3 Metrics Categories That Could Transform Your CFO’s View of AP
Blog: Kofax - Smart Process automation
Change the Old Faithful perception that’s keeping your AP department from outperforming
Erupting around 17 times per day and spraying an average of 130 feet in the air, Old Faithful is, as its name indicates, a reliable attraction for visitors to Yellowstone National Park. In fact, scientists can predict the timing of its powerful blasts of steaming hot water within 10 minutes at 90 percent accuracy.
But what does a geyser at one of the United States’ most popular destinations have to do with accounts payable? According to a recent study from the IFO, the majority of CFOs describe AP as a “reliable” finance department, with twenty-nine percent saying they can count on their accounts payable team to “get the job done.” Only 13 percent of CFOs called them “real strategic partners who are constantly adding.” And a small, yet still alarming, percentage of CFOs (3.7 percent) said they “are not familiar with that group.”
As far as most CFOs are concerned, AP is the Old Faithful of the finance realm.
A 2016 report from Ardent Partners yielded some rich data on the metrics that AP departments prioritize versus the metrics that CFOs use to evaluate AP’s performance. And while it’s not surprising that the two aligned around Old Faithful metrics like timeliness and accuracy, there were a few performance areas top of mind to the CFO that weren’t on AP’s radar. Could they be the keys to ending your CFO’s outdated perception of AP and implementing a new outperformance strategy? Let’s explore.
- Internal stakeholder feedback and surveys (45 percent of CFOs)
While there are no numbers that AP can consistently track when it comes to feedback from other departments and stakeholders within a business, there is a very real and powerful strategy they can begin to implement to influence stakeholder feedback – collaboration. According to Ardent Partners, “working more closely with stakeholders like procurement, finance and treasury provides opportunities for AP to showcase the value of its financial and operational data.” Want your CFO to start seeing your strategic business value? Work on building stronger relationships with other departments in your business.
- Department budget performance (44 percent of CFOs)
Are your processes optimized so your staff can max out their productivity and put time into more strategic initiatives? If your accounts payable team is reliable, but they don’t have the tools they need to be truly efficient, it might be time to look into how technology could transform the way they work. CFOs want to know that staff members are being utilized properly. Making the best use of their time frees them up to take on the kinds of activities that will position your AP department as a strategic business partner.
- Compliance metrics (31 percent of CFOs)
Process, regulatory and financial compliance are topics that keep your CFO up at night. Falling short in any of these areas could lead to stressful legal repercussions. AP departments that show they’re attuned to their CFO’s need for controls in the area of compliance are more likely to be recognized as a trusted partner. If you’re hoping to get the resources your department needs to become a more dynamic and strategic contributor to your business, then showing your CFO you not only care about compliance but are actively tracking metrics in this area could be a game changer.
The perception that AP is reliable is not, by itself, a bad thing. But reliability will only get you so far. “Although the industry is in the midst of a broad-based transformation, the general perception of the AP function significantly lags recent industry advances,” explains Ardent Partners. Is your AP department stuck in an Old Faithful role within your organization? If so, transforming the way your CFO and the broader enterprise sees AP is going to require a bottom up shift in mindset and an aggressive push to align “department goals with business priorities.”
Ready to break free of outdated perceptions? Use our AP & Procurement Playbook to create your play by play outperformance strategy.