The top priority among the many responsibilities of the CFO is managing the organization’s cash flow, costs, and financial risk. To accomplish this, processes must be both flexible and scalable in order to respond to immediate business challenges and opportunities as well as to future scenarios — such as potential acquisitions, divestitures, and expansions into new territories — with minimal disruption to operations. Processes must also be user friendly and closely aligned with the overall business roadmap to ensure buy-in across all departments. Long regarded as a cost center whose main purpose was to ensure the organization pays the bills on time, the accounts payable (AP) department is being transformed to play an important role in accomplishing these objectives.
So, how can the CFO and AP team more closely align in 2016? Here are three questions every CFO should ask their AP department to transform this business unit into a strategic partner.
1. What Is Our Digitization Roadmap?
Digitization gives CFOs and other key stakeholders more visibility into the business, regardless of the process or the system of record. It also ensures processes are ready to scale to meet changing demands. Lastly, it increases security and allows for better audit control with safeguards in place for tracking documents that are being accessed or edited. Having a roadmap in place will ensure the benefits of digitization will be felt across the entire organization.
The accounts payable department is being transformed to play an important role in accomplishing the primary objectives of the CFO: managing cash flow, costs, and risk.
2. How Are We Using New Technologies?
Cloud continues to be the IT department’s most popular buzzword, but it should be viewed as a tool and not as a solution. If you rip and replace legacy technology, but still use the same old processes in the cloud, you’re not operating any more effectively. For example, consider SAP HANA Cloud Platform: Cloud solutions can extend processes without disruption, resulting in more flexible processes and seamless integration into the system of record. Testing new processes is also more agile and has lower project overhead.
3. How Are We Improving Relationships?
Let’s cut to the chase: How easy is it for customers to pay you, and for you to pay your vendors? Cash is the lifeblood of the organization, which is why it is important to eliminate friction in relationships that drive cash flow. Faster order processing and vendor portals with dynamic discounting are just two ways that processes can be streamlined to improve vital business relationships.
Applying the Answers
By asking the AP department these questions — and getting honest answers — the CFO will be able to turn this critical operation from just a cost center into a well-prepared staff making meaningful contributions to the organization. In 2016, take a deeper look into your finance organization, but don’t just stop with the AP department. Seek out ways to simplify handoffs with other departments as well, such as accounts receivable and purchasing/procurement, to keep cash rapidly moving throughout the business. For many organizations, silos of information will continue to exist in 2016; make it a goal to tear them down and streamline operations over the next 12 months with long-term process improvement. For help getting started, visit www.dolphin-corp.com.