Collaboration in AP!
Part 2 of our 4 part series with Stewart Griffiths APAM.
Following on from last week, Stewart and Rory are chatting about the importance of collaboration within business.
Especially AP collaboration with the wider business and their partners in procurement.
Watch the video, listen to the podcast & read the transcript below!
Part 2 of 4.
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Collaboration in AP.
Rory Coleman-Smith: Welcome back to another ITESOFT Insider View. I am joined, of course, by Stewart Griffiths.
Stewart Griffiths: Thank you Rory.
Rory Coleman-Smith: Today we are going to be talking about collaboration in AP.
Stewart Griffiths: Great, so, yes, collaboration. I think collaboration is so, so, important within the AP function.
I think we sit at the heart of the business. I think back in the day AP was considered a back office function, siloed, and just enclosed in its own little world.
But todays AP world is totally different.
I think we need to reach out to all the areas of the business and departments, and how we how we interact with those guys is so, so, important.
I think the world of AP now is all around educating business in best practice.
Being that knowledge centre, being that service team, where people can come and ask questions about their purchase orders and how they use them and what they should and shouldn’t be doing.
Because a lot, a lot of time, what I’ve found in my experience, is that people don’t know what they should be doing.
Or people don’t know when they should be doing it.
Or people just don’t know how they should be doing it.
And so all those things, all those elements fit into, well how can AP show those people; how, what and when.
Does the business know who AP is?
Rory: So, do you think that there are people within businesses that maybe don’t even know what Accounts Payable is or does?
Stewart: Err, yes. Yeah. I hear stories around people saying to me:
“Oh, I’ve had this invoice stuck in my drawer for two months now. But I’ve been doing you a favour because you don’t want to pay this supplier yet so I’ll keep it in my drawer.”
Again, the education piece for Accounts Payable, for me, is:
Give me the invoice let me process it, and then we can decide when we pay the supplier. But don’t sit on things.
Let’s be open, let’s be honest. Don’t sit on things. Let’s be sure that you give us everything on time and in a timely manner.
And I think that’s where the education piece and AP collaboration comes in I think there’s so much that we can teach our businesses internally and that’s why I say AP sits at the heart of the business.
Our mission is to make processes smoother it’s to iron out those bumps in our processes.
And deal with the challenges that come day to day, and make sure that we know how to deal with those things.
Because predominantly they are the same things happen time and time again you know.
Maybe in the same way or in a different guise and it’s for us to make sure that we know really how we should, how that should be dealt with and then make sure our business knows how that should be dealt with.
Rory: Yeah, so I guess the challenge now is not only do you want to explain to other people in the business, or other stakeholders in the business how AP works and where they can go for help. But also help your AP team be able to help those people and also know how to help them.
Stewart: Yeah. Exactly. You hit the nail on the head there. I think yes, we need to be all those things.
AP is such an important part of business. But, again, people don’t know how important we really are.
So it’s a case of us making sure that, you know, yes we do talk to the department heads.
Don’t be scared to have those conversations with those people in those areas. And sit down and say look, this is what’s going well, this is what’s not going so well.
How can we help you to make sure that this improves?
Because ultimately, the full circle is, that AP will end up having the hit and having the issues at the end of the day. And you know that whole supplier piece is where it falls over. So get it right.
AP collaborating with Procurement.
Rory: So talking about suppliers, one important part of the company that you really need to collaborate with is Procurement, right?
Stewart: Yeah, yeah, yeah. I think, in this day and age, AP and procurement are working so much closer, if you look at the whole procurement cycle. Both teams, not just AP have had to learn about collaborating.
There’s that whole piece around well this is what we want and this is how we get it and that’s the procurement piece and for us it’s around, well once you’ve got it how do we pay for it?
And what are the requirements of the business to get that invoice over the line so that we can pay it?
So yeah, working with procurement to work with our suppliers to educate. I suppose to educate, to help us to educate our staff in terms of what are the requirements are.
It’s so, so, important. In my world today, I am knocking on procurements door.
