Using Accounts Payable Data to Make Informed Decisions
Managers need timely and useful information to make informed decisions. Business success depends on a number of factors, including how a company uses technology to produce relevant data.
Stampli’s AP Automation software includes Dashboards, a set of customizable graphics that provide data on invoice processing and spending. Customers want access to real-time data that reports the number of invoices in process, the dollar amount of invoices, and processing time. Stampli Dashboards is the solution to the AP reporting problem.
Management needs to monitor how efficiently the AP team is processing invoices.
Increase Team Productivity
Labor costs may represent 10% to over 50% of total company revenue, depending on the firm’s industry. As this article explains: “Service-based businesses where payroll is the primary cost involved in producing the product can have labor costs as high as 50 percent without destroying profitability. Generally, payroll expenses that fall between 15 to 30 percent of gross revenue is the safe zone for most types of businesses.”
To control labor costs, work needs to be allocated evenly between staff members, and the AP team must be able to operate productivity.
Allocating invoice processing work
To illustrate these concepts, assume that Reliable Hardware operates 200 retail locations in the US, and that the stores are assigned to the East, Midwest, or West division. The controller has an AP staff person assigned to each division.
The number of invoices processed for each division can vary greatly, due to seasonal issues and other factors. For example, stores in the northeast purchase large amounts of snow-related inventory (shovels, rock salt) during the winter months, while Florida stores don’t stock this type of inventory. These differences in invoice volume can overwhelm members of the AP staff, and approvals may fall behind.
Using data to shift workloads
Dashboards provide immediate insights into team productivity, so you can assess how each team member is processing invoices. Let’s assume that the East division has far more invoices in process than the other divisions. You can add another AP team member to assist with the East invoices, and monitor invoice processing in just a few clicks.
Identifying opportunities
Users can dig deeper into invoice data to uncover optimization opportunities. In this example, assume that West invoice approvals are taking longer than normal, creating a bottleneck. The controller digs into the invoice detail and determines that one large vendor, Acme Supply, accounts for most of the invoice delays.
Acme’s invoices and shipping receipts do not provide enough detail to match the documents with purchase order data, and the AP staff must contact Acme to get clarification on many orders. The controller works with Acme Supply to enhance the data provided on invoices and shipping receipts, and invoices are approved in less time.
Vendors provide the items you need to make a product or deliver a service, and reliable vendors are important to your business. Managers can use AP data to maintain vendor relationships.
Maintain Vendor Relationships
Companies value vendors who can deliver a quality product on time, and at a reasonable price. Vendor relationships are particularly important when supply chain disruptions occur, and effective communication will help you overcome supply chain issues. As a business grows, vendors become more important, and are harder to replace.
Improving communication
Kissflow also points out that: “Corporate buyers need to communicate with their vendors frequently in order to transmit their requirements effectively and get a better understanding of their suppliers’ capabilities.” Here are a several instances that require communication with a vendor:
- Order change: The buyer wants to change the quantity of items in a specific order
- Delivery details: The buyer wants the order shipped to a different address
- Delivery date: The vendor tells the buyer that an order will be shipped earlier (or later) than planned
Stampli’s AP Automation solution includes a vendor portal, a tool that allows vendors to review each invoice’s status, and to communicate with the AP staff. All the communication can take place in the portal, rather than through emails and phone calls by different individuals.
AP Automation speeds up invoice approvals and improves communication, so that you can pay vendors on time. The vendor portal makes it easier for vendors to do business with you.
Access to more data helps you to identify trends and make more precise decisions.
Analyzing trends
Stampli Dashboards provide reports that list your largest vendors by number of invoices, and by dollar amount. Use this data to evaluate whether or not you are too reliant on a small number of vendors.
Reliable Hardware’s controller notices that 70% of the East division’s purchases are generated through four vendors. In past years, the East division has used 10-12 vendors to place the majority of its orders. Losing a supplier would disrupt Reliable’s business, and the controller asks the purchasing manager to find additional vendors.
As discussed above, customer buying habits may be seasonal, and businesses can use invoice data to analyze purchasing patterns. You can dig into invoice data to determine the types of items purchased, the dollar amount, and when purchases spike each year. For example, a hardware store may place large orders in January to meet March and April demand for lawn and garden items.
Your accounts payable balances have a direct impact on cash management.
Improve Cash Management
A business must manage cash transactions, in order to maintain a sufficient balance to finance operations. Reliable Hardware’s controller estimates the amount of cash needed to operate the business each month, and Reliable manages the business to maintain that minimum cash balance. Reliable monitors cash collections from sales, and cash payments for inventory and expenses.
With Stampli Dashboards, users can review the dollar amount of accounts payable due for a specific period of time. If, for example, Reliable has $500,000 in payables due in the next 10 days, the controller can use that information to plan cash payments.
Closing the books each month-end may require the accounting team to work long hours, in order to meet deadlines. AP Automation and Dashboards help the accounting team save time and close the books sooner. Stampli also makes the year-end closing process easier.
Close the Books in Less Time
Closing the books requires accounting to reconcile each account balance, so that an accurate balance is reported in the financial statements. The accounting team frequently needs to review the details of a transaction to reconcile an account.
Let’s say that a staff accountant is reviewing a $50,000 inventory purchase, to determine if the correct expense account was used. Stampli’s communication hub includes the invoice, all questions and answers regarding the invoice, and links to supporting documentation in one place. The accountant can perform analysis on the transaction, without having to access multiple sources.
Your accounting staff can resolve transactions in far less time using Stampli, and the business can close the books in a timely manner.
Stampli Dashboards provide the key metrics you need to make informed decisions, and you can customize the dashboards to fit your needs. Dashboards provide visually appealing graphics that deliver information quickly. Use Stampli to automate your entire AP process.
Don’t Just Manage Spend, Control It
Stampli’s end-to-end platform gives you full control and visibility over all your corporate spending from cards to invoices to payments- all in one place. The communication hub displays all of the data related to an invoice, and the Artificial Intelligence technology learns an organization’s unique patterns to simplify GL-coding.
Take control over invoice and bill processing with smart, intuitive, and actionable AP Automation from Stampli.
