Renovate Or Raze? How Best To Modernize Your Payables House

By Drew Hofler, Senior Director, Solutions Marketing, SAP Ariba

Is your payables process built on a solid foundation, or is it a candidate for tear down and rebuild? Your approach can determine whether your payables house is built for the future or becomes a patched together eyesore best kept hidden in the back office.

Payables as home renovation

I have a confession to make… I’m a house renovation and DIY junkie. I love projects, fixer-uppers, and renovations. If it requires a power tool and a trip to the home store, I am all in! And I love those renovation TV shows where older homes are transformed to fit modern times and their owners’ lifestyles.

A common dilemma facing homeowners on these shows is this: Do they add on to the existing space, or tear down the structure and build on a new foundation? If the need is short term, they may choose to add a room; but if the objective is to accommodate a growing family, they may start from scratch with a new foundation.

So, what does all this have to do with payables?

When addition becomes subtraction

When trying to improve inefficiencies in their payables or P2P processes, many companies have taken the remodeling equivalent of an add-on by attacking one discrete problem at a time. They add catalogs to control overspend, for example, deploy scanning to get rid of paper, implement workflow to manage approvals, and employ post-audit recovery firms to reclaim savings lost to a broken process. Taken by itself, any one of these approaches can be a good, discrete solution, just as adding a new room to your house can solve the need for more space.

However, when enough of these point solutions have been stacked upon each other, the outcome is often disparate, disconnected technologies that do not work well together. For a home improvement project, this approach gone wrong merely results in an ugly collection of mismatched rooms. But for your P2P operations, the consequences can be more troubling. Adding point solutions one at a time may sabotage the business case, and pose technical problems trying to integrate the different solutions.

A solid foundation

For example, scanning solutions may solve the issue of too much paper, but they don’t solve the root problems of paper, which are the errors and exceptions in the source documents. And while post-audit recovery firms can recover lost savings and overpayments, they simply are cleaning up the mess of a broken process.

A recent Ardent Partners report put it this way:

“While there is inherent worth in the transactional efficiencies gained improving key AP Processes, the true value [of payables] is rarely realized…Executives must view Accounts Payable as not merely an opportunity for short-term efficiencies, but as [a source of] intelligence, insights, and value in support of broader company goals and initiative.”

Gaining true value from payables requires a shift in thinking: from discrete, niche solutions to a holistic approach, where one platform manages payables as part of the larger source-to-settle process, end to end. This makes it easier for you to capture and share data, manage transactions, enforce compliance, and run simple.

This approach also turns your payables staff into business analysts who bring more value to your business.

To learn more about how to take payables to the next level of performance here, click here.

 

Drew Hofler is senior director, Solutions Marketing for SAP Ariba. Mr. Hofler is recognized as an expert in the area of collaborative finance and dynamic discounting. He has been interviewed and quoted widely in finance and supply chain industry publications around the topics of e-invoicing, dynamic discounting, supply chain financing, and working capital management-related issues, and has published a number of articles on these subjects.

Mr. Hofler is also a regular contributor to various blogs around the issues of the financial supply chain. Mr. Hofler brings almost 20 years of banking and financial services industry experience to SAP Ariba.

With Ariba, we reduced our paper invoice volume by 33 percent in nine months, and that was a tremendous accomplishment. We have also placed additional controls up front, created a system where invoices flow through better, and, in the end, reduced the actual cost of our operations.

— Al Barbee , Director , GSK North America Shared Financial Services