Excelling in AP Management through Automation with AP Leader Caroline Adams

In this interview with Caroline Adams, an accomplished AP leader, we ask her a series of questions about AP management, the influence of automation, and the journey toward modern AP processes. Discover her valuable insights.

Introduction

In the past years, the role of Accounts Payable (AP) has undergone a profound transformation. Once considered a back-office function primarily focused on processing invoices and making payments, AP has now emerged as a strategic business partner at the forefront of financial automation. This shift has been catalyzed by technological advancements and the growing importance of data-driven decision-making.

Q1: How has the role of AP evolved from being a back-office to a strategic business partner?

AP has shifted from a transactional focus to a strategic one. It now offers valuable data insights, helps improve supplier relationships, and cash flow management, which is crucial to an organization’s success. This change toward a more strategic function gives AP a significant role, actively contributing to the achievement of business goals.

Q2: What are the key drivers behind the transformation of Accounts Payable (AP) in the past years?

Several factors have propelled the transformation of AP. Firstly, the COVID-19 pandemic forced businesses to adapt quickly to remote work environments, emphasizing the need for digital AP processes. Secondly, organizations are recognizing the untapped potential of AP data for informed decision-making.

Q3: What strategies can organizations employ to run effective AP departments?

Firstly, it’s important to emphasize opportunities for growth and innovation within the AP departments. By creating clear career paths and offering chances for employees to develop new skills, such as investing in training programs, and taking on more strategic responsibilities, organizations can make these roles more appealing.

One game-changer here is automation. With the rapid advancements in technology, especially robotics, AI, and machine learning, organizations can automate a lot of the repetitive and manual tasks that are part of AP processes. This not only makes the job more attractive but also frees up AP experts to focus on more interesting activities.

When it comes to hiring, organizations should look for professionals with the right mix of skills and qualities. It’s not just about the technical skills; it’s also about having a goal-oriented mindset, commitment to the job, a willingness to learn and adapt, and a diversity of perspectives and experiences. These qualities, combined with a shared organizational culture, responsibility, clear communication, and an innovative mindset, can help build a strong and effective AP team

Q4: How can organizations manage an aging AP workforce in the era of automation?

I believe that first and foremost, we should acknowledge that our experienced AP professionals bring a lot to the table. They’ve got skills and experience that can be used in various areas within finance and even beyond. So, one key strategy is to recognize these transferable skills. Next, organizations should create clear career development pathways for these professionals. This involves providing opportunities for training and upskilling to enable them to transition smoothly into different roles.

Encouraging specialization is another key strategy. This might involve strengthening statement reconciliations, providing essential insights to the procurement teams, enhancing the accuracy of financial processes, addressing complex VAT-related challenges, identifying opportunities for working capital optimization, and effectively managing cash flow.

Furthermore, these experienced AP professionals can also play a vital role in handling more complex queries and complaints. Moreover, considering their experience, they can serve as mentors for junior members of the team. This mentorship role can facilitate knowledge transfer, skill development, and overall team cohesion, creating a supportive and collaborative work environment.

Q5: What are the key factors to consider during AP transformation, and how can organizations effectively manage change?

When it comes to transforming the Accounts Payable process, there are a few key things to keep in mind. First off, you need top management on board, setting the vision, and making sure everyone knows why this change is happening. Overall getting buy-in from everyone involved across the organization is crucial. That said, you need more, that is stakeholder engagement. You need your AP team, your procurement department, and even your suppliers to work together.

A clear roadmap is like having a GPS guiding you through this journey, clearly defining objectives, milestones, and expected timelines. Therefore, effective communication plays an important role. Ensure open lines of communication so that everyone remains informed, and go beyond just talking to people; establish channels for them to provide valuable feedback.

And don’t forget about setting KPIs. Make sure they’re measurable, and they should tell you if you’re heading in the right direction. Lastly, define training programs so your team has the skills and knowledge to handle the new processes and technologies.

Q6: What were the major challenges you faced in AP before implementing automation?

Before implementing automation in AP, we encountered several challenges. One of the primary issues was the sheer volume of invoices and data that had to be processed manually. This not only consumed a significant amount of time but also introduced the risk of errors, which could impact financial accuracy and vendor relationships. Another challenge was the lack of real-time visibility into the status of invoices, which made it difficult to track and manage payments efficiently. Additionally, having to use multiple systems to answer a query as opposed to just one further complicated the process, leading to inefficiencies and delays in resolving payment-related issues.

Q7: How can AP automation help overcome those challenges?

AP automation has been instrumental in addressing these challenges. By automating invoice processing, we’ve significantly reduced manual data entry, minimizing the risk of errors and ensuring data accuracy. Automation has also provided us with real-time visibility into the entire AP workflow, from invoice receipt to payment. This visibility enables us to track invoices, identify bottlenecks, and make informed decisions swiftly. Furthermore, by addressing root cause issues in our payment processes, we aim to increase the percentage of payments made on time. This proactive approach not only helps us avoid late fees but also strengthens our relationships with vendors, allowing for smoother transactions and overall improved supplier relationships.

Q8: What are the key performance indicators (KPIs) you utilize in your AP process?

In measuring the performance of our AP process, our primary key performance indicator (KPI) is the percentage of invoices paid on time. Additionally, we monitor other essential metrics, including the number of invoices processed per FTE, early payment discounts captured, supplier satisfaction scores, and invoice approval cycle times. These KPIs are aligned with our goals of accuracy, efficiency, cost reduction, and stakeholder satisfaction. It’s worth emphasizing that KPIs should remain adaptable to changing organizational needs and evolving industry standards.

Conclusion

The transformation of Accounts Payable from a transactional back-office function to a strategic partner in business operations is well underway. Caroline Adams’ insights shed light on the evolving role of AP, the importance of automation, and the strategies to overcome challenges. As organizations continue to embrace digitalization and data-driven decision-making, AP professionals will play a pivotal role in shaping the future of finance. We hope this interview has helped you get some valuable learning to excel in AP management.

About Caroline Adams

Caroline Adams, an experienced AP leader with a remarkable track record of guiding teams through transformative changes. Caroline’s expertise and insights have proven invaluable to organizations facing AP and shared services challenges. She is also a key member of the Institute of Financial Operations and Leadership (IFOL), where she imparts her knowledge and coaching to a global community of finance professionals.