AP & big data: How to leverage invoice data for intelligence
The term “big data” is more than just a buzzword worthy of an eye roll. It’s become a central theme in strategies and analytics for finance departments around the world. One of the areas of finance that has been most dramatically impacted by big data is the accounts payable department. AP and invoice workflow and processing transitioned from its former transactional role into an intelligence hub for the business; invoice processing steps uncover meaningful data that makes the AP team strategically valuable.
For the C-suite, AP provides the intelligence needed to react effectively to new market pressures and updates. AP automation harvests data from invoices and other transactional documentation. This data is used to determine activities and trends, as well as to gauge the future of the marketplace - placing AP and invoice processing at the forefront of big data.
What is big data and why does it matter?
Big data is the digital trace of activity including journal entries, sales journals, employee information and customer data, along with all of the typical data found in AP and accounting processes.
From the CEO to the CFO to the AP team, detecting trends from this data is crucial to determining patterns and trends day by day and what they are likely to be tomorrow and beyond. Following trends and the invoice workflow not only helps the company take steps to prepare for the future but also strengthens the internal controls, providing more stability to the organization. The need for this data is so strong that there are now full-time positions dedicated to predictive analytics - that is, finding the meaning in big data and operation automation solutions to facilitate the process. In accounts payable, AP automation speeds up the process and ensures everyone has updated data anytime and anywhere, including crucial invoice updates.
Access volume of data for optimum results
Evolving intelligence, such as AP automation, provides a significant volume of pertinent data in real time. Where there were once only a handful of solutions offering usability to mine financial data for businesses, there are now seemingly hundreds of vendors with various analytics platforms. Modern technology can provide everything from automated reports of invoices requiring tax regulations to a sleek dashboard for CFOs offering a high-level view of the state of the business in 10 minutes or less. The AP team and the C-suite can use this data to drive business value and make more educated decisions.
Even if an organization has not yet adopted modern standards concerning its finance process technology, it is crucial for the right types of data to be measurable in order to correct errors and prevent them in the future. Reducing the risk of manual errors now helps AP teams save time and money, while simultaneously improving the overall quality of the services they provide to the rest of the business. Taking the necessary steps to reduce manual work by employing various levels of automation will, over time, make the process of modernizing a business easier and more streamlined.
Agile analytics and financial intelligence
It’s hard to separate financial intelligence and the agile analytics supporting it from big data. The two are interwoven, particularly in AP where invoice data feeds directly into the most critical reports for AP managers and controllers. AP automation improves how this important data is collected, not only reducing processing errors but improving the efficiency of staff members and protecting historic AP data for future reports or potential audits.
Stakeholders, particularly procurement, finance and treasury, benefit from instant access to real-time information on any device. It’s up to accounts payable to increase its value to the company by making use of solutions that leverage this data in a meaningful way so that the other departments know where to go when addressing dynamic business challenges and pressures.
Faster is better - benchmarking goals
An automated AP system is a fast and efficient one. Being fast and efficient translates to a more successful AP department, saving money by avoiding late payment fees and potentially unlocking early payment terms and discounts. But it’s important to avoid complacency, even if an organization is already automated. That’s why keeping track of KPIs and industry benchmarks helps businesses hold themselves accountable, so that they can continually improve and highlight bottlenecks or address processing inefficiencies.
When setting the KPIs you want to track, it’s important to understand the data supporting them and to set realistic benchmarks based on legitimate, updated data. Take advantage of data-driven methodology with analysis of the invoices flowing through the AP process to point out which suppliers use the most paper, which suppliers have the highest exception rates, and which are keeping you from reaching touchless processing. Then, do an assessment to break down the reasons for manual work and how automation could take over routine tasks. Finally, get up to speed with automation, discuss with your peers the processes and solutions they or their suppliers are using, and routinely research news and market updates on the progress of technology.
In this increasingly analytics-driven business climate, accounts payable and big data are inextricably tied together. The current era of AP automation acts like an accelerant, providing easier access than ever before to critical invoice workflow data for greater predictive intelligence to make operations more profitable and productive - today and in the future.
