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Optimising financial processes

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Research Insights: P2P/AP Performance in Digital Shared Services/GBS


Welcome to December!

Procure to Pay (P2P) is a critical – perhaps THE critical – process in shared services/GBS. It is the most common activity to be managed from a shared services model, and the one that has significant potential to drive improved performance.

Tom Bangemann, Barbara Hodge and the team at SSON Research & Analytics have just produced a fascinating report looking at this process through a “digital lens”. There is a link to the report below.

Trends, what is working well and what continues to challenge shared services/GBS.

The survey report indicates that, despite being the stalwart of process optimization in SSO/GBS, P2P remains a “mixed bag”  in terms of maturity.

Just 36% of respondents regard themselves as “expert” or high maturity, and just less than 6% as “highly automated”.

P2P is also a big lever for working capital with 67% pointing to its key role in cash flow optimization.

Whilst AP may be the longest standing and most commonly managed component of an SSO/GBS, it still suffers heavily from the lack of “end to end” thinking from procurement to payment. This sustained challenge in the need to “shift left” is hampering many efforts to optimize the business outcomes.

But the Global Process Ownership (GPO) model is popular, powerful and growing with 62% believing that a strong GPO organization is key to end to end transformation.

Meanwhile, the largest hindrance to success is “lack of standardization” reported by 56% of respondents. This has a major impact in the cost of running the process, with 80% reporting that cost efficiency is their primary strategic target in this regard. A third of respondents also rate risk management as a key outcome of an enhanced P2P process.

When it comes to technology, AP and P2P have higher levels of automation than many other processes.

  • Almost all respondents have an imaging/data capture solution for invoices.
  • Over three quarters of respondents cite “pdf by email” as the most popular form of invoice receipt (for suppliers).
  • 68% have workflow for invoice routing and approval.
  • 47% have adopted e-invoicing.

So, with all this digitization, what’s going wrong?

I would argue the answer lies in the Bill Gates maxim, “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.”

An “efficient operation” or “efficient process” is also massively impacted by human behavior. So, it was a little surprising to observe the omission of “Goods Receipt (GR) timeliness” as a big impact on the P2P / AP process. Another recent poll showed this GR behavioural challenge as the most significant cause of P2P process failure, followed by vendor master data accuracy and “PO coverage and timeliness” with “invoice capture and timeliness” coming in last, perhaps surprisingly . . .

78% are targeting improved cycle time of the process, but as always “actions speak louder than words”.

  • Just 41% have a designated P2P owner accountable for the “end to end” process.
  • Just 39% of respondents have a P2P analytics capability.
  • The majority of respondents state that “centralized co-ordination” would increase the benefit of automation.

Maybe it is finally time to implement a more structural approach to the “end to end” process . . . If you want access to the “Playbook” you can get it here . . . 

You can get access to the full 26 page report “Benchmarking Accounts Payable Performance in Modern Finance & Shared Services/GBS” from SSON Research & Analytics here . . .  It is free but you may need to register . . .  

Thanks for reading . . . .