November 30, 2021
Many companies experience significant challenges with their accounts payable (AP) functions. These tend to be manual, drawn-out and fragmented finance business processes surrounded by legacy technology. They’re not tied to business outcomes and, therefore, lack an end-to-end process flow and metrics to define success. Businesses that fail to reinvent these business processes remain at risk of jeopardizing the user experience. They’ll also have to grapple with inefficiencies that lead to unnecessarily high invoicing costs. Critically, these businesses are also unlikely to improve their cash flow.
Rethinking finance business processes for the digital world and tying them to explicit business outcomes changes the game, providing multiple business benefits:
- Improved cashflow
- Enhanced stakeholder engagement
- Reduced costs
- Improved business data, insight and knowledge
Achieving multiple paybacks
Say, for example, that a company’s objective is to create a better AP process, where the outcome will be growing working capital by boosting cash flow. The business’ existing process is manual, clunky, multi-step and data poor. So, the company creates an automated, secure, self-service, straight-through payment process to replace it –– and incentivizes suppliers to adopt it. Suppliers that load their invoices directly into an ingestion system will receive faster payment than their terms specify — in exchange for taking a percentage off the purchase price.
Suddenly, with reduced charges, the company has generated working capital in a way that it historically hasn’t been able to do.
This approach also has positive repercussions across the AP chain. The process helps the company build both stakeholder and customer satisfaction. I’m thinking here of employees in the business who have to wrestle with cumbersome AP processes that span multiple touchpoints. Their work can be inefficient, siloed and task driven.
Now, these employees become part of the digital workforce, add value at the right touchpoint and understand the business outcome. They’re dealing with hyper-automated processes that seamlessly handle previously tedious and time-consuming tasks, such as correcting accounting errors. Their experience is improved and they become more engaged.
There are other significant benefits of reengineering and automating AP processes. For instance, it’s possible to significantly reduce the cost of the invoicing process, which is typically around $6 per invoice — about 70% of it allocated to labor. After DXC Technology rebuilt and automated that process for one large company, the business saw its labor requirements decline and its per invoice processing costs shrink in excess of 50%.
Taking AP processes beyond technology
New and improved business processes should be backed up by a data model and rules for the system to automatically check for compliance issues, ensuring the amount on a supplier’s self-submitted bill matches the purchase order, for instance. As data libraries build up around processes, companies can take more advantage of analytics and machine learning to get better at identifying issues and automatically correcting errors.
Just about any AP process can be automated, but remember that without reengineering “the bot farm,” as I like to call it, the company is just adding speed, not speed-to-value as the inherent process flaws remain. Reimagining and automating processes and driving change through them requires that the company be ready to commit to a digital transformation journey to achieve important business outcomes.
It’s about transforming the legacy ecosystem and re-engineering business processes by taking advantage of the latest technologies, operating models and benchmarking. In the new world automation is linked with analytics, which is then linked to machine learning, artificial intelligence (AI) and domain expertise.
This all has to be orchestrated, not deployed in a linear, single use-case fashion. Improving the expected business outcome requires asking and answering questions such as how long the process should last, what is the right time for human agents to enter into it, what can be encoded through rules, how errors will self-correct and so on.
The right business process playbook
DXC has multiple years of deep domain experience in this field powered by the strength of its technology. We act in a consultative role to understand your business and define a roadmap, with options to drive better business results. Critical to this is our domain expertise and IP in finance and accounting business process services to build out and configure a capability to drive new process optimization and deliver a highly tuned, managed service.
We work with our customers to predefine appropriate measures of success, and that extends beyond the business outcome of a process itself. We consider everything from whether we have achieved integration into the culture of an organization, to whether we delivered the change in a manner that meets our customer’s return-on-investment needs. Another consideration for many of our customers is how we can enable them to leverage the data that they collect as a result of running a process, to drive benefits back into the organization.
To ensure that we can meet customers’ requirements to act in an agile and flexible manner, we also focus on business outcome pricing contracts, so that our payment is tied to customer success.
Intelligently rebuilding, streamlining and automating AP finance processes — or for that matter, any significant process — can generate exponential value for a company. Create future-ready processes and your business and stakeholders will be ready for the future.