AP Best Practices - Accounts Payable Manager - Medius (2024)

The role of an AP manager has undoubtedly changed over the last couple of decades along with AP best practices. The entry of IDC (Intelligent Data Capture) technology in the early 2000s marks the latestchange. This technology provides the opportunity to take out a significant portion of the manual steps in the process, along with the shift to AI and ML.

With automation, AP is becoming a department that controls a majority of business-critical data that impacts the CFO’s agenda. This is changing the accounts payable manager’s skill and experience requirements beyond processing accurate and efficient transactions to project- and change management, C-suite communication, and business analysis.

What Accounts Payable skills used to be

Withearly technology, the accounts payable process was not fully automated. The accounts payable professional’s role still involved manual entries of business-critical information and verification of entries in different systems to reconcile, pay vendors, and resolve purchase orders, contracts, invoice, or payment discrepancies. An accounts payable specialist needed capabilities to secure both an accurate and efficient process. Structure and attention to detail were fundamental, and expertise in accounting regulations and data entry skills.

A typical accounts payable professional resume would highlight : 

• Attention to detail in data entry and verifying details on transactions when processing invoices to maintain 100% accuracy 

• Self-motivated, high drive to keep the efficient processing of invoices and maintain up to date systems.

• Strong problem solving and resolution capabilities to maintain efficiency and accuracy

• Regular updates of state of accounts reports to management

  See Also

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• Vendor management and experience from re-negotiating

• Rawest payment terms with suppliers as well as escalations of accounts payable issues from  employees to suppliers

How the accounts payable professional’s role change

Modern accounts payable software deploys technology that increasingly takes out the manual steps from the accounts payable process to capture invoice data efficiently and accurately. Thus, the process becomes less reliant on the individual accounts payables professional’s efficiency, data entry skills, and attention to detail. As a result, the stereotypical "task-oriented" role is outdated, and other responsibilities have become increasingly important as AP best practices evolve.

According to the Robert Half Company, among theessential skillshighlighted for the accounting and payable professional was:

• Project- and change management

• Data interpretation and business analysis

• Business stakeholder and C-suite management communication

• Up-to-date technology expertise

Project- and change management

The accounts payable professional has a vital role in a) selecting the accounts payable automation software and b) acting as a change advocate and project manager during the software implementation and during operations.

To get the full effect out of accounts payable automation,the AP managerneeds to be as involved in selecting and implementing the system as IT management, finance management, and procurement.

The accounts payable professionals are the primary stakeholders to evaluate process requirements and user interface during the selection process. But implementing an automated accounts payable process is far from just replacing an inefficient manual workflow with a digital one. For successful implementation, the accounts payable professional needs to understand the opportunities outside just processing invoices efficiently and accurately to take the lead in the digital transformation of the process.

The project- and change manager role does not end with the implementation. The modern accounts payable professional always looks for continuous process improvements by analyzing process performance indicators, identifying bottlenecks or issues, and fine-tuning system configuration tomaximize automationand value outcomes.

This extends into the payments, which should be covered by a sophisticated, modern AP automation software. It’s AP best practice to ensure that payments are under the same system as the invoice management, as these are areas where AP managers can source opportunities for significant savings due to early payments, dynamic discounting, and/or card rebates.

Even though the current accounts payable automation software is far from the old, less than user friendly, systems you used to see only a couple of years ago, the modern accounts payable manager needs to be more technically savvy and possess project management skills to secure the business gets the most out of the accounts payable process.

Data interpretation and business analysis

Current accounts payable software provides real-time business performance indicators, i.e., typical CFOKPIssuch as days payables outstanding (DPO) and weighted average days to pay (WADTP). Also, it provides process performance indicators, such asinvoice processingtime and touchless invoice processing ratio.

This is an opportunity for the accounts payable professional not only to be the one who, on a regular basis, consolidates data and reports - but to be the one mastering the insights, conclusions and propose critical business actions to management. To do this requires professional capabilities such as solid business understanding, judgement, critical thinking, and skills in complex problem-solving.

Business stakeholder and C-suite Management communication

If you can’t explain it simply, you don’t understand it well enough.

Albert Einstein, Physicist

The AP manager’s interactions once focused on securing invoice approvals from business management, escalating issues from the company’s employees, and answering suppliers’ questions.

With current accounts payable software, suppliers have direct access to their invoice information and the payment processing. The technology goes beyond just invoice data capture and includes approval flows, which connect all relevant stakeholders with messaging functionality to secure processing of invoices in a timely manner. Most of the processes can be executed on the approvers’ smartphones.

As a result, an AP manager has more time to get involved with business stakeholders both inside and outside of finance and support them in taking actions based on the accounts payable data. For example, work with the procurement department in strategic sourcing initiatives to identify cost savings and supplier discount opportunities through the intelligent use of AP automation. Or, for example, collaborate with the sales department and accounts receivables to make accurate cash flow projections for budgeting purposes.

Being able to draw conclusions and insights from accounts payable data is worth little if it cannot be communicated to business stakeholders so that they can act upon it. Hence, people and communication skills have become just as important as keeping the numbers in check. As a result, accounts payable professionals’ training now goes beyond the standards certifications and includes instruction in stakeholder-, project-, and change management and C-suite communication.

The Outlook for the Future

With the fast development of machine learning, robotics, and even AI entering the accounts payable space, it is not unlikely that more emphasis will be put on accounts payable managers to understand and collaborate with others. These communications will center aroundcapabilities such asadvanced business models, cybersecurity, data visualization, data analytics, blockchain, and electronic supplier payments.