Posted by Steve Wilcox on Fri, Nov 14, 2008 @ 02:59 PM
This past Wednesday, we had an excellent webcast with Nat Goodman, a well-known AP industry expert, titled "AP Benchmarking: 12 Critical Issues."
It was a very good webcast with some very positive feedback. Here are the 12 Critical Issues that Nat discusses:
- Use Benchmarking to Commit to Continuous Improvement
- Balance Your Scorecard
- Broaden But Don't Overdo Metrics
- Participate in Benchmarking Studies
- Build Professionals Relationships
- Recognize Accounting and Organizational Disparties
- Focus on the Technology Drivers for Success
- Examine Performance Gaps
- Determine Costs vs. Benefits
- Apply Internally as well as Externally
- Motivate Associates with Compelling Data
- Track and Continously Improve with Dashboards
As I wrote in my last blog entry, when the topic of AP Benchmarking comes up, there is usually a lot of discussion about "cost per invoice." And yet this metric is just not a very good metric.
Why?
Here's what Nat had to say:
"There are a lot of accounting differences and cost differences. One example - when I worked at Sears, we didn't have a large AP operation, and I was processing about 1,000 FedEx invoices per month. They were very simple, and the cost to process each invoice was smaller than average. To simplify this process, I converted those 1,000 invoices to one summary invoice and reduced my total number of invoices by 999. But what did that do to my metrics and cost per invoice analysis? It actually increased it. While my overall AP costs went down, my cost per invoice went up. Even if your cost per invoice is low, you might still be processing too many invoices."
Rakesh Shukla
@rakesh170
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Posted by Rakesh Shukla on Mon, Oct 13, 2008 @ 06:50 PM
"
Laws are like sausages, it is better not to see them being made."
Otto von Bismarck
How true ... especially after watching the passage of the Wall St. Bailout bill. The bill had some very weird provisions. Here is my favorite:
SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN ARROWS DESIGNED FOR USE BY CHILDREN.
(a) IN GENERAL.-Paragraph (2) of section 4161(b) is amended by redesignating subparagraph (B) as sub301 paragraph (C) and by inserting after subparagraph (A) the following new subparagraph:
‘‘(B) EXEMPTION FOR CERTAIN WOODEN ARROW SHAFTS.-Subparagraph (A) shall not apply to any shaft consisting of all natural wood with no laminations or artificial means of enhancing the spine of such shaft (whether sold separately or incorporated as part of a finished or unfinished product) of a type used in the manufacture of any arrow which after its assembly-
‘‘(i) measures 5⁄16 of an inch or less in diameter, and
‘‘(ii) is not suitable for use with a bow described in paragraph (1)(A).''.
(b) EFFECTIVE DATE.-The amendments made by this section shall apply to shafts first sold after the date of enactment of this Act.
What wooden arrows for children have to do with solving our current credit crisis is beyond me. As I read the full text of the bill (yes, I actually read most of it), I was kinda shocked at the inclusion of some other unrelated tax breaks (i.e. pork) benefitting Hollywood producers, stock-car racetrack owners and Virgin Islands rum-makers.
I guess this is how a bill is passed ... a big pot of pork sausage is Washington's recipe for final passage.
When it comes to bills, Washington is not the only place for dysfunctional processes. The other common place is Account Payable departments. Here is a not-so-uncommon picture of the way a bill was paid at one of our customers before the process was automated:
Even though this customer had implemented an ERP Accounts Payable system, the Accounts Payable processes had not been upgraded. Here's where workflow and imaging enters the picture -- it allows you to tap into the full power of these expensive ERP investments by automating, sometimes redesigning and always streamlining the business processes which touch these powerful ERP systems.
In many cases, you can take dysfunctional business processes which used to take, for example, 10, 15, 20 or even more steps and reduce it to less than 5.
Now, the root cause of these dysfunctional processes is NOT that the ERP system is flawed but that critical pieces of information are often NOT online in a tightly integrated fashion, which causes the communication and collaboration channels to be highly inefficient - here we're talking about the back and forth e-mails, faxes, copies, interoffice mails, Fed Ex's, etc.
These inefficient business processes can be dramatically improved to truly leverage your existing ERP systems if you capture all your information online, tightly integrate it, and then provide a highly intuitive and intelligent way to interact with that online information.
Paying bills should not be like passing laws ... or making sausages.
-Rakesh