By: Tom Nichols
Accounts payable is unique in that multiple customers rely on outputs from its processes. Two critical customers of AP are internal clients and vendors.
In some AP organizations internal clients are treated as fellow employees and not customers, and vendors as suppliers and not strategic business partners. But, an AP best practice is to treat those customers that AP serves as just that – customers. After all, you don’t want any of your customers to take their business elsewhere. The growth of AP outsource providers has provided a competitive factor for in-house AP departments so not serving your customers can result in an outsourced environment.
AP’s Internal Customers
AP’s internal customers are the organization’s employees – those who purchase goods or services that AP is responsible for paying or employees that are reimbursed for T&E. AP relies on these colleagues to ensure that AP is in receipt of all invoices so they can be paid on time. In addition, the internal customers are often responsible for allocating and approving invoices on a timely basis. Not receiving the invoices and getting approvals on a timely basis prevents AP from doing its job of getting invoices paid accurately and on time.
When invoices are not paid on time, vendors start calling and emailing the person who purchased the goods or AP to find out the status of invoice receipt, approval and payment. For some companies this can be a very time-consuming process. In fact, some companies have multiple employees dedicated solely to answering customer-service inquiries. If the vendor calls the purchaser, that person has to contact AP to ascertain the status of the invoice, AP has to research the invoice and respond to the purchaser. This process can be inefficient and expensive, increasing the cost of processing an invoice.
Making friends with internal customers is a win-win scenario for AP. Survey results from internal customers often indicate a lack of communication, processes that are not tailored to their needs and the perception of exclusion from participation in establishing process-improvement priorities. This results in what I call the “Internal Customer Syndrome.”
- Why should we treat our internal customers like our external customers?
- We know what’s important to them. Why ask?
- We don’t have the time and resources
A TAPN Benchmarking study (2013) indicated that less than 30% of AP professionals had knowledge of the internal clients or vendors top complaints.
A simple approach is to conduct a “Customer Satisfaction Survey” measuring key elements such as cost, accuracy, timeliness and compliance. Asking your customers for their opinion helps them feel that they are part of the process and may improve working relationships with your internal customers.
Vendors
Treating your vendors as strategic business partners will enhance the efficiency and effective management of your “supply chain.”
A Service Level Agreement (SLA) is an effective way of communicating with your vendors about what you expect from them and what they can expect from you. The SLA should also spell out what the vendor must do in order to enable AP to do its job – pay the supplier accurately and on time.
In the above-referenced benchmarking study, only 10% of the AP organizations conducted a “Vendor Satisfaction Survey.” Surveying your vendors on your processes and asking how you are doing in servicing their needs, can go a long way towards a mutually beneficial strategic partnership.
Automate Supplier and Internal Inquiries with a Vendor Self-Service Portal
Vendor and internal customer relations can be greatly enhanced through the use of vendor self-service portals. Studies show that the majority of calls and emails that come into AP focus on whether or not the invoice has been paid. To avoid these calls and emails and to slash the productivity drain, best-in-class organizations are implementing portals where internal and external customers can access accurate invoice and payment status information within seconds, via the Internet.
Portals provide your internal staff and your vendors with a single shared data view that allows for collaboration on corrective actions to improve overall supply-chain performance. Portals provide an online resource to communicate changes to the contract details, resolve disputes more efficiently and advise vendors of pending process changes. A portal would be an ideal place to have the vendor satisfaction report card.
To see how InvoiceInfo’s self-service solutions can benefit your operations and your company click here to request more information or call (678) 335-5735.