The role of the Accounts Payable Department has changed significantly in recent years, particularly as supply chains have become increasingly globalised. In the past, Accounts Payable Departments were primarily responsible for processing invoices and making payments on time.
However, today’s AP Departments are expected to do much more. They are now responsible for ensuring compliance with regulatory requirements, minimising financial risks, and reducing costs wherever possible.
As the pressure on AP Departments has increased, so too has the need for AP professionals to take on a more strategic role within their organisations.
How Accounts Payable Managers Can Be More Strategic
By working closely with other departments and stakeholders, AP Managers (APMs) can identify opportunities to improve efficiency and reduce costs. Here are some tips for putting forward savvy ideas that will benefit broader business strategies:
- Keep up to date with changes in the marketplace and look for areas where the organisation could be at a competitive disadvantage. Doing this will help identify areas where improvements could be made.
- Meet regularly with other department heads to discuss areas of overlap and potential synergies. This information-sharing will help everyone involved identify areas where efficiencies could be gained.
- Use data analytics to identify trends and patterns that could inform decision-making. For example, analysing accounts payable data could reveal opportunities for process improvements or cost savings.
- Prepare presentations or reports detailing the findings and recommendations. APMs should back up their ideas with hard data and clear reasoning.
Goal Alignment Across the Entire Organisation
Accounts Payable Managers need to align their department’s goals with those of other departments, including procurement and finance. By doing so, the organisation can avoid duplication of effort, maximise efficiency, and save money.
Furthermore, it is essential to clearly understand each department’s roles and responsibilities to avoid confusion and ensure that everyone is working towards the same objectives. By aligning the goals of the AP department with those of other departments, businesses can streamline their operations and achieve greater success.
The Role of APMs in Reducing Costs
Accounts Payable Managers can help their organisations reduce costs in several ways because they are in the position to recognise potential cost-saving opportunities. Here are some specific tips for how APMs can save their organisations money:
- Review supplier contracts regularly and look for opportunities to renegotiate terms or prices. This could involve working with the procurement department to find alternative suppliers who offer better terms.
- Examine invoices closely to ensure that they are accurate and that there are no errors. This can help avoid overspending on items that are not actually needed.
- Work with the finance department to develop budgeting and forecasting tools that account for Accounts Payable data. This will help businesses make more informed decisions about where to allocate their resources.
- Use data analytics to identify trends and patterns that could lead to cost savings. For example, analysing Accounts Payable data could reveal opportunities for process improvements or early payment discounts.
- Implement controls and procedures to prevent fraud and waste. This could involve setting up a system for monitoring spending or conducting audits of Accounts Payable transactions.
By following these tips, savvy APMs can position themselves as strategic assets within their organisations. They can use their knowledge of the marketplace and their department’s data to identify cost savings and process improvements opportunities. In addition, by working closely with other departments, they can ensure that everyone is working towards the same goal: reducing costs and improving efficiency.
At Cogent Consulting, we help busy AP teams use automation to make strategic improvements in their processes and systems, enabling greater throughput and increasing efficiency. To find out more, please call 01536 266585 today.