Getting the most from your AP data: tips for CFOs and finance professionals.

As a finance professional or CFO, you likely already know how important accounts payable (AP) data is. But are you really getting the most out of that data? With the right tools and mindset, you can gain valuable insights to help you make better decisions, streamline processes, and save money. In this blog, we’ll discuss:

• Why you need AP data visibility
• Common AP data challenges
• Tips for getting the most of your AP data

Why you need AP data visibility: understanding the value behind the numbers.

To successfully manage your accounts payable, you need complete visibility into your data, which means real-time information on how much you’re spending, who you’re paying, and why. With visibility into your data, you can ensure your accounts payable process runs smoothly and efficiently and quickly spot and address any issues or inefficiencies.

Address key business questions.

When you have visibility, you can answer operational and financial questions quickly and accurately, like: 

• What is my processing time?
• What tasks are taking the longest to perform?
• Where am I running into exceptions?
• Which suppliers are causing problems?
• Can I identify bottlenecks by supplier or approver
• How can I optimize system settings for further process automation?

Data provides insights that allow your organization to better plan for the future. With the right data visibility, you can support short and long-term planning and answer questions like: 

• What are my short and long-term liabilities?
• How can I better manage cash on hand?
• Where do I have time and cost savings opportunities?
• Is our staffing optimized for current and future business needs?

Identify fraudulent activity.

Recent research showed 34,000 fraud cases occurred across 2,750 global businesses. Since the pandemic, invoice fraud cases have increased by 75%. Yet, 25% of finance professionals cannot estimate how much fraud costs them—because they’re often unaware it’s happening. With access and visibility, you can monitor and catch any odd patterns or discrepancies in your accounts payable data to prevent significant financial risks to your company.

Track spending patterns.

CFOs acknowledge they still struggle to understand their company's financial position comprehensively, including cash flow and daily operating expenses. By analyzing your data, you can identify areas where expenses are too high and find areas where you can save money. With complete visibility into your data, you can track these patterns, adjust your spending habits, and improve your company's financial health.

Improve workflow efficiency.

Complete visibility into your data can also improve your workflows and efficiency. For example, you can identify bottlenecks in your process and recommend process changes, such as automation, to help improve efficiency. Additionally, automated systems help reduce the number of errors caused by manual processing, making your entire workflow more reliable.

Negotiate smarter.

Complete visibility into your accounts payable data can provide you with a better understanding of your vendors and suppliers. For example, when you know how much you spend with each vendor and supplier and how often you work with them, you can leverage this data to negotiate better pricing and terms.

Common AP data challenges

Despite the clear benefits of using accounts payable data, many organizations face significant challenges when collecting and analyzing their data. They often lack a standardized process for tracking invoices, have manual processes prone to errors, and need help accessing legacy systems. Typically, common AP data challenges break down into two main categories: people and process barriers and technology barriers. 

People and process barriers.

People and process barriers can limit the effectiveness of accounts payable data. For example, lacking communication between departments or stakeholders can lead to inefficient workflows and duplicate efforts. Additionally, manual processes can be challenging to track and follow up on promptly, causing payment delays and impacting cash flow. Finance professionals frequently struggle to identify which metrics matter and why. Understanding the effective KPIs to track and how to measure them is essential. The people behind your AP operations can provide valuable insight. However, if they lack the experience and knowledge of what to track and other key skills, organizations can get bogged down with data that isn’t meaningful. 

Technology Barriers. 

Technology is another challenging area for many AP teams. Technology gaps and disjointed systems can lead to inaccurate data, incomplete information, and time-consuming manual processes. For example, if your AP tools cannot capture supplier agreements or automate specific processes – like reconciliation –discrepancies in payments can occur. Some teams are simply burnt out on manual spreadsheets and need more bandwidth to enhance efficiencies.

Additionally, data model complexity can be an issue. AP teams are bogged down in digital silos and unable to access all the data they need in one place to make informed decisions. Instead of focusing on their core processes, they become overwhelmed with managing many digital systems and tracking manual activities.

Lastly, third-party tools can present challenges to getting complete AP data. Many teams have an array of existing systems that are not integrated and require employees to transfer data from one system to another manually. This can lead to inefficiencies, discrepancies, and errors and limit the insight you can gain from your AP data. 

Tips for getting the most from your AP data.

Choose the right metrics.

The first step in getting the most out of your AP data is choosing the right metrics, or KPIs, to track. Some of the most important metrics to track include purchase order accuracy, invoice processing time, early payment discounts and supplier performance. These metrics and benchmarks will give you insights into what's working and not working with your current AP operations.

Use AP automation.

Automating your AP process has many benefits, including valuable insights. When you automate AP, you create instant transparency. You know where every invoice is. You can monitor key metrics such as invoice processing time and payment accuracy. You can even configure alerts to prevent fraudulent activity and errors.

Leverage data visualization tools.

Visualizing your AP data can help identify trends and anomalies that aren't readily apparent from numbers alone. With dashboards, you get the transparency you need, and answers customers expect, with tools like pivot charts and graphs that show you historical and current data. In addition, visualization tools give you insight into overall financial performance, cash flow trends, accounts receivable and payable balances, invoice processing times, payment accuracy rates, aging discrepancies, and more.

Analyze data from multiple sources.

To get the most out of your AP data, you should also consider analyzing data from different sources such as your ERP, procurement and other third-party sources. This will allow you to better understand how your system's components work together – from identifying process improvement opportunities to quickly tackling exceptions or discrepancies and getting visibility into incoming payments.

Think beyond e-invoicing. 

Reducing paper use and increasing reliance on PDFs –

 or e-invoicing –certainly improves AP processes, but research shows it doesn’t always translate to better efficiency and visibility. Half of the businesses surveyed minimized paper invoices yet still grapple with challenges, and reporting and analytics remain high priorities. As a result, many businesses are turning to autonomous AP technology that uses artificial intelligence and the latest machine learning capabilities to get the most from their AP data. 

Accounts payable data is an incredibly valuable asset for finance professionals and CFOs. Take time to identify your available AP data and evaluate options for accessing, streamlining and analyzing your data. With the right analytics, CFOs and AP teams will gain a holistic view, stress less and have more time to focus on decision-making, planning and strategy.