Tuesday, October 06, 2009
Session: Re-inventing your AP process.

Live blogging the Association of Finance Professionals in SF, CA

John Kelso, CPA, is the VP of Global Process for Thomson Reuters. He walked us through their 2008 process for automating Accounts Payable (AP). Thomson operates in 93 countries with 55,000 employees. Consider this: they have 30,000 cost centers.

The process is too big for the space of a blog post, but the full presentation link will be up under the Resources page, Link subpage. This post is going to address two key areas of Mr. Kelso’s presentation:

  • Why automate AP?
  • What are the desired outcomes of a successful AP process revision?
     

Why automate AP?

  • To reduce costs and cycle times – paper invoices and paper checks increase the company’s overhead costs but add no value to the products and services you’re offering.
  • Improve accuracy and visibility into liabilities – how often have you been surprised by the dollar volume of invoices sitting in employees’ desk drawers and inboxes?
  • Strengthen internal controls – how often are invoices presented for payment that management had no idea were coming?
  • Maximize cash from operations – you can’t take a 2% discount for paying in Net 10 days when the invoice isn’t even posted for 3 weeks!


What are some of the desired outcomes of a successful AP process revision?

  • Usability for the non-finance user;
  • High percentage of Purchase Orders or Payment-card payments;
  • Central invoice receiving and control;
  • Optical character recognition (OCR);
  • Paperless, intelligent invoice routing;
  • Electronic approval;
  • Transparency into invoice status at all stages;
  • Consolidate at one low cost location.
     

One of Mr. Kelso’s excellent suggestions is to create a web portal for vendors so that they can see the status of their invoice / payment at any time. Your only costs are sunk costs: the initial hardware and setup.

After analyzing the early warning signs, the second step that turnaround managers take is to reduce working capital and implement a 13-week cash budget. If you don’t have control of the spending, you can’t do the second step.

21st century management teams stay ahead of the curve by practicing turnaround management every day. Automate your Accounts Payable and Purchase-to-Pay processes.

That’s Practical Turnaround Thinking.