When I first started in Accounts Payable with GE 10 years ago, the landscape was very different than it is today. I remember having data entry races with my colleagues when we had an urgent backlog that the offshore team couldn’t handle. Payment status was checked through email exchanges. Returned checks was still a core process, and querying metrics was a laborious task done manually through ancient-feeling data warehouses.
At that time, the focus was myopic; making sure the offshore teams met their service level agreement turnaround times, chasing invoice-hold action owners with emails, and above all, getting the urgent bills paid before any escalations. Since then we’ve come a long way. But are we still falling short?
The answer to that question largely depends on your organizational needs, as well as your ambition. We have both technology (e-Invoicing, OCR, AP automation, RPA, etc.) and global trends (countries mandating e-Invoicing) working in our favor. Data is often cheaply available and visualized for easy tactical decision making. If you’re outsourcing work, labor is more competitive and available than ever. However, with all this expanded capability, it still feels like we’re failing to maximize our potential.
My journey through GE Accounts Payable (and later Source-to-Pay) is one that ended recently, and I will look back on fondly. There were many fundamentals we got right, some things we did exceptionally well, and other areas where we ultimately failed. We expanded from a small GE Energy shared service to a larger GE-wide “global business service” branded as GE Global Operations, and ultimately sold in an operational partnership with Genpact.
First, the things we did right:
- We focused rigorously on two outcome KPIs (Cost-Per-Invoice and Pay-On-Time), along with several sub-KPIs, and ensured this data was highly visible both internally and to our business partners
- We invested in technology and tried a full toolkit of possibilities
- We simplified life for our business partners with initiatives such as two-way match (eliminating receiving process for small dollar indirect purchase), and ERS (eliminating invoices for direct material transactions)
Now, the things that didn’t go so well, hindsight being 20/20:
- We didn’t focus enough on communication, especially two-way communication. Strategic initiatives were led from the top down, then communicated out en masse
- We didn’t make e-Invoicing a priority soon enough. We invested heavily in iterative improvement technologies that led to far less sustainable gains
- We didn’t maximize our potential value as a true global business service (GBS)
There’s a lot I could discuss on the various tools and strategic decisions, but I’d like to focus on that final bullet. This to me is the critical missing piece for many organizations. Implementing new processes and technologies is necessary, but it must be handled with utmost mindfulness. Done piecemeal and/or with a narrow focus on AP outcomes, and you’ll have difficulty achieving buy-in and smooth roll out. It will be impossible to achieve true transformation, and at best you can hope to become a highly efficient service center. For some organizations that’s the true end goal and that’s perfectly fine. For those with greater ambition, how can we focus on being more effective?
An effective AP (aka B2P/P2P/S2P) organization must take the conceptual difference between a “shared service center” and a “global business service” to heart. The former delivers a specific outcome within its domain, whereas the latter drives value across the business. Achieving GBS outcomes will likely involve technology transformation, but must begin with a holistic look across the supply chain.
Start with a bird’s eye view seeking to understand each piece of the supply chain, what it’s trying to accomplish, and what it needs. If you’re dealing with a CEO/CFO, they’ll likely care most about the outcome KPIs such as Cost-Per-Invoice, Pay-On-Time, and cashflow (that last bit’s notable, as it’s something AP has influence over but doesn’t always step up to drive). On the other hand, a sourcing manager likely cares about discount loss and supplier relationships, as well as the correct enforcement of payment terms. Meanwhile, a materials manager may be most concerned about uninterrupted fulfillment. Indirect PO requestors and receivers probably care most that the process flows smoothly and with little complexity or time required on their end.
Let’s consider one piece of AP with this broader context in mind: e-Invoicing. One specific goal would be to automate invoice processing, which primarily benefits the AP team and AP outcomes. Too often this is looked at as the beginning and end of the benefits. What else can e-Invoicing achieve that touches the various supply chain functions above?
- CEOs can rely on e-Invoicing to save the business money sustainably
- Sourcing managers can benefit from setting the e-Invoice tool to start the terms clock upon successful invoice submission, preventing early/invalid invoice submission. They can also benefit from improved supplier experience and therefore relationship
- Material managers can count on clear transparency for suppliers and internal team members alike, precluding the need for more manual status updates/communications
- PO requestors and receivers can avoid being caught up in invoice holds if the e-Invoice tool is set to prevent invoice submission when hold conditions exist, stopping “garbage in”
Taken at face value, e-Invoicing has the potential to transform your AP service. Taken holistically, e-Invoicing has the potential to transform your supply chain. The little decisions you make affect everything (e.g., what rules to build in your system to control invoice submission, how you utilize terms dates, how you communicate internally and through supplier campaigns). This is just one example to highlight that there are many opportunities, large and small that you can leverage.
The more you hear what your business constituents are saying, the more receptive they’ll be to listen when you speak. Opportunities are everywhere, and only by understanding the entire supply chain ecosystem will you unlock its true potential.