This PaymentsSource blog offers a prescription of sorts for payables folks who are challenged with obtaining CFO approval to invest in A/P automation projects. The author suggests it is a more recent phenomena, but that is likely reflective of the proliferation in digital cash cycle solutions during the past couple of years versus a lack of past desire for automation.
Since more capabilities are now available than ever before (see our member report on this point), along with easier paths to implementation through API integration, those who wish to improve financial operations have a virtual candy store of choices. That puts pressure on people to keep up the competition, and it has always been tough to develop detailed ROI analysis.
‘Selling accounts payable automation internally to CFOs has become a recent challenge for firms…CFOs are finding themselves asking two common follow-up questions of AP practitioners who pitch automation to them: Why now? And why fix what isn’t broken? These questions can be difficult to counter because they’re so open-ended. Here are a few ways to break them down and make a strong case for change.’
So the classic inertia retort to investments is (actual wording can be adjusted) ‘don’t fix what’s not broken,’ and the author makes an interesting point about the logic of that position. It’s not that paper checks and processes are broken, they are simply inefficient and it’s time to move on. Also, organizations find it difficult to actually pinpoint cases where something really is broken, since metrics are perhaps inconsistent in the least or unavailable in the worst case. This is where opportunity cost becomes an issue, since analytical clarity is a benefit of digitization.
‘The obvious next question becomes: How does your company determine when your payment process is “broken”? When payment fraud causes you financial and reputational loss? When a pay run error damages your supplier relationships?If you stay committed to a manual, paper-based payment process, you keep risking fraud over the long term—especially if your team doesn’t fully resource proper security reviews of all parts of the processes…Of course, this is about far more than an issue of whether or when to initiate a fix to your AP. Using automation to optimize your payment process doesn’t only improve fraud recognition and reduce errors. It makes payments more time- and cost-efficient, and gives your AP team the chance to take on strategic initiatives like negotiating better payment terms. All of these improvements give your organization a more competitive edge.’ Worth a quick read for sure.
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group