Figuring out how your AP department measures up is as easy as 1, 2, 3.
Working in AP can sometimes make you feel like Rodney Dangerfield…you don’t get no respect. Even though you’re a department that can impact the company’s cash flow, which impacts the business’s bottom line; the perception is that you’re merely a transactional back-office cost center.
So how can you audit your internal controls and performance in order to position your organization for success in lowering costs and increasing operational efficiency, while getting the respect you deserve? There are 3 ways you measure your progress:
1. Map your process – Track each step of your invoice processing and monitor its effectiveness. Is your AP centralized? Do all invoices go to you or to Procurement? Are you capturing early payment discounts? Where are your bottlenecks in the approval process?
2. Create Benchmarks – How do you measure up to average or best-in-class companies when you consider the time and cost spent to process each invoice? Where do you want to be?
3. Identify Improvement Areas – So where do you want to be? It’s easy to identify where that is; the difficulty is in knowing how to get there, since it’s always a multi-step process. The first step is to define where in your processes you need improvement, and you need to be painfully honest with yourself about this. Don’t sugarcoat your current situation.
Clearly getting to where you want to be is a process. Start by assessing where you are and where you want to be:
- Understand the strengths and weaknesses of your current processes
- Set clear goals and timeframes
- Keep up to date on new and emerging technologies
Once you’ve accomplished this, you’ll begin to transform AP from a back-office cost center to a strategic asset … and you’ll get the respect you so richly deserve.
For more details on this topic, download our “3 Ways to Audit your AP Performance” Webinar.