Guest post from Millennium Consulting Partner, Proactis

(Author: Andy Hamilton)

We live in competitive, and often volatile times. So, aligning your purchasing and accounts payable (AP) processes is a crucial step towards efficiency and agility – without which, your organisation could be exposed to increased risk, a lack of control, reduced productivity and an operating model which is wasting money, rather than saving it.

Over the last few months, I’ve had some very interesting discussions with senior Finance and Procurement leaders who are reaping the rewards and demonstrating a clear ROI by successfully aligning these two processes as part of their digital evolution. Although many organisations have already started on the journey, most are not yet achieving the full benefits possible, because their processes aren’t aligned. So, they remain exposed to maverick buying, extended and inefficient purchasing timescales, duplicate invoices, late payments and a general lack of true spend visibility.

British Land is one example of an organisation that has successfully aligned these two processes, helping them improve their business performance to process over 10,000 purchase orders and 25,000 invoices per year. This new approach to purchase orders and electronic invoicing provides improved levels of accuracy, control and transparency, as well as a transformed finance function that delivers continuous ROI.

With these thoughts in mind, I want to share 3 steps that could help you begin to align your purchasing and AP processes to deliver maximum ROI for your business strategy:

To truly align your purchasing and AP processes, you first need to understand how these processes are currently performing. This will not only highlight what you’re doing well, but also where improvements can be made. Once you’ve understood your current processes and how they’re working, you should look at whether they’re meeting your current KPIs and whether they’re driving tangible business outcomes. If you haven’t already set KPIs, they are invaluable in helping you establish what your performance looks like vs industry benchmarks or industry peers. They are also critical in supporting the creation of a business case based on what needs to change, promoting stakeholder collaboration and accountability and, if appropriate, helping you identify the right technology partner to deliver an ROI against them. Once you’ve completed these steps, you’ll have a better idea of:

· The cost savings and process efficiencies that are achievable.
· An understanding of the cost to your organisation of ongoing sub-optimal performance – the “cost of doing nothing”.
· A clear statement of the business outcomes that you want to achieve.
· A supporting business case which justifies any request for investment to deliver the change required.

Understanding your processes is crucial for your evolution, so look at what you do now, and work out what you can do better. This is where choosing the right technology partner is vital.

Once you have performed a methodical and complete review of your current processes, you should consider the technology you are using to manage these processes – is it suitable? Are there gaps? Do those gaps cost you money, or make you inefficient? Can you see what you need to confidently to manage your business, or do you have to guess/make assumptions? The technology, and the vendor supplying it, should be the bedrock of all your processes, and as a result, must be aligned with your business objectives and able to provide you with all the tools you need to drive maximum ROI. Sadly, I still hear of vendors supplying technology that do not:

· Assess customer needs correctly.
· Understand business objectives and KPIs.
· Understand the importance that people place in the process.
· Care for the vision of the customer and their journey.

The right solution provider should help you lay the foundations for success from the outset, and beyond. You need a partner that will work with you along the way. One that will have you up and running within an agreed time frame and help you to continuously improve and monitor progress against your current objectives and KPIs. On top of this, any software must integrate seamlessly into your existing Unit4 Financials system. This is the only way of ensuring maximum ROI, control, and limited disruption. Best-of-breed providers, or software partners, such as Proactis can help you do this.

The University of Essex, a Unit4 user and long-term Proactis customer, recently took the decision to extend its solution to incorporate Proactis Invoice Capture. This has not only helped them further automate their processes, but it also ensures that it now has full control and visibility of the ordering and invoicing processes, from technology provider it could trust.

As part of your digital evolution, a simple, but effective policy that I often come across is employing a “No PO, No Pay” policy. Proactis has several customers that use this to help align and support processes. Such a policy means that if an invoice arrives at the AP department with no PO number associated with it, the invoice will automatically not be paid. The benefits of such a simple, but effective policy include:

· All spend being accounted for.
· Increased compliance.
· Reduced invoice error handling.
· Prompt payment of invoices.
· Peace of mind!

I find that some organisations are still struggling to implement this. And this is because, for such a policy to succeed, you need to understand that implementing such a policy is a journey. “No PO, No Pay” is not a magic wand that will fix everything in one go, but with the right mindset, technology, technology partner and understanding of your current processes, it can deliver value.

Wolverhampton City Council, a Council that services over 250,000 residents, has been able to introduce such a policy and, as a result, has been able to streamline its invoice payment process, increase spend visibility and reduce its supplier base from 25,000 to less than 7,000.

Summary

To summarise, the 3 steps above are things you can do to successfully understand and align your purchasing and accounts payable (AP) processes, and in doing so, deliver increased efficiency and agility to your organisation, as well as a healthy ROI. I’d be very interested to learn where you are in your process automation journey, and how Proactis can help you achieve your goals.

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