The goal for Finance may ultimately always be ROI. But the road to ROI looks different for AP departments vs. CFO’s.
Nobody has invented a GPS for Finance; a road map on how to get to positive ROI and a great-looking balance sheet. Every department has its own vision of how to achieve these successes. The divergence has become clear in two different surveys that were recently published. In a new one, conducted by Robert Half Management Resources, CFO’s were asked to name their highest priority. In reply, 65% said that controlling costs was the top concern, with 27% ranking it very high and 38% ranking it somewhat high.
When it comes to upgrading systems and processes, however, CFO’s don’t rank this as a high priority at all. The Robert Half survey finds that a full 53% of CFO’s rank upgrading company systems and processes as low on their list of priorities.
Now compare that to a survey we just cited two weeks ago in the post “The #1 Concern For Accounts Payable Departments” from TAPN (The Accounting Professionals Network), which compared AP department concerns now with those of five years ago. As you can see in the charts below, for AP departments, reducing costs not only lost ground in the last 5 years; it’s now the top concern for only 6% of respondents. What is the top concern is in total opposition to CFO’s? Improving processes and reducing errors get the top ranking as the major concern of AP departments.
So where does this disconnect come from?
There are probably a number of reasons you can stipulate as to why there is such a difference between the two. But it shouldn’t be surprising. For many CFO’s they’re taking the view from 30,000 feet, looking at the big picture, which is exactly what they’re supposed to do. They’re concerned with the numbers shown in the bottom line; numbers that need to be impressive to the Board and/or to the stockholders and investors. The easiest way, in their view, is to cut costs; whether it’s cutting heads or slashing marketing efforts or reducing benefits. But AP heads know that they still have to make sure that suppliers get paid and that invoices still get approved. And they understand that one of the ways to do this quickly, accurately, and efficiently is through implementing AP automation workflow solutions and e-invoicing. In AP, you know that if you can increase the amount of invoices a processor can approve fivefold, you’ve just added efficiency that can be directly correlated to cost savings. If your invoice load increases, you don’t have to hire additional heads to cover the work; the automated workflow will handle it, and without the errors inherent in paper invoices and manual processing.
You need to build a convincing ROI
You know all of this, but how do you make your CFO see that automation will turn AP from a cost center into a strategic part of the company, in a totally affordable manner? You need to show him or her that implementing AP workflow automation will accomplish a number of things to improve the bottom line; that this technology will lead to:
- Cost cutting
- Improved cash flow
- Early discount capture
- Faster ROI
- Increased policy compliance
- Fast supplier onboarding
You may want to add in additional cost savings. E-invoicing virtually eliminates postage and delivery costs. Since automation streamlines the approval process, you don’t’ have to increase payroll as business grows so all those additional costs, from salary to benefits to office space, are not incurred,
If you’d like help pulling these figures together, just link to our ROI calculator which has multiple variables allowing you to create a full picture of the savings your department, and the company, will realize. Then present your CFO with this fully detailed ROI. Remember, your CFO may have a 30,000 foot view, but eventually, everybody has to come down to earth.
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