Everything has changed for accounts payable—how do teams move forward?

April 1, 2020 Kevin Wilbur

Two months ago I spent time with an accounts payable manager of a large global enterprise. We spoke at length about their challenges with paper-based workflows and how they’re excited to have the budget to adopt a new accounts payable platform. They had big plans for the department and were fully focused on the future.

I called that same accounts payable manager this week. Unsurprisingly, everything had changed. 

Over the course of a frantic five minute call they told me their scanning provider was operating with a skeleton staff, leading to a backlog of paper invoices waiting to be scanned. The invoices they’re able to process are taking the team much longer as it adapts to working from home. They also mentioned the working capital strategy is in flux meaning they’re not sure what approved  invoices they can pay.

Our conversation got cut short because another supplier call came through, apparently the eighth that morning—it was just gone 10am. Their parting words: “I wish we were better prepared for this.”

I suspect this story resonates with other accounts payable teams. You’re all dealing with an unprecedented situation. And it might seem an insurmountable challenge. But it’s not. 

And there are practical steps teams can take to keep their head’s above water, and even generate opportunities to add value.  

  1. Get invoices digital

Getting as many sellers as possible to send a digital invoice must be the top objective for accounts payable teams. According to the latest stats from Ardent Partners, nearly half of all invoices are paper-based. That’s a lot of invoices getting sent to understaffed or empty offices and potentially going unpaid right now. 

If you already have an e-invoicing solution, you're in a great position to do this quickly. In fact, this is arguably an unrivaled window of opportunity to maximize your solution’s utility and digitally connect your supply chain. So remind your sellers the solution is there for them, and support them so they can get started using it right away. 

It’s a bigger challenge if you don’t have a suitable e-invoicing solution in place. But there are options. You can ask your sellers to send you PDFs over email. And there are free tools you can show your sellers that’ll help make this process quick and easy for them. It might not be the ideal solution, but it’s better than paper. 

  1. Inform working capital strategy

Cash flow is likely top of mind for your CFO, and even CEO. Your treasury team is working day and night revisiting forecasts and devising a working capital strategy to meet the demands of the coming months. As a key component of working capital performance, accounts payable must be part of this conversation. 

Now your team might not usually get involved in these discussions. From my experience, accounts payable and treasury tend to operate in silos—treasury dictates the strategy and accounts payable executes it. But right now those silos need to come down, the stakes are too high. 

One way accounts payable can add immediate value is to provide insights around the impact any proposed strategy will have on sellers. Your team is in touch with sellers daily and have a unique window in their financial health. These insights can give treasury the best chance of building a working capital strategy that meets the company’s needs without negatively impacting sellers. 

And part of that strategy may be harnessing the new digital connections accounts payable is making with the supply chain to leverage innovative forms of supplier finance.   

  1. Be a partner to your sellers

A healthy, adaptable and well-managed supply chain is crucial at all times. And it may well be that one key differentiator that’ll ensure your business survives during this turbulent time. 

Because of this, it’s vital that your accounts payable team proactively communicates with your seller base. And I don’t just mean answering the phone when they call to find out when they’re getting paid. I mean giving them information ahead of time about when they can expect to receive payment so they can plan their cash flow accordingly.

Now, I understand that it’s a big ask—your company has thousands of sellers, it’s not easy to give them all the information they need. But use technology to your advantage where you can. For example, as you onboard sellers onto your e-invoicing platform, you have the opportunity to collaborate with them digitally and in real-time. You might even provide them with self-service tools giving them a frictionless way to discover their invoice status. 

Communication is key during times of crisis. And the way you communicate and treat your sellers now will likely go a long way to defining your future relationship. If you’re there together through the bad times, you can thrive together in the good.

  1. Beware of fraudulent activity

Fraudsters strike when companies are most vulnerable. Around the world, fraud activity is up to target the operational weaknesses exposed by the current period of disruption. 

As the gateway to your company’s finances, accounts payable is on the frontline of this battle. But with teams working at a frantic pace and dealing with the complexities of distributed work, there’s a real risk individuals might get caught out. All it takes is one misstep to open up a pandora's box of problems. 

Digitally working with sellers will go a long way to help accounts payable mitigate the risk by simply creating more visibility into transactions. While advanced systems can also apply business firewalls, artificial intelligence, and apps to workflows to further reduce the chance of fraudsters having success. 

  1. Show the real value of accounts payable

I’ve spoken with many accounts payable professionals over the years who feel their department is undervalued. Now’s your chance to prove the naysayers wrong, and show that accounts payable has a clear and visible impact on company strategy.

Take the recent announcement by British supermarket chain, Morrisons, for example. They’ve pledged to pay its small suppliers immediately to give them the best chance of surviving the current uncertainty. 

But Morrisons can’t make good on that pledge without accounts payable executing on the plan. It’s up to the team to approve and pay sellers invoices quickly. This is just one example of the very real way that accounts payable can and will impact company strategy over the coming month.  

What you do now can set your team up for the future

Accounts payable teams have a challenge on their hands right now. I won’t downplay it; the coming weeks and months will be tough, no matter your level of preparedness.

But I also believe the current situation provides accounts payable teams with a unique window of opportunity to define their future. The department is in the spotlight, and its work over the coming months may not only allow teams to push forward the digital ambitions they have. It may also be the time the rest of the business recognizes the true strategic value accounts payable brings to the organization.

This is your window of opportunity to digitally connect your supply chain. Discover how.

About the Author

Kevin Wilbur

Kevin Wilbur is Tradeshift's VP of Customer Value. He has spent over 25 years leading organizations focused on procure-to-pay, accounts payable, professional services, and financial services. He's now leveraging the knowledge he's gained to help global businesses digitize their supply chain and maximize their efficiencies.

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