Posted by Rakesh Shukla on Thu, Jul 30, 2009 @ 12:46 PM
12 months or so ago when I was approached to do an AP Blog for 170 Systems, my initial reaction was, "Who would want to read a Blog about AP???" After all, what could be said in a blog that is not already being said in newsletters, webinars, e-mail alerts and updates, etc.?
But then we realized that a blog allows us to take a fresh approach (and a few risks) highlighting key AP issues in a fun, creative and more personal way. The blog takes some very different perspectives on critical AP matters ... and is anything but boring -- at least according to the feedback we have received.
To my pleasant surprise, our thought-provoking posts have generated thousands and thousands of visits. To date, here are the 10 most popular:
- A Cell Phone for an 11-year-old?
- What is the NFL''s 2nd Highest-Paid Position? The Immensely Important Role of Accounts Payable
- The Best Excuse Ever ... Babysitting Invoice Approvals
- A plague o'' both your houses! The Ancient Feud of AP vs. Procurement
- A Tale of 2 Grocery Lines ... Understanding AP Bottlenecks
- The #1 Accounts Payable Headache is ...
- Segregation of AP Duties, What''s the Best Approach?
- Lies, Damn Lies and Stupid AP Metrics
- How to Earn 37% on AP Invoice Discounts ... Despite the Lowest Interest Rates Ever ...
- 5 Reasons E-Invoicing & Supplier Portals Have Failed
Please let me know what you think by posting a comment.
-Rakesh Shukla
@rakesh170
Posted by Rakesh Shukla on Thu, Jun 04, 2009 @ 01:59 PM
It's been about a year since one of my very first blog posts titled, A Cell Phone for an 11 year old?
A year ago, my son tried to make the case that he needed a cell phone but had no idea of the costs.
It turns out that he actually didn't use his phone that much to talk. Instead, TEXTING became all the rage. I became aware of this when our monthly bill doubled! You see, I didn't have him on a texting plan, and he sent and received 750 texts!
"Do you realize that sending text messages cost money?" I asked.
"Uhhh, no"
"Do you realize you texted 750 times last month?"
"Sometimes I get 50 in a day!" he responded proudly.
"What are you texting about?"
"Stuff" he replied like it was none of my business.
At that point, I got concerned and asked him to hand the phone over so I could see what was going on.
Here was a typical text conversation with one of his buddies:
SON - hi
BUDDY - hello
SON - im bored
BUDDY - me too
SON - bye
BUDDY - bye
750 texts like this! I put him on a plan and told him not to go over 500 texts in a month.
Anyways, the same lack of knowledge about costs continues to persist about technology investments.
Check out this chart:
What is striking (at least to me) is that almost 20% or respondents have NO IDEA of the return on their technology investments!
That's excusable for a 12 year old but not a finance manager ... especially an AP manager. Other surveys (such as IOMA's) show that most AP departments have no idea of current costs even after the economic turmoil we have been through.
Here is the point I made last year which I feel is still valid now:
Survey after survey shows that the #1 priority for most finance departments and especially AP is cost reduction. Well, how can you make the case to save money with proposed/desired initiatives if you don't know your current costs???
The other benefits of a formal cost analysis are a better understanding of your current AP processes and inefficiencies, as well as establishing the groundwork for future benchmarking to measure how you are improving as an organization and how you compare to other organizations.
IOMA also states that when it comes to technology investments, "traditionally, AP has not been a priority, which is why so many organizations rely on completely manual processes. ... The problem is that most AP Managers do NOT build a good enough case."
How can you build a case for any type of investment if you don't have a handle on current costs? Understanding costs would be a NECESSARY first step to building a case for technology investments.
-Rakesh Shukla
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
Posted by Rakesh Shukla on Fri, Sep 26, 2008 @ 12:03 PM
That's my 11-year-old son playing quarterback in his first-ever football game last weekend. This was a pass play -- he confidently called the play in the huddle, made sure his teammates were lined up properly, executed a good snap with his center ... and then things got ugly. What happened next made me acutely aware of the importance of a crucial position in football.
Any guesses what position this is? Here's a hint: this position gets paid the highest salary in pro football, after quarterback.
Running back?
... Nope.
Wide Receiver?
... Nope.
Defensive lineman, linebacker or cornerback?
... Nope, Nope & Nope.