I am not sitting with procurement but we are working so close together now in terms of understanding what the requirements are and how we can manage our suppliers (that’s whole supplier relationship piece) and then how we can pay our suppliers efficiently clearly and on time.
Rory: So do you think, you mentioned that you don’t sit with suppliers, do you think that it’s important for an organisation to maybe sit Procurement with AP?
Stewart: With AP? Yeah? I think that’s getting so much closer.
I think, if you do have a Procurement department, if your business is of that size, yes you do need to talk about it from, what the payment terms are, what the issues are. Around what suppliers are not doing right, what suppliers are doing well.
That whole supplier relationship in terms of when they come in, when you visit your suppliers, when they come to visit you. What are the conversations are you having?
I’m having discussions around payments and how quickly we pay our suppliers and our payment performance to our suppliers.
You know, how quickly do we pay our suppliers? Yes, we are paying you on time, or, this is why we can’t pay you on time.
And so feeding that sort of stuff, information, back to our suppliers and working with proc to improve that because then you can talk around the other stuff around um discounts.
You know, what conversations are we having?
We are spending so much money with those suppliers, what conversations are we having around those areas?
Working with procurement helps you to understand what the supplier needs as well and having that whole management around that.
Rory: And is that sort of the evolution towards a P2P process?
Stewart: Yes, yeah, yeah, definitely! I think having a smoother, I call it a procurement cycle, a smoother cycle is definitely a way forward in terms of working with Procurement, working with our suppliers, having those discussions with everybody involved and making sure that that circle is as round as possible.
Rory: Greasing the squeaky wheel…
Stewart: Yeah! Definitely!
AP collaboration with Procurement – Your project.
Rory: Ok, so, I know you want to talk about a specific project that you are working on. Enlighten me.
Stewart: Yeah so, in my business we identified an issue, just around credits, and how we dispose of them.
How we ensure that any credit that’s due from our suppliers are asked for, and we are aware that we actually need a credit.
So, the process around how we deal with rejected items in our business and just making sure that everybody knows what is going on.
For example, I can’t pay an invoice because there is an item that has been rejected, and when we find out from our warehouse team that there is an issue it’s a case of asking:
Who else knows about this?
What are the dots?
And who else should know about it?
So when we have an issue with an item Procurement should be made aware, warehouse are, obviously, aware about it and it’s how that communication piece flows within our business.
What we found was that communication piece is broken.
And its then a case of how do you fix it?
Who do you need to fix it?
What can we use to fix it?
At the moment we have a paper based system with bits of paper flying around.
For me I would love to eradicate, to have a paperless world. But, in every business, there’s going to be paper so documentation is going missing or breaking communication, or that piece of paper doesn’t reach that person in Procurement or that person in Procurement doesn’t tell finance.
So for us the project is around eradicating paper and moving to a more system based process where notifications are automated, there is visibility within the system to understand what items are rejected and why they are rejected.
For me, AP needs to collaborate with different areas; warehouse, procurement, finance and then ultimately then it goes back to the supplier at the end result to discuss how we are going to fix this issue, or why this issue happened.
That’s the end of the chain.
Initially it’s a case of well, how do we communicate within our business and for me the collaboration piece is first.
Let’s talk about it, let’s identify what needs to be fixed and then lets implement those changes.
Rory: Right, I guess it’s going to be easier to know when you don’t want to pay for something before you’ve paid for it, so the quicker you can get that done without paper because we know that slows things down.
Rory: Then the sooner you can flag it up.
Stewart: Yeah, because at the end of the day I think everybody working in AP would say “AP are always the last to know about anything” and so why can’t, you know, ideally you want to be able to get an invoice into your system, process it and pay it as quickly as you can.
But if there’s blockers stopping you from doing that, what is it that you can do to improve it?
And what technology can you use to help you make that process more slicker?
Rory: Ok, well that’s all we have time for this week. Join us next week and we are going to talk about data and how that impacts AP?
Stewart: Thank you Rory, looking forward to it!