Your route to becoming a strategic AP function revolves around how you plan to use that gift. 

What Does a Strategic AP Department Look Like?

We see a lot of RFPs from AP departments solely looking to generate cost savings, often through a reduction in headcount. This isn’t necessarily wrong, but it is a missed opportunity. Reducing headcount is a one-time benefit that pales in comparison to the value obtained through elevating AP’s mission. A business case built purely around cost-savings is an admission that your department views itself as a cost center rather than a potential value center capable of actively contributing to the wider strategic goals across your business. 

A strategic AP department is far more likely to build their business case for AP automation around the additional value they can offer to the business as a result of the efficiencies they gain from the technology itself. Areas these teams are likely to focus on from the outset include: 

  • New strategies for working capital management
  • Enhanced approaches to fraud mitigation and compliance
  • Increased supply chain visibility and collaboration
  • Proactive, data-driven insight to support financial planning

Strategic AP teams strive to break down silos, creating a more collaborative process with cross-functional engagement. By utilizing data and intelligence, they proactively engage with sellers and foster positive relationships. 

How Tradeshift helps your AP department to become more strategic

Becoming a strategic AP function isn’t something that happens overnight. With the support of a strong digital platform and a connected network, the transition from tactical to strategic can be done more easily. That’s where Tradeshift comes in. 

The Tradeshift network facilitates a fully digital approach to AP. We make digital the default for the orders, e-invoices, conversations, and other transactions that occur between you and your sellers. And, with access to early payment options, you can work to get paid faster and more reliably, helping you maintain a steady cash flow. 

Using Tradeshift Pay, your organization can embrace a digital-first approach by implementing artificial intelligence to help create an efficient payables process. You can quickly and easily adjust the level of involvement our AI has in your process, allowing unbridled customization and tiered implementation.

We're so passionate about that this issue that we partnered with the Institute of Financial Management IOFM to explore the benefits of a true automated AP processing solution — one that should manage your processing tasks by handling all the repetitive, manual work and free up your team to build relationships and create value.

The road to embracing strategic AP doesn’t need to be a long and challenging one. With the right support system and the right tools in place, you can shift your organization from a tactical approach to a more insightful, effective, and strategic one.

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