Efficiencies: The biggest challenge for Accounts Teams?
In a recent Benchmark report from the Institute of Finance & Management (IOFM), Efficiencies were cited by Accounts Payables as their biggest challenge.
Based on a 2 year study of nearly 400 AP functions (mainly US based), the IOFM focussed in on how benchmarking can help AP leaders to understand how their team is performing and how performance can be improved.
Efficiencies were consistently identified as the biggest challenge to AP teams and were typically measured by metrics such as:
- Supplier paid on time
- Cost per invoice
- Invoices per FTE
- Staff per manager
These metrics can be monitored and compared to similar organisations in order to assess how the business is performing and where teams need to focus their efforts in order to be considered best-in-class.
Diving deeper into the research, the IOFM report shows that process imnprovement and automation rated as the highest priorities among respondents. Time management, securing approvals, reducing paper and improving on time payments were also cited as key efficiency challenges for AP leaders.
The report highlights the highly manual nature of most AP organisations and points to many of the challenges occuring before an invoice arrives with the AP team.
Taking a look at the upstream problems that impact on AP efficiences, its clear that improving purchasing processes and automation can deliver significant benefits, not only to accounts payables, but to the organisation as a whole.
Receiving invoices late, lack of receipts, pricing discrepancies, approval audit trails and mis-matches are all a function of poor purchasing processes.
There are a number of solutions which can quickly address AP efficiencies.
3 Step Solution to AP Inefficiencies:
- Map Your Processes - take a look at your current workflow, document each step. Start as early in the process as possible, such as purchase requisition or supplier selection. Identify bottlenecks and opportunities to streamline the process.
- Implement Cloud based Purchase Approvals - automate your purchase-to-pay process using cloud based platforms, such as Zahara. By implementing easy to use, low cost cloud based platforms, you will be able to capture powerful powerful performance data while ensuring an efficient process for automating budgets, purchase requisitions, orders, receipts, invoices and approvals.
- Monitor, Improve & Benchmark - identify the key performance metrics that you need to focus in on. The IOFM suggest paid on time, cost of invoice, invoices per FTE and staff per manager as quantifable data to compare with similar businesses. With software in place such as Zahara, this type of data is readily available and allows management to deliver tangible business benefits, whilst the team optimise efficiencies.
To discuss how you can improve the efficiency of your organisation, please contact Zahara.
Get a copy of the IOFM report here.