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Chapter 5

What Each Role Should Consider with Automated AP

Earlier in this guide, we discussed the leadership roles that typically guide the AP department. To reiterate, these are the chief financial officer, controller, and AP manager.

When considering the switch to automated AP, these leaders have a lot to consider. The primary goals and focus for business leaders when improving a company’s accounts payable process is growth, contribution, significance, certainty/uncertainty, and connection.

CFO

As the top financial leader at the company, the CFO takes a strategic, high-level view when focusing on AP. Rather than getting in the weeds and dealing with every little problem and issue that comes along, the CFO should be focused on the most important processes and priorities.

Growth – Increasing profits is typically the primary objective for a CFO, but managing cash flow, accounting, treasury, and other challenges falls under the job description. While paying bills is not going to grow the bottom line, it is a necessary focal point in a growing company. For CFOs, growth in AP is all about efficiency.

As the business grows, they have to identify whether the company is in a position to handle the growth. For example, does the AP manager have the tools needed to scale and add more invoices each month without a breakdown in the process? This is how CFOs can help with growth in AP.

Contribution – Accounts payable is a cost center, not a profit center, so it doesn’t have a contribution to the bottom line, like other teams probably do. However, that doesn’t mean the AP team isn’t contributing to the company’s success. Operations need goods and services to get their work done. The CFO is tasked with ensuring each business unit and department is getting the support it needs from the AP team.

Significance – One of the worst problems in corporate offices today is wasted resources. Wasting the time of your staff on unimportant tasks that do not add value to the business is akin to throwing dollar bills in the shredder. The CFO can work with the Controller and AP Manager to ensure the priorities of the AP team line up with the overall company mission, and that all tasks the team is working on are important ones. Anything insignificant that can be automated, should be in order to achieve optimal efficiency.

Certainty/Uncertainty – The CFO is responsible for ensuring there is enough cash in the bank, bills are getting paid, taxes and financial reports are correct, and much more. To ensure everything is happening correctly and on-schedule, the CFO needs accurate data. A solid AP system removes uncertainty from business decisions for the CFO.

Connection – How does AP connect to the rest of the company? The CFO should ensure the AP department works well with both internal and external partners. Internal connections to accounting, finance, and operations can be both electronic and human, and properly managed relationships and networks improve overall efficiency and performance.

At larger companies, the CFO has his or her hands full with a wide array of responsibilities. While accounts payable may not come up every day, ignoring AP is an enormous mistake for a CFO. With good automation and a trusted team, accounts payable doesn’t have to take up too much of a CFO’s time. However, if AP is ignored and gets inefficient or out-of-control, the CFO can plan to spend many hours solving problems and putting out fires that arise with internal customers and external vendors.

Controller

While the CFO is focused on the high-level connections between AP and the rest of the company, the controller is more focused on how AP integrates with the rest of the finance organization. Though this is a narrower focus, it is easier said than done. At large companies, a change in AP automation systems can lead to multimillion dollar costs. Let’s take a look at how controllers handle the same challenges, but with a different focus.

Growth – Like the CFO, the controller is working to ensure AP does not hinder the company’s growth. This means when vendor agreements are reached and invoices are received, they must be enforced and processed efficiently. A backup of vendor payments can lead to getting your credit cut off by the vendor, which can lead to work stoppage at your own company. A smooth, effective process ensures the rest of the company can thrive and grow with solid support from accounts payable.

Contribution – Both accounts receivable and accounts payable teams are essentially mini business units that serve the rest of the company. As we just discussed, this means AP is a cost center. To make up for those costs, accounts payable must quickly react when other parts of the company need support. The controller must prepare AP and give them the right resources to quickly fulfill this responsibility.

Significance – The definition of materiality is different at each company, but there is always a threshold where something is simply not worth the time. The controller should work with the AP manager to focus workers on significant projects that will lead to measurable results for the company. Moving from paper to automation is a big step in making that happen.

Certainty/Uncertainty – The controller needs the same data as a CFO to make good decisions, though in a more focused and detailed format. The CFO works with the corporate treasury to handle the company’s cash flow, and a lack of information here can lead to really bad situations. Bounced checks, missing payments, and the inability to make payroll are all possible if this is ignored. Knowing how much is owed and when it is due can help forecast and plan for cash movement.

Connection – With oversight over both accounts payable and accounting, the controller understands the connection between the invoices coming in the door and the bigger accounting picture. Automated AP lets a controller rest easily knowing that invoices are digitally captured and ushered through a process that checks for accuracy and lowers risk from procurement through payment.

The controller has a big job with oversight over all of accounting and related functions. A smooth process flow that connects each part of the greater accounting, accounts payable, and accounts receivable teams is key for success.

AP Manager

The AP manager directs the day-to-day operations of accounts payable, so it is normal for this type of leader to get into the details of how the department ticks. By focusing on how each worker manages tasks and what everyone is doing, this role is responsible for the success of the AP department.

Growth – At a detailed level, the AP manager wants to see members of the AP team grow and succeed while taking on more work and processing invoices in less time. This leader has the most to gain from AP automation in terms of growth, as it may be possible to increase productivity while also increasing morale by implementing new systems.

Contribution – A recent review by AvidXchange found that some companies can cut AP costs by as much as 60 percent by implementing AP automation. This is huge. When your boss is the controller, who stares at the bottom line every day, you know they will be happy if you can cut your department’s costs in half.

Significance – Every invoice is important. However, do you really want your team members to spend their time rounding up approvals and pushing paper around their desks for each one? Of course not. Automated AP helps you direct your teams’ time to significant tasks and projects while avoiding common day-to-day time-wasting tasks.

Certainty/Uncertainty – When business department leaders and higher-up financial leaders want AP information, such as which invoices are currently in progress and forecasts on what will be paid over the coming weeks, the AP manager is ultimately responsible for the answer. In the world of paper AP, this could take hours, or a full day if responding to an ad hoc request. With automated AP solutions, the AP manager can just login to the online portal and quickly access the answers they need.

Connection – Do members of your team work in their own vacuum, or can people quickly move around, pick up where others left off, and have the ability to efficiently handle anything that comes across their desk or inbox? If the answer is no, then AP automation can help. One system can unite the workflow of the entire team, which opens staff up to jump between projects and tasks while working as a team toward common goals.

The AP team is the first and last line of defense against fraud, overspending, vendor relationships, and expense accounting accuracy. With AP automation, formerly tedious and slow tasks are completed quickly.