AP Automation – A journey of continuos improvement Part II

This a continuation of my previous blog post about the journey to deliver a world-class P2P performance.

What are the most important learnings from your journey so far? What would you do differently next time?

“Success is not built on success. It is built on failure. It is built on frustration. Sometimes it is built on catastrophe”.

Sumner Redstone

Over-automating or Over-controlling

It is quite normal to be cautious when an automation project starts, as everyone will want to make sure that the correct information is loaded into the ERP system and that the AP processes are not affected by the new solution. However, adding unnecessary validation rules could be a duplication of the standard holds that are already in place in your ERP system.

Then, instead of automating the process, it may end up requiring more manual intervention.

If, at a later day you want to remove those holds, you may find that the IT Department does not have time, resources are not available and staff are committed elsewhere. Therefore, you will have to live with some undesirable holds that prevent you for having a full automation.

My recommendation is to do a thorough test before committing to production, to involve all business areas impacted (AP Team, Finance, Sourcing, Local teams, Vendors, IT), using different types of POs (good/services), suppliers, and countries.

Go live with e-invoicing solution only when you are completely ready and use an Agile approach instead of the traditional Waterfall.

Culture – Automation mindset

Automation is the ideal path for companies that want efficiency. However, the road to automation is paved with failures and, therefore, it requires a change in people’s mindset.

Many surveys across the globe seem to indicate that workers are more concerned about the future of automation than necessary. Businesses need to adequately address these concerns by highlighting the benefits of automation to their staff and providing relevant training. Similarly, we must all learn to come to terms with, and thrive in, automated workplaces. Automation is here to stay.

You need a team of professionals capable of challenging the status-quo, who are not afraid to take risks and always think outside the box. Of course, it is always easier to continue without trying to improve.

The IT Department team needs to understand that they are no longer there to catch-up with bugs, but to prevent them from even happening.

Ultimately, the key to success in these type projects is collaboration, stakeholders (including Sourcing. Accounts Payable, IT and Finance teams) should actively participate from the beginning of the project, to share their requirements, concerns and recommendations and not simply wait for others to tell them what to do.

Describe your learnings working with your Suppliers through this journey

Our internal processes have improved considerably like PO generation and submission, vendor creation, reporting, fraud detention.

It also has helped us to better understand our suppliers’ needs, but the journey is not yet complete. There is still room for improvement and we will have to continue working collectively to find better ways to improve both parties’ efficiency and productivity.

The process of on-boarding new suppliers is still a challenge. It has to be understood that there are several e-invoicing services providers using their own templates, rules, and formats. So, if every company forces its suppliers to use its own provider, it is likely that suppliers will end up with multiple connections that make the whole process inefficient. This needs to be addressed by the companies offering this service to find a way to easily inter-connect them, so that the E2E process will be transparent for all parties involved, irrespective of the e-invoicing service provider they use.

We need to introduce other alternatives to improve the invoicing process such as the Tungsten Network Advance Capture, which allows scanning invoices and intelligently recognising and capturing data without using templates. POs, will be encourage supplier to create an invoice with auto-populated PO data, reducing manual intervention and human error.

Improving the global payment and supplier reconciliation processes, ensuring that only pending invoices are reflected in the companies’ open balances.

Alignment between Procurement and Finance – Need to wordsmith, but perhaps ‘In your experience, how important is alignment between Procurement and Finance?’  

On this journey to the world-class performance, it is impossible for an organization to succeed if there is no alignment between the Procurement/Sourcing and Finance teams.

To begin with, most Procurement teams only focus on finding the best deals, prices and increasing the company’s profitability, but as soon as the contract is signed they walk away and they forget to see if the suppliers are paid on time and, more importantly, if they deliver and invoice the goods/services according to the agreement. To add more complexity, some contracts are not even made available to the Finance team to review the conditions.

AP Automation projects are normally led by the Finance team. However, the relationship with the supplier is managed by the Procurement team, and they do not normally participate in the process of engaging suppliers to adopt the e-invoicing services. In some cases, the Procurement team is even against suppliers paying for the connection, which makes it impossible to implement the solution.

Additionally, the Sourcing back office is responsible for setting up or updating the supplier’s data. So both parties need to agree on the templates to be used, and ensure that resources are available to do the required set up on time.

Finally, sales teams launch new products without considering the procurement and billing processes. In this case an E2E analysis needs to be done to ensure all parties are totally aligned.