Category Archives: Accounts Payable

Accounts Payable, Digital Transformation, Strategy

Crawl before your Walk, Walk before you Run, it’s a Digital Journey

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Digitalization projects are difficult. It’s not about the technology. Yes technology plays a part but it is understanding how the potential technology can be applied and developed to shape the user experience, aka customer journey.

There is a temptation to jump in without any directional oversight which frames the anticipated customer journey. These plans, or roadmaps, are more than a project timetable; they consider how the user interacts with the technology as well as the required functionality. This forms the minimum viable product (MVP) – both aspects must be addressed. A common failing is to get lost in the technology, and ignore the user.

A better way? Perhaps?

A personal frustration is the lack of data points assessment. Cutting through and making sense of the various data points is key in producing a storyboard that delivers both efficiency and effectiveness. Who get’s data, what do they do with it, how is the decision reached, what is the data output are some of the questions that need to be asked and addressed. Understanding the customer journey involves a more holistic appreciation of the end to end process.

Similarly when the business fails to assess data quality, data remains ‘dirty’ and unstructured. It seems crazy that organizations believe that they can ignore these factors and succeed. For example, imagine a zero-touch accounts payable invoice goal where the supplier master data is just garbage and missing bank accounts.

Embedding this into the roadmap ensures alignment on a facts and data basis. Where there is mismatch on MVP, change the phasing or delay the project.

Quick win?

In some cases preparing solid foundations for digitization can take years. A good example was the ebook value chain: obtaining rights from authors and agents and setting up the electronic distribution business model were critical to enable the introduction of the ebook. This was not a quick win.

There is no clean start or stop: goal posts move, organizations grow and evolve, new functionality becomes available, customer demands alter – there is constant change. This is the digitalization journey.

There may be options for quick wins; depending on the context. In the main these will be determined by the quality of the digital foundations and how quickly they can be re-validated. These broader factors can become barriers if you fail to address.

Technology is an enabler. Central to the digital journey is the customer experience. These factors influence your critical path. Line up the planning sequences and eat that elephant in the room, one bite at a time!

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Accounts Payable, Supplier Management

Payment on Time – it matters!

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Global recession, supply chain disruption, inflation and erratic demand will continue to place pressure on businesses to improve their cash flow management. A recent UK Dun and Bradstreet annual SME report indicates that late payments have almost doubled since 2019 and invariably these delays are forced down the supply chain without agreement or consideration of any direct and /or indirect consequences.

We know organizations differentiate their customer base and prefer dealing with customers that are stable, consistent and pay on time. Organizations will penalize those customers that fail to meet these ideals – these penalties may not be transparent or explicitly communicated however they exist and will impact the customer negatively.

Examples include:

  • Addition of a risk price premium – charges are significantly adjusted to cover the risk of debt, interest and inconvenience when dealing with that customer. This addition increases cost of sales.
  • Service disruption – services may not be performed until payment has been made. Cash on delivery or advance payments may be demanded from the customer which actually worsens the organization’s cash flow position.
  • Finance charges – Letter of credit or other forms of finance guarantee, and interest payment demands add delays to the process and increase the cost of transaction for the customer.
  • Supply assurance – preferred customers will be top of the fulfillment list where capacity and material shortages occur. Knock on delays across the supply base multiples create a domino effect that destroys responsiveness.

Do not negatively impact your reputation by failing to pay on time. Take a considered approach; there are appropriate supply-side strategies that improve cash management, mitigate penalties and improve robustness.

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