3 Easy Steps to Make Accounts Payable More Strategic

Cassie Crail
May 18, 2021

Including the questions that every AP team should be asking themselves.

To get an edge in accounts payable, you need an intelligent accounts payable process that not only makes you a more efficient AP professional but also provides strategic context on your company’s expenses while helping you identify wasteful vendor spend. We call this Smart AP.

Smart AP platforms, like Glean, provide operational efficiencies and make your vendor spend review processes and budget vs. actual meetings significantly more insightful.

Here are three ways to make your accounts payable process more strategic and value-creating for your company.

Step #1: Analyze Spend

Does your spend comply with the terms established with your vendor? Do spending levels match your expectations?

If the answers aren’t clear, we recommend performing a variance analysis on a vendor level to see if costs fluctuated from the prior period.

If there is a significant or unexpected variance in spend, ask the respective budget owner:

• Do the pricing terms match what’s in our contract?
• Were new features added?
• Did usage increase or decrease?
• Understand the reasons for any identified changes.

Investigate if usage correlates with your company’s internal metrics or KPIs. If, for example, your monthly headcount increased by 10% but costs for Slack went up by 25%, that discrepancy warrants further inquiry.

Tools like Glean facilitate easy analysis of these activities, yielding actionable insights on vendor spend.

Step #2: Determine if You’re Actually Receiving an ROI from Your Vendors

It’s crucial for finance teams and AP professionals to challenge budget owners on the return on investment from vendor spend. AP teams can ask:

• Does your vendor add value to the business? What business goals are supported?

Business goals are dynamic, so it’s important to periodically assess the value of your vendors. Smart AP platforms can help identify unnecessary line items.

Checking in with budget owners about vendor value leads to a culture of spend accountability within the organization, enhancing the strategic nature of the AP process.

Step #3: Determine if You’re Getting Good Deals from Your Vendors

AP teams should also investigate whether they’re receiving good deals from their vendors. One effective strategy is to have budget owners research current introductory offers or seek quotes from competitors.

Glean allows access to benchmarking data to ascertain whether your pricing measures up against peers.

Bonus: Review Your Accounts Payable Internal Control Checklist

Utilizing an internal control checklist, you can analyze the accounts payable process to boost strategic value. The checklist includes:

Segregation of duties. Employees should not perform conflicting functions.

Reduce errors. Smart AP software can minimize errors, particularly when matching invoices with purchase orders.

Data entry controls. Automating data entry significantly reduces the chance of errors, allowing staff to focus on more valuable problem-solving tasks.

Conclusion

Analyze spend, evaluate vendor ROI, and ascertain if you’re securing the best deals. Follow these three steps to enhance your AP process.