The 2nd highest-paid position in pro football is ... left offensive tackle. Huh??? Yup, the anonymous, 300lb hulk on the left side of the offensive line.
As chronicled in Michael Lewis's superbly entertaining book The Blind Side, over the years, the NFL gradually recognized the immensely important role that offensive left tackles play in defending the quarterback from devastating blind-side hits - and thus protecting the QB from a season or career ending injury.
So what happened to my son? Yup, he suffered a bone-crunching sack from the blind-side. He never saw the hit coming. Thankfully, he didn't get hurt.
If you think about it, a strong AP department with robust internal controls also prevents devasting blind-side hits such as fraud, inaccurate financial statements and delayed period end closes.
In many ways, Accounts Payable Professionals are like football lineman.
Being a lineman in football is a thankless job. If you do a good job of blocking and tackling, you don't get noticed but if you miss a tackle or a miss a block, everyone notices! The quarterback gets sacked, the other team scores, etc.
Similarly, when AP does a good job, nobody notices. But when bills are paid late or incorrectly, finance management gets upset, vendors get angry and line of business managers lose patience.
It took the NFL a while to wake up and recognize the true value of left tackles ... hopefully, upper management will someday appreciate the crucial blocking and tackling that AP executes day-in and day-out and reward AP Professionals accordingly.
-Rakesh Shukla
P.S. The Blind Side is much more than a "sports book." It is an incredible human interest story about a homeless boy named Michael Oher. If you haven't read the book, this interview with the author, Michael Lewis, is definitely worth a look:
Posted by Rakesh Shukla on Tue, Sep 16, 2008 @ 04:15 PM
Lehman Brothers is bankrupt ... Merrill Lynch sold before going bankrupt ... AIG on life support ... Fannie and Freddie in federal conservatorship ... Washington Mutual and Wachovia and [fill in the blank] next?
The financial world has forever changed in the past few days. Historic, once-in-a-generation type of stuff. Just stunning that Lehman has disintegrated - a 158 year old firm which survived the Civil War, the railroad bankruptcies, the Panics, WWI, the Great Depression, WWII, the Cold War and more than a few stock market crashes.
And why? Because of greed. And excessive leverage ... reckless leverage, actually. All of Wall Street was making billions of dollars repackaging bad loans into "innovative" financial products using 30 times leverage (or even more!). At the time, it seemed like pure genius to spread the risk from a few to many. The geniuses were rewarded with billions in bonuses.
Sadly, for us citizens and taxpayers, the rich geniuses weren't so smart after all. They get to keep their bonuses and the average taxpayer has to foot the bill to clean up this mess. How grossly unfair.
Unfortunately, the day of reckoning for Wall Street's mortgage masterminds is here -- the massive unwind of leverage is going to be ugly. Just like you can't turn stone into gold, you can't loan TRILLIONS AND TRILLIONS of dollars to UNQUALIFIED home buyers and expect to eliminate the risks through exotic derivatives, CDOs, SIVs and MBS.
The losses so far have been staggering -- about $500 Billion in write downs. BUT (hold on to your hats here), the total losses could be as high as ... 2 trillion dollars! Yikes!!! As unbelievable as it seems, we may only be ¼ of the way through this mess ...
Now, here's an angle you may not have thought about: these ginormous losses are going to wipe out bank profits ... for years and years and years.
No profits = no tax revenues.
Bloomberg reports that:
"Wall Street's mortgage losses have grown so large that some firms may pay little or no taxes for years, widening New York City and state deficits and challenging their ability to provide services, Mayor Michael Bloomberg said.
"It will be a number of years before Wall Street starts paying taxes again,'' the mayor said at a press conference yesterday in Manhattan. "They will carry forward all of those losses.''
And, it's not just New York. Other banking regions will also suffer from reduced tax revenues: California, Connecticut, Virginia, Illinois, Massachusetts and other states.
And it's not just tax shortfalls by banks but also individuals. For example, CNBC was reporting this morning that 10-12 thousand Lehman employees will be out of jobs resulting in $50-$100 million in additional lost income taxes.
What is the direct implication for Accounts Payable? In a word: escheatment.
The declining tax revenues will force States to aggressively collect unclaimed property such as uncashed checks. You should be aware that there is no statute of limitations for turning over unclaimed property -- if you get caught, the fines and penalties can be severe. Ideally, you should have an automated system that tracks all uncashed checks on a frequent basis (not just at the end of the year). Not filing or scrambling to file your State Unclaimed Property Forms would be unwise in this environment of severely declining tax revenues.
