Don’t automate a bad process! Learn about the importance of creating a complete and effective process for Accounts Payable BEFORE automation, to achieve AP PERFECTION
I like baking. I’ve been baking cakes for many years, and I know what works well and what doesn’t. For example, I know that if I don’t mix the cake batter correctly, allowing plenty of air to be added, it will result in a flat cake. I know that if I’m not precise with my ingredients, the cake won’t be light and fluffy. And I know that if I don’t take the time to level my cakes before decorating, that they won’t stack evenly. I know that I would need to get my process perfect before writing out a recipe and instructions for someone else to use!
Let’s automate that process and take it from my kitchen to the factory. If the manufacturing process of a cake wasn’t correct, the shop shelves would be full of flat, claggy, wonky cakes. It just wouldn’t be efficient or acceptable. The factory would need to get their recipe and process correct before commencing manufacture to ensure well turned-out, consistent, presentable cakes every time.
Automating Your Accounts Payable Process
It’s the same with automating any process. Let’s take accounts payable (AP). It’s necessary to assess the efficiency of your AP function and create consistent, effective processes before automating to ensure you’re getting the most out of your automation investment.
As organisations across the globe continue to turn to technology to drive greater efficiency and cost savings across accounts payable and other back-office processes, AI-driven automation has proven to be an obvious and powerful tool for achieving exactly that. Automation solutions are being used to combat common AP challenges, such as: long work hours for staff, missed payment deadlines, slow resolution of exceptions, inaccessible information, and frustrated suppliers and stakeholders. However, without properly assessing your current AP practices and process maturity, you could be automating a broken process, which can make things even worse.
It can be a bit like plugging holes – fix one area and then another hole appears. Instead, surely it is better to look at the bigger picture and get the full process right in the first place before applying the icing on the cake; automation?
So, how can you achieve top-performance status in your own AP department? It’s a simple equation:
Evaluating Process Maturity
Process maturity looks at how close a developing process is to being complete and capable of continual improvement. It’s a measure of how well-defined and controlled a company’s processes are. A high level of process maturity shows that a company documents processes well, employees understand and follow procedures, and there is ongoing assessment and improvement. Reaching AP process maturity before automating should be every organisation’s goal to ensure maximum ROI.
What processes have you automated already?
You may have already automated some steps or all steps. To achieve process maturity, you must first work on improving the efficiency of each, ideally through automation.
What is your level of automation?
Next, you must identify your current level of automation and where you can improve.
- Low automation: having automated no more than two steps
- Significant automation: having automated three steps
- End-to-end automation: having automated at least four steps
How consistent is your decision making?
Assessing the consistency in which your business makes decisions is a key piece of evaluating your current AP process maturity. When decisions are made higher up in the organisation in terms of process, consistency and efficiency, it typically leads to much better results at the AP level where the work is actually done.
The importance of process consistency
To become a top-performer, it is essential that AP departments first fix their processes to achieve consistency.
Steps for improving process consistency
1. Get strategic alignment
Define goals, and try to align those goals with those of Finance and Procurement. Consider whether your organisation is investing enough resources to support your well-defined AP goals.
2. Put a governance team in place
Define the capabilities required for an effective process owner, select the best fit for the position and task them with creating, modifying, and enforcing process changes and keeping lines of communication open with frontline staff. Assign people to each step and identify who should be consulted and informed of changes.
3. Visualise your process
Organise your AP processes from beginning to end, starting at the point of purchase and concluding with reconciliation. Give each process a name, sort processes in order, chart the roles involved in each AP step, and detail all the inputs and outputs for each step in the process.
4. Manage change
As you implement the changes, be sure to capture any best practices or lessons learned that emerge and share them with your entire team to celebrate and replicate the good outcomes. Identify training needs for your team to enable them to succeed.
5. Apply what you’ve learned
Top performers are continuously improving their processes. This starts with aligning your process improvement goals with what leadership defines as success. Quantify performance targets, identify and define process measures, then collect data to measure your progress. Finally, compare your results to those of your peers to continuously improve your processes based on the data that you learn.
Don’t automate a bad process! Technology helps, but it can’t fix what’s already broken
Automation can only get you so far. Don’t automate a bad process! A better investment would be to first fix inefficient processes, then determine if your current system is still inadequate. Only then can automation perfection be achieved.
Or perhaps you’ve already achieved top-performance status in your own AP department and are already ready for the benefits that automation can bring?
Watch our AP demo for more information about how Esker’s solution can automate your perfected processes
Or contact us to arrange a one-to-one demo
