How to leverage AP data analytics to define strategic actions

Employing advanced accounts payable data analytics builds actionable insight and facilitates the development of a data-driven organization.

Successful businesses recognize the crucial role data plays in informed decision-making and strategic planning – and act upon this insight. Collecting, interpreting, and leveraging data is essential for anticipating challenges and fostering growth. A critical contributor to achieving this success is the integration of Accounts Payable (AP) data analytics, specifically in extracting insights throughout the invoice processing cycle. 

With its digitized and automated processes, the AP department is a trove of financial insights, presenting opportunities for significant operational enhancements. The data-driven approach facilitated by AP analytics empowers businesses to make nuanced decisions, addressing immediate challenges while also foreseeing and adapting to future trends.

What is AP data analytics?

Accounts payable data analytics involves the systematic examination of invoice processing data within a financial framework. This practice enables organizations to enhance operational efficiency by identifying inefficiencies and making informed, data-driven decisions, ultimately contributing to improved financial performance. 

How is accounts payable data analytics transforming the role of the AP team?

Accounts payable data analytics is one of the main drivers of the transformative shift in the role of the AP team. No longer confined to the repetitive task of data entry, AP agents emerge as strategic problem-solvers, leveraging data to propel decision-making and organizational efficiency. By harnessing the power of data, AP teams are continuously finding opportunities to further cut costs, optimize cash flow, and mitigate financial risk. In this way, the strategic use of AP data not only enhances the efficiency of day-to-day operations but positions the accounts payable team as a valuable asset in driving broader organizational success. 

Let’s explore in some detail where AP agents can meaningfully leverage data analytics to drive transformation: 

1. Identify invoices at risk of late payment: 

   By actively monitoring a dashboard with data on aging and the time invoices spend in the system, the AP team can anticipate overdue invoices, and so prevent potential disruptions to cash flow.

   Cevinio extends the benefits of its Analytics Suite to designated users and features a comprehensive workload and aging dashboard. This tool aids teams in comprehending the lifecycle of invoices. The dashboard identifies roadblocks and workload fluctuations, enabling the AP department to adapt and ensure timely payments.

   In the pursuit of efficient operations, one common hurdle encountered is delays in the approval process. Is there a particular department or approver consistently causing delays? By delving into our Invoice Approval Workflow dashboard, AP teams can meticulously evaluate the efficiency of the process, pinpoint invoices stuck in the workflow, and identify any recurring issues caused by specific approvers or departments.

   Armed with this insight, teams can collaborate with approvers. For example, they can agree on the automatic approval for specific invoices meeting predefined conditions. Such an initiative greatly reduces the volume of invoices requiring manual approval, contributing to the prompt processing and payment of invoices. 

2. Resolve invoice processing bottlenecks

   By harnessing the power of modern automation and analytics tools, AP teams discover the reasons behind delays in invoice processing. Among the most prevalent bottlenecks are exceptions due to discrepancies, missing Goods Receipt Notes (GRN), incorrect master data, and various other factors.

   One of the actions that can be taken to smoothen the process is to identify the most common reasons for rejection. AP teams can gain detailed insights into rejection volumes and the underlying causes of invoice cancellations. This information serves as a foundation for crafting strategic initiatives aimed at reducing rejections. Cevinio provides a dashboard dedicated to the challenge of rejection bottlenecks so they can be resolved.

   Enhanced visibility into rejection issues empowers teams to refine processes. By analyzing the specific reasons for rejection, AP teams proactively work towards optimizing workflows, ultimately contributing to a more streamlined and effective AP process.

3. Analysis of vendor performance

   By actively contributing to timely payments and facilitating a smoother process, the AP department plays a pivotal role in cultivating mutually beneficial relationships with vendors. The Cevinio Analytics Suite features additional dashboards and data sources that further impact these dynamics.

   One such resource is our Supplier Dashboard, a focal point for supplier efficiency enabling AP teams to analyze if the goods received match the PO quantities and price, to name but one benefit. The tool unveils sources of additional workload within the process and provides relevant data for procurement, enhancing your ability to make informed decisions and strengthen relationships with suppliers. 

4. Elevate team performance

   Effective team management is paramount for the success of AP operations. AP managers equipped with insights into peak seasons, invoice status, and team productivity can make informed decisions that significantly enhance overall efficiency.

   For instance, through an analysis of various productivity insights, AP managers can gain a deeper understanding of the volume of invoices processed per agent, the actions taken on invoices, and working patterns. This valuable information enables them to better assess and split workload, evaluate process efficiency, and comprehend how AP agents use the AP automation system.

   By proactively addressing issues such as misuse of the process or system, AP managers play a pivotal role in overcoming specific challenges and fostering a thriving team. Additionally, learning about the complexity of invoices empowers managers to find innovative ways to simplify processes.

The barriers to AP data analytics integration

Inadequate training and a cultural reluctance to embrace change stand in the way of getting the most out of AP data analytics. This is how you should address these challenges: 

Work towards the right mindset

To make digital transformation a reality, the culture of your organization is as vital as the technology you deploy. AP teams that have been working in traditional ways for a long time could regard automation as an implicit criticism, and a threat to their job. But as we saw, data analytics transforms the role of Account Payable in a positive, strategic way, so to extract maximum value from your financial data it is crucial to get this message across.

Emphasize training

Establishing a proficient and well-trained team is paramount for unlocking the full potential of AP data analytics.  

Conversely, a lack of expertise could seriously impede the effective use of dashboards where the important information is grouped and classified. Without the requisite knowledge to interpret AP data, organizations may struggle to derive meaningful insights so bridging the gap in expertise becomes imperative. 

The transition to a data-driven AP department requires a concerted effort in education to foster acceptance of the new paradigm.

How Cevinio AP Automation and Analytics Suite work in tandem to elevate your AP operations

Cevinio AP Automation and data analytics form an ideal combination to optimize your accounts payable operations. Our AP Automation tool seamlessly manages the entire process – from reception to exporting the invoice to your current ERP system(s). Our analytics tool complements this by providing valuable and easily interpretable data for monitoring and continuous process improvement. Such insightful input extends the usefulness of your automation efforts beyond the AP team, benefiting other departments within your organization.  

Explore Cevinio Analytics Suite, a comprehensive solution for enhanced operational efficiency, designed to optimize your AP processes, and contribute to the overall success of your organization.

Conclusion

Harnessing the power of AP data analytics proves instrumental in propelling organizations toward a future of informed decision-making, strategic planning, and better performance.  

While embracing a data-driven culture may meet with obstacles such as a lack of expertise and resistance to change, overcoming these challenges is crucial for unlocking the full potential of AP data analytics. 

If you are excited by the rich possibilities of applying data analytics to your accounts payable processes or have any questions about AP automation, get in touch – we’re happy to help.