-Rakesh Shukla
Posted by Rakesh Shukla on Fri, Sep 12, 2008 @ 01:37 PM
221 Days, 16 Hours, 23 minutes ... that's how long it has been since the Patriots lost the Super Bowl and I am still crying over that loss. Did they really lose the championship game after going 18-0?
I am still in denial.
Unfortunately, denial is only stage 1 of the "5 Stages of Grief." The "5 Stages of Grief" is process by which people deal with tragedy and grief and was introduced by Elisabeth Kubler-Ross in her 1969 book "On Death and Dying."
The stages are:
- Denial: "It can't be happening."
- Anger: "Why me? It's not fair."
- Bargaining: "Just let me live to see my children graduate."
- Depression: "I'm so sad, why bother with anything?"
- Acceptance: "It's going to be OK."
These stages can be applied to any form of catastrophic personal loss ... a loved one, job, freedom, a Super Bowl loss ... Tom Brady getting injured for the season ... and even Accounts Payable!
With some help by some great illustrations by Steve Greenberg (http://www.greenberg-art.com/), here is a tongue-in-cheek look at "The 5 Stages of AP Grief":
The 5 Stages of AP Grief
Stage 1: Denial
"There is just no way that there could be anything wrong with the way we process invoices around here. Whatever frustrations business managers, suppliers, auditors and my AP staff say they are experiencing must be bizarre delusions caused by impaired reasoning."
Stage 2: Anger
"I am SOOOO furious! WHO'S TO BLAME? I'm not gonna stand for this!
Why can't those lazy business managers send their invoice approvals in on time!
Why can't those incompetent suppliers send invoices that actually match the POs we send them!
Those @#%*! auditors found another control deficiency! Those pointy-headed, bean-counting suits are just too picky!
Those procurement boneheads are no help in resolving holds"
Why can't my AP work more efficiently with less errors?!"
Stage 3: Bargaining
"If we can just survive this quarterly close, I promise to do away with the manual, paper-intensive processes that are causing such long work hours. If this all goes away, I will simplify and automate our processes ... I PROMISE."
Stage 4: Depression
"This job is so hard and nobody appreciates all the hoops we have to jump through to get a stinkin' bill paid."
Stage 5: Acceptance
"It wasn't supposed to be this way... but I guess this is life. It is what it is. And, hey, if paying a bill was as easy as it sounds, I wouldn't have a job."
Again, thanks to Steve Greenberg for the great illustrations!
Illustrations by Steve Greenberg, Ventura County Star, Calif.
Posted here with artist's permission.
http://www.greenberg-art.com/
-Rakesh Shukla
Posted by Rakesh Shukla on Thu, Sep 04, 2008 @ 12:08 PM
"The nice guys are all over there. In seventh place."
Leo Durocher, US baseball manager (1906 - 1991)
This is the original quotation which has been simplified over the years to "Nice guys finish last." At 170 Systems, we have spent a lot of time with AP professionals over the years and the consensus opinion is that AP professionals are really, really nice people. Probably too nice - certainly for the business world.
If you are afraid to speak up because you need to be liked ... back down too easily when confronted ... fret about offending others ... work tirelessly without breaks ... then you are probably sabotaging your chances for promotion.
Does this mean you have to be an ogre or a jerk to get ahead?
Not according to Russ Edelman, CEO of Corridor Consulting, and author of a new thought-provoking book titled "Nice Guys Can Get the Corner Office." The book details how to succeed without being an SOB ... or a spineless pushover.
Russ originally authored "The Nice Guy" in the Harvard Business Review in 2006 which explored the impact of being too nice in business. It turned out to be one of the most popular articles of that year. That tremendous response led to the book where Russ had the opportunity to interview 350 business professionals including 25 CEOs of major companies including SouthWest Airlines, Disney, Proctor & Gamble, Dunkin Brands, Boston Market and Life is Good.
For today's blog entry, I have the pleasure of introducing Russ, who relates his extensive "nice guy/gal" research to the world of Accounts Payable.
Enjoy.
-Rakesh
As a general and unfortunate rule, the important role played by AP professionals is under-appreciated at most companies. In fact, one could legitimately argue that AP professionals are often the recipients of the S*#t that rolls downhill. For many of us, we have no choice but to be "nice" and smile. And for those of us that put up a fight, we are fired ... or promoted!
