How AP teams can embrace change by becoming more agile.
‘Agility’ has become something of a buzzword in business and technology. It’s an easy term to bandy about, but much harder to actually achieve. Is the concept of ‘agile accounting’ simply another throwaway phrase, or something more tangible and concrete?
Let’s explore what an agile methodology might look like when applied to accounts payable.
The times they are a-changin’
Sometimes it can seem as though change is the only constant in accounting and finance. In today’s fast-paced business landscape, digital technology represents not just a catalyst for change and a response to change, but also a means of futureproofing your business against change. This distinction is becoming increasingly important for finance departments as they transition from their traditional role as a support service to a more strategic value-creation role within the business.
Free Download: Futureproofing Accounts Payable: Making AP an efficient, resilient, and strategic function
Technology-driven change is enabling us to:
- Revolutionize the way businesses operate
- Reshape accounting and finance functions
- Transform the roles of accounting and finance professionals
Today, technology acts as both a driving force and the foundation of where, when and how work gets done. A prime example is how the sudden demand for remote work in the wake of the pandemic led to a rapid shift from paper to digital processes. We’ve since witnessed a domino effect, with new ways of work giving rise to innovative technological solutions and vice-versa. Consider just some of the tools that have risen to prominence in the last few years, and changed the way we work forever:
- Communication and collaboration tools (e.g., Slack, Microsoft Teams, Zoom)
- Project management and task tracking software (e.g., Asana, Trello, Jira)
- Cloud-based storage and file-sharing platforms (e.g., Google Drive, Dropbox)
- Virtual meeting and video conferencing solutions (e.g., Webex, GoToMeeting)
- Automation and workflow tools
- Customer relationship management (CRM) systems
- Online training and learning platforms
- Data analytics and business intelligence tools
- Digital document management systems
- E-commerce platforms
Change is all around us, whether we like it or not, and technology is at its heart. An agile methodology helps organizations become change resistant, and capable of capitalizing on change to discover new opportunities.
The ‘agile’ methodology
‘Agility’ in a business and technology sense has its roots in the agile software development movement of the early 2000s. This approach revolutionized software development, and it can do the same for accounting and finance. Here’s how adopting agile methodologies could change the way our industry operates:
So ‘agility’ in this sense is a destination, but also a means of reaching that destination. The destination is described in the ‘to’ column of the above table. Becoming agile means moving from left to right: reactive to proactive, manual to automated, rigid to flexible, etc.
But agility is a methodology, too. Agile methodology breaks projects into multiple phases or ‘sprints’ — applying iterative, incremental, adaptive changes to deliver specific results and drive continuous improvement. After every sprint, teams pause and reflect to see what can be improved for next time. So by applying an agile methodology, teams can more easily achieve agility the destination as outlined in our table above.
Agile accounts payable
If we’re talking about change, then let’s acknowledge that many accounts payable (AP) processes are ripe for disruption. Traditionally manual, labor-intensive, error-prone and inefficient, AP processes are obvious beneficiaries of an agile methodology. Here’s what such a methodology might look like when applied to accounts payable.
Agile AP is automated
New and emerging technologies — such as artificial intelligence — are helping to automate accounts payable tasks including approval workflows, reconciliation, journal entries, inter-company consolidation, revenue recognition, and more. Automating time-consuming manual tasks enables accountants to focus their attention on more rewarding value-creation activities. In fact, 70% of companies that have automated more than a quarter of accounting functions report moderate or substantial ROI.
Agile AP is digital-first
By abandoning paper-based manual processes, agile finance departments are improving data accuracy and security, minimizing time spent on paperwork and associated manual tasks, radically reducing processing times and improving integration with existing accounting systems. Businesses are finding that digital invoices are up to 70% cheaper, while The United States Treasury estimates e-invoicing could cut costs by 50% and save $450 million per year.
Agile AP is work that flows
One of the main aims of agile accounts payable is to streamline and simplify workflows to eliminate bottlenecks, improve accuracy and compliance, and deliver real-time visibility into the status of invoices, approvals, and payments. If we refer back to our chart from earlier, we’re moving from bureaucratic to streamlined, from manual to automated, and from rigid to flexible. It’s about trimming the fat and creating simple workflows that just work.
Agile AP is transparent
By delivering real-time visibility into accounts payable processes, an agile methodology allows for better decision-making, enhanced cash flow management, and rapid identification of potential issues. To gain this degree of visibility, organizations need an AP software solution featuring a comprehensive dashboard delivering the deep insights you need to assume a strategic, proactive role rather than simply a back-office housekeeping function.
Agile AP is data-driven and analytical
Think back to our ‘agility table’ from earlier. An agile organization is one that has moved from transactional to strategic, using data analytics to identify trends, detect anomalies and drive continuous improvement. Analytics tools help organizations align financial goals with business objectives, and make more informed decisions that help drive financial success.
Agile AP is collaborative
Finally, agile methodologies enable teams to move from isolated to collaborative — delivering better communication, improved vendor relationships and smoother transactions. Enhanced communication and collaboration helps to improve supply chain efficiency and optimize costs through negotiation of favorable terms and early payment discounts.
The agile methodology shows that change is to be embraced rather than feared. Learn how London’s Goldsmiths University embraced an agile methodology with the help of Quadient Accounts Payable Automation by Beanworks to improve efficiency and time management while solving the issues of a newly-remote workforce.
Free Download: Futureproofing Accounts Payable: Making AP an efficient, resilient, and strategic function
