Accounts Payable Visibility and AP Optimization Challenges

One of the areas where Corporate management sees value in AP process optimization centers around what’s called “visibility”. Visibility is a term that describes the finance department’s ability to know, with a high degree of confidence and accuracy, the nature and dollar value of invoices and liabilities that a company has incurred at any given point in time. Visibility helps management in many ways, including the following two examples:

1. It is far easier to calculate period-end accruals when AP knows the nature and dollar amount of all invoices received on a given date. Accrual accounting becomes “more calculation, less assumption/estimation”. Visibility reduces the cost of calculating period-end accruals and also improves balance sheet accuracy.
   
2. Finance departments always seek to forecast cash inflows (collected revenues) and cash outflows (payables, payroll, debt payments, etc) into the future. Better visibility provides improved cash management, and the opportunity to borrow at lower costs or invest excess cash at higher returns.

AP process optimization often attacks the root cause of “lost visibility” – paper invoices received in different geograhical areas, departments and divisions around the company but not yet accounted for in AP. Process optimization vendors, through central receipt, front-end image and data recognition, as well as conversion to e-Invoicing, can often assist AP management achieve dramatically improved visibility in an environment that also reduces payables unit costs .

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