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Market Perspectives from Industry Leaders Business Information In today's information age, collecting and storing vendor payment data is simply not enough. Given current time constraints, accessing the right information at the right time and analyzing this information to develop clearer business understanding, is critical and a true source of competitive advantage. Since the Accounts Payable (AP) Department is the last control point before money leaves a company, access to comprehensive reporting is crucial to effectively managing the business. Additionally, access to such relevant and timely AP information can directly drive down operating costs.
But with many companies bombarded by AP data overload from numerous internal systems and reductions in staff, how can companies decide which analysis is the most critical?
With API's Accounts Payables Solution, companies are able to better manage Days Payable Outstanding (DPO), reduce processing costs, and receive built-in duplicate payment protection.
Key Reporting Areas
Best practice companies evaluate their AP results and historical trends in four major areas:
Vendor Management
Leading companies have found that continuous evaluation of vendor spend and purchasing trends allows them to better capitalize on their overall buying power. This evaluation becomes even more critical as companies expand through geographically remote operations and field offices; as well as when companies employ an active acquisition strategy and integrate a variety of new business entities.
It should be expected by companies that as they effectively complete analysis of purchasing trends, there will be changes in vendor population, improved leverage in contract negotiations and changes in buying behavior. Some items to consider when evaluating vendor management include the following:
Cash Flow Analysis
Depending on your organization's cash flow needs, it may be more beneficial to take advantage of early pay discounts, or it may be more profitable to pay on time to lower financing costs. Analysis of cash flow is vital to determine the best course of action to take. Questions that should be answered include the following:
Compliance - Internal Controls & External Regulations
With the increase in AP fraud and the establishment of the Sarbanes-Oxley Act, even private companies are more aware of the critical need for improved documentation and financial controls. Segregation of duties is imperative in the accounts payable arena. Information which ensures full compliance with documented procedures and controls (at Corporate and throughout field operations) is crucial. Answers to the following questions should be readily available within your reporting capabilities:
Audit areas that best practice companies pay particular attention to include:
Operational Efficiency
Assessing AP Departmental efficiency - and comparing your results to best practice companies - assists in identifying service gaps and ensuring appropriate levels of staffing. Questions that should be answered include:
Business Optimization
Gaining timely access to pertinent information is critical to managing the accounts payable process, managing cash flow, and ensuring consistent adherence to proper procedures and controls. Robust reporting and analysis requires access to real-time information with the flexibility to hone in on specific information at any given moment. With the access to the right information, leading companies also benefit from reduced costs, improved operations and reduced risks from fraud. Such companies ensure processes and costs are optimized and have the strongest balance sheet. They are also the companies best positioned for future business growth.
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