“Two households, both alike in dignity, in fair Verona, where we lay our scene, from ancient grudge break to new mutiny.”
Thus begins the prologue to Shakespeare’s Romeo and Juliet, describing the legacy of irreconcilable differences between two families that, ostensibly, should have much in common.
It strikes me that in many organisations, the Procurement and Accounts Payable functions share a similar hostility towards one another when theoretically, they should be aligned. I’ve interviewed Procurement folks in several companies who claim their biggest pain point is invoice exceptions; their frustration with Accounts Payable for passing them on blithely is almost palpable. Yet the manual handling of exceptions can come at a real cost to the Accounts Payable department. When things go wrong, it takes time to identify and investigate the problem, a laborious process compared to a smooth, first-time matched, touchless invoice.
But across the corridor, Accounts Payable are equally lamenting the poor quality of purchase orders that are hitting their desktops. Similarly, their manual
intervention results in lost productivity, but late payments (or early payment discounts being missed) and unhappy suppliers don’t do Procurement any favours, either.
A knock-on effect on suppliers
There’s another dimension to the conflict: I once asked a supplier what, in his opinion, was the root cause of invoice exceptions, and his immediate answer was “bad purchase orders”. His bugbear was continually receiving sloppy POs with the description cell completed as “miscellaneous”. That gave me pause for thought: I had assumed that the fault for exceptions generally lay with suppliers entering the wrong information or mis-keying the data.
E-invoicing doesn’t single-handedly resolve the conflict.
If all you have is basic validation capabilities – ensuring fields contain data and in the right format – you can reach automation rates in the 40-80% range,
but that still leaves a large proportion of invoices that require manual intervention to resolve errors and exceptions.
A more robust set of business rules goes a long way to improving invoice processing efficiency. But in the pursuit of near zero-touch processing, you need greater visibility and control, and a more collaborative invoice process than most organisations can achieve. And if two internal and complementary functions such as Procurement and finance can’t overcome their differences, what hope is there of brokering peace between customers and suppliers?
One of the benefits of the Ariba community is that it supports total supplier participation without the high cost of entry of a custom built portal, and comes with nifty self-service tools that eliminate invoice and payment status chasing. Having information more readily available helps with dispute resolution, which can in turn can temper supply chain risk. It’s a virtuous circle: by helping your suppliers reduce their days sales outstanding, you are actively good for their financial health, which in turn strengthens your supplier relationships and secures you more favourable terms.
The lovers Romeo and Juliet broke down the misunderstanding and animosity between their respective families. A vibrant e-commerce network can play the same peacemaker role, eliminating the mistrust between Accounts Payable and Procurement: although perhaps with a lower body count.