How CFOs use AP automation to improve operations and increase revenue
Digital transformation has moved from a buzzword to a critical need and reality for most businesses. For progressive AP departments, this means increasing automation to streamline workflows and improve efficiency. Now AP is moving from a back-office function to a strategic center of business, supporting the CFO’s goal of achieving operational excellence, control and increase revenue.
The expanding role of the CFO
Today the CFO role is expanding to a proactive advisor to the business while still managing the traditional responsibilities. Complexity increases as the rapidly changing environment require CFOs to balance performance, efficiency, and risk in the face of increasing regulatory controls. Digital transformation is the only possible way to achieve these goals as the CFO’s role continues to evolve.
“Forced to do more with less, CFOs must balance performance, efficiency, and risk—but that requires digital tools as well as the agility to manage volatility and drive enhanced decision making at reduced cost.”
The expanded responsibility to help guide the business in decision-making processes means the CFO must free up time within the finance department and ensure easy access to the data required to support different types of business decisions. Implementing digital tools, such as an AP automation software solution to enable streamlined and automated invoice processing, is an excellent first step in this digital transformation.
As the need for data proliferates across all business functions, many companies are adding a new member of the C-Suite - the CDO, Chief Data Officer. Recognizing that the CFO is already wearing multiple hats, this addition is a key component in a business’ digital transformation journey.
The Gartner Chief Data Officer Survey found that support for the CDO role and business function is rising globally. More than half of CDOs now report directly to a top business leader such as the CEO, COO or CFO and Gartner predicts that by 2021 the office of the CDO will be seen as a mission-critical function comparable to IT, business operations, HR, and finance.
“While the early crop of CDOs was focused on data governance, data quality and regulatory drivers, today’s CDOs are now also delivering tangible business value, and enabling a data-driven culture.” says Valerie Logan, research director at Gartner.
Implementing an AP automation software solution will digitize the invoice processing workflow to save time. It will also function as a data repository for invoice data and support reporting on key financial metrics such as cash flow, accruals, and forecasts. The CFO will see AP resources being freed up for more strategic tasks and, more importantly, gain greater visibility into the AP process and real-time invoice data to support the entire organization.
AP automation - the CFO’s first step to digital transformation
Automating the accounts payable process is a smart first step of digital transformation within the finance department since it’s relatively easy to implement. And the benefits to the organization are multiple and tangible.
“Our CFO had to step in while our AP manager was out and saw all of the manual processes that were being done. By the next day, we were exploring a solution” - Anonymous AP Professional
With no solution in place, the pressure on the AP staff is high, manually managing paper invoices, coding costs to the appropriate G/L account and cost center, routing for internal approval and matching invoices to purchase orders while trying to minimize the risk of errors and late payments. Thus, the CFO has much to gain by digitizing AP just regarding process and resource efficiency.
Some of the immediate effects of implementing an AP automation solution for the CFO and AP team include:
- The solution automates repetitive tasks, so there is less manual work for AP staff
- Reduced risk of errors and late or lost vendor payments
- Easier and faster review process for approvers even on mobile devices while on the go
- Access to invoices in a digital archive
- Full visibility of the AP process and outstanding invoices
- Automatic matching of invoices to purchase orders
However, there are other and much more exciting benefits of achieving a digital and automated AP process. In the long term, an AP automation software solution can help the CFO strengthen the finance department’s position in the organization and provide a better service to the overall business. By increasing efficiency and automation of the AP process, the CFO will free up time for AP professionals previously busy doing manual work. These resources could be re-allocated to more strategic initiatives that better support the overall business goals.
The invoice data captured and stored within the AP automation solution is a critical source of information for the CFO. With this real-time data at hand, the finance team can report on accruals, cash flow and forecasts with better accuracy, confidence, and timing. Long-term AP automation becomes a key control mechanism providing CFOs with increased visibility into the overall financials, supporting more informed business decisions.
Reduced costs mean increased profits - making the CFO a star
Digital transformation makes it easy to capture, integrate, access and analyze data. Also, the costs of data storage, processing, and cloud infrastructure have dropped rapidly over the past decade. Many modern AP automation solutions are cloud-based and easy to integrate. Thus, the overall cost of investing in AP automation software can be reduced and result in a faster ROI.
AP efficiency reduces resource heavy manual processes driving hard savings in headcount reduction or reallocation. A fast AP process also eliminates late payment fees and opens up the opportunity of negotiating early payment discounts with suppliers. Other savings that are harder to put dollar amounts on include time savings for invoice approvers within the organization, improved visibility of the AP process, access to invoice data and better vendor relationships.
Implementing an AP automation software solution drives cost reductions that benefit bottom line results in general and performance of the finance department in particular. At the same time, the organization will enjoy a faster and easier invoice approval process. Together this will be a perfect recipe for making the CFO a superstar and digital transformation champion within the organization as well as increase revenue.
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