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Managing accounts payable (AP) efficiently is crucial for ensuring smooth business operations. The role of an Accounts Payable Manager goes beyond just paying invoices; it’s about leveraging technology, streamlining processes, and driving value for the organization. Let’s explore the six habits that distinguish highly effective AP managers from the rest.

Key Takeaways:

Effective AP managers leverage automation to improve FTE efficiency and reduce manual errors.
They see the AP department as a strategic function that drives organizational financial objectives.
Prioritizing invoice processing based on optimal benefit helps unlock working capital.
Monitoring the correlation between cycle time and business costs is key to optimizing performance.
Collaboration and visibility between internal and external stakeholders are critical.
Technology is essential to minimize costly errors and improve accuracy.

1. They Improve FTE Efficiency with Automation

Manual invoice processing is time-consuming and error-prone. According to Aberdeen Group, the average time to process a single invoice is 16.3 days. Leading AP managers tackle this by implementing automation software, such as Zycus’s AP automation tools, to reduce overhead and improve processing speed. Automated systems allow invoices to be processed faster, leading to better operational efficiency and freeing up time for AP staff to focus on higher-value tasks.

Learn more about AP automation.

2. They Leverage AP as a Strategic Function

Gone are the days when AP was seen merely as a back-office function. Today, 67% of AP departments are recognized for their strategic value, as reported by Ardent Partners. Effective AP managers understand the importance of automation and how it contributes to achieving the company’s broader financial objectives. By improving cash flow management, managing liabilities, and enhancing supplier relationships, AP managers ensure that their department is a strategic asset.

3. They Unlock Working Capital Through Invoice Prioritization

The first-in, first-out (FIFO) method isn’t always the most efficient way to manage invoices. By implementing invoice prioritization based on criteria such as payment terms and discounts (e.g., Dynamic Discounting Management, Supply Chain Financing), top AP managers can optimize cash flow. This not only shortens payment cycles but also helps unlock working capital, which can be reinvested in the business.

4. They Understand the Correlation Between Cycle Time and Costs

According to APQC’s Open Standards Benchmarking, organizations take an average of 7 days to resolve invoice issues, which directly correlates with business costs. The more time it takes to resolve an issue, the more it impacts cash flow and vendor relationships. Effective AP managers reduce these cycle times through AP automation, keeping operational costs in check and resolving errors quickly. Optimizing cycle time is key to controlling business expenses, especially for large organizations where inefficiencies can be costly.

5. They Foster Visibility and Collaboration

Supplier satisfaction is crucial for maintaining strong relationships, but internal stakeholders play an equally important role. By promoting transparency and collaboration across departments, effective AP managers minimize delays in approvals and ensure that invoices are processed in a timely manner. This fosters trust between departments and helps create a streamlined invoice lifecycle management process.

6. They Seek Technology to Minimize Costly Errors

Human errors such as keying mistakes or misfiled documents can have a significant impact on an organization’s finances. Effective AP managers use technology like AP automation tools to reduce these errors and improve exception handling. This not only ensures compliance but also drives overall process efficiency, allowing organizations to meet best-in-class AP standards.

Case Studies: How Zycus Transforms AP Management

Zycus’s solutions have been instrumental in transforming AP processes across industries. Let’s look at two examples:

Supplier Management Success: Howden GmbH

Challenge:

Howden GmbH struggled with manual supplier management, resulting in inefficiencies and delays.

Zycus Solution:

Howden adopted Zycus’s iSupplier and iContract solutions, leading to a 40% reduction in supplier performance cycle times and achieving ISO 9001 certification.

Impact:

Improved real-time visibility and greater control over supplier relationships.

Procurement Efficiency Success: Delta Air Lines

Challenge:

Delta Air Lines faced challenges with manual and inefficient procurement processes, resulting in delays.

Zycus Solution:

With Zycus’s Source-to-Pay suite, Delta Air Lines reduced project cycle times by 81%, significantly enhancing procurement efficiency and increasing sourcing events by 60%.

These case studies demonstrate the powerful impact of Zycus’s solutions in optimizing AP and procurement processes, driving significant time and cost savings for organizations.

Conclusion

The six habits of highly effective Accounts Payable managers highlight the critical role AP plays in today’s business landscape. By embracing automation, fostering collaboration, and unlocking working capital, AP managers can transform their departments from tactical to strategic functions. Zycus’s advanced solutions have helped companies like Howden GmbH and Delta Air Lines overcome common AP challenges, reinforcing the need for technology in driving operational excellence.

If you’re ready to optimize your AP process and achieve best-in-class AP standards, Zycus has the right tools for you. Schedule a demo today and see how our solutions can transform your AP department.

FAQ’s

1. What is one essential habit of highly effective Accounts Payable managers?

Highly effective Accounts Payable managers ensure timely and accurate invoice processing to maintain strong vendor relationships.

2. How do effective Accounts Payable managers handle discrepancies?

They implement robust reconciliation processes and encourage open communication to promptly resolve any discrepancies.

3. Why is leveraging automation important for Accounts Payable managers?

Automation significantly reduces manual errors and accelerates the invoice approval process.

4. How do top Accounts Payable managers manage vendor relationships?

They prioritize clear and consistent communication to build trust and reliability with vendors.

5. What role does data analysis play for successful Accounts Payable managers?

Data analysis helps them identify patterns, streamline processes, and make informed decisions to improve efficiency.

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Zycus

Zycus is a leader in Cognititive Procurement. A leading SaaS platform used by many large enterprises across the globe for enabling efficiency and effectiveness of the procurement function.