Let's face it, the world of AP is a challenging one and if you are "too" nice, you can be eaten alive. The constant pounding of suppliers looking for payments and/or credits; internal client support and requests, finance planning demands from Treasury and coordination with Procurement. With all of these demands, is it any wonder that those worn, squeezable stress balls can be found at the desks of most AP team members.
Let's take an example. Betty is the Director of AP and has a team of 22 people working for her. Betty is also an Overly Nice Guy as when any of her staff members are unable to complete their workload, she is the first one that they ask to lend a hand. And each time, she does it using one excuse or another. She rationalizes by thinking that it is an undue burden to place upon her team members rather than having them remain accountable for the processing of their backlog. Nights and weekends have become the standard for Betty. Ultimately, she becomes a "corporate martyr" by sacrificing her time and energy. Instead, she should define boundaries and hold her team accountable; changes that may require some form of training and potentially the increase in headcount if the workload is too excessive.
So, how can Mary or any other AP representative stay true to Nice while at the same time, finding the power to be assertive and effective?
The answer...to become "Effectively Nice"
Kind, Empathetic, Concerned, Honest
AND
Assertive, Able To Speak-up, Confront Situations and Define Boundaries
In the absence of finding a path to becoming Effectively Nice, most business people will continue to struggle with behavior that is Overly Nice. To start down this path, we've taken a bold step by writing "Nice Guys Can Get The Corner Office - 8 Strategies for Winning in Business Without Being a Jerk". It provides guidance to Overly Nice Guys in their mission to become more balanced...to become Effectively Nice. The book is also designed to providing strategies for people who manage the Overly Nice Guys as they are largely a resource pool that has not reached their full potential.
Here is a quick summary of the 8 strategies that we call "The Nice Guy Bill of Rights":
Nice Guys (including Women) have the right to:
- 1. Self-Awareness - Learn about yourself -- know your strengths and weaknesses.
- 2. Speak Up - Learn to express your opinions and be heard.
- 3. Set Boundaries - Learn to set clear, strong, and appropriate boundaries.
- 4. Confront - Learn to face issues directly and without fear.
- 5. Choose - Learn to make choices without guilt.
- 6. Expect Results - Learn to hold others and yourself accountable.
- 7. Be Bold - Learn to take chances and push the envelope.
- 8. Win - Learn how to finish first respectfully and fairly.
The reality is that when people are too nice in business, there is a real cost to their careers and their organizations. Becoming Effective Nice can make the difference!
-Russ
http://www.niceguystrategies.com/
Posted by Rakesh Shukla on Mon, Aug 25, 2008 @ 02:03 PM
This "Life is crap" t-shirt (a spoof of the famous "Life is Good" t-shirts) got me thinking about 2 very different experiences I recently had at grocery stores.
I hate waiting in line - especially grocery stores lines. The other night, I stopped at the grocery store to pick up some milk. It was peak grocery shopping time so why were there only 2 registers open??? Of course, both lines were super long! Which line to choose? I admit that I always try to choose the shortest grocery line by doing some quick calculations based on the number of people in each line, the number of items each shopper has, the competency of the check out clerks, etc.
"OK...there are 8 people ahead of me in this line with only 2 or 3 items, and there are only 4 people in that line but one of them is an old lady with a heaping cart full of food ... The check-out gal in the longer line looks like she knows what she is doing but the droopy-eyed check-out guy in the shorter line looks like he needs a cup of coffee."
Tough choice but I decided to take my chances with the longer line when, all of a sudden, some frizzy-haired soccer mom from the shorter line darted in front of me! Of course, this voided my previous wait-time calculations. Annoyed, I went to the shorter line behind the feed-the-small-army old lady. After fiddling with my blackberry and sneaking a peek at the tabloids ('ST. VALENTINE & CUPID WERE SECRET LOVERS!', 'JOHN MCCAIN ENDORSED BY UFO ALIEN' and , 'ELEPHANT SHUNNED BY HERD... after making love to a rhino!'), I got really annoyed when frizzy-soccer-mom got rung up before me and I was still stuck behind the old lady.
Now, compare this to my experience at Trader Joe's a few days earlier. Trader Joe's is my favorite grocery store . It's very reasonably