Data as the Starting Point for Automation



Shivani Bhatia
01/04/2019

Automation is only as good as the data

Automation is a crucial tool in improving both effectiveness and efficiency in A/P processing, but only yields results where the data it accesses is complete, up to date, and correct.

Data, in fact, lies at the root of so many technology-driven performance initiatives.

The A/P data journey starts with the vendor master file and the insights that can be extracted from it when managed judiciously. The enormous impact of vendor data on A/P is recognised by leading practitioners like Shivani Bhatia, a senior director for business systems transformation at McGraw-Hill, who in her previous role as director of Global Procure-to-Pay successfully led a widespread review and update of McGraw-Hill’s A/P service delivery. (She is now doing the same in Order-to-Cash).

Reflecting on the opportunities outlined above, Shivani describes the true opportunity for A/P as buried in vendor files. Indeed, although invoice processing gets a lot of headlines, Shivani’s priority was to get the vendor file data in order, which led to a wealth of benefits and new business insights across A/P and beyond, she explains.

“For us, the vendor file was the starting point to open up more opportunities to get cash back to the business,” Shivani explains. “As a result, our analytics have gone through the roof. We now have complete visibility over spend to analyse. That’s a lot of useful information, but it is only as useful as the data is clean,” she continues. “Once you have true and complete data any team, in-house or third party, can leverage it for performance improvement. At McGraw-Hill, we were just after a clean-up of our vendor management files – but we ended up benefiting in so many different and unexpected ways.”

By tackling vendor data as a starting point, A/P teams can drive far better quality insights across spend and decision-making to improve the overall performance of Accounts Payable. Instead of fixating on driving suppliers’ behaviours, for example, organisations can leverage analytics to drive changes in business decisions. Clean, reliable, complete vendor data is the basis, in other words, of many of the improvements that A/P can lead.

Some of the unexpected benefits to McGraw-Hill included identifying duplicate purchases through procurement; immediate access to relevant data in order to comply with regulatory mandates; and supporting HR by identifying payment records to audit and alleviate compliance risk related to subcontractors entitled to Affordable Care Act (ACA) benefits.

Vendor onboarding is the natural starting point to improve supplier relationships and build positive impact throughout the payables process. McGraw-Hill realised considerable improvements through vastly enhanced analytics and reporting as well as more targeted sourcing.

Some of the areas in which significant progress was made include:

1. Capturing discounts at source

McGraw-Hill initiated a Buyer Initiative Payments (BIP) program managed through their credit card provider that facilitates key vendors being presented with early payment discounts, reimbursed as rebate checks. Even though the work was executed by the vendor, having clean data was instrumental to unlocking cash, which tripled as a result, from the process.

2. Point of Contact

Perhaps the more significant change, however, was wrought in identifying the best suited point of contact in the vendor’s organisation for specific requests. A major learning was to ensure Accounts Payable had the applicable contact information, from a financial standpoint, of those motivated to take payment discounts. Typically, this is not the sales rep, Shivani explains, however they traditionally would have been listed in the vendor file when the account was set up. The person who does care about payment discounts sits within Accounts Receivable (A/R). So, a key change introduced at McGraw-Hill was to insert questions at the point of onboarding t ascertain the vendor’s interest in taking advantage of payment discounts and to request the relevant name within A/R. At the same time, existing vendors were re-registered, and the same question asked. This resulted in “a veritable treasure trove" of leads to be pursued for early, discounted, cash payments.

3.Credits outstanding.

Another area frequently overlooked concerns credits outstanding on statements. Vendor audits are time consuming and resource intensive, so many companies, McGraw-Hill included, outsource this activity to a third party. The combination of leveraging a third party and having clean vendor files yielded impressive cash returns in the first year, says Shivani.

Summary

The challenge to benefiting from these kinds of opportunities lies in ensuring your organisation’s data capture procedures align with capturing the most comprehensive information upfront that may be required for analytics, reporting and insights downstream. Even if you have clean vendor files, Shivani suggests, if you are not using them to the full extent possible you are missing out on measurable improvements. An essential part of achieving such benefits is that sourcing and procurement are aware of the data and can access it with ease.

 

Co-Contributor


Barbara Hodge
Principal Analyst and Global Digital Content Editor
Shared Services and Outsourcing Network (SSON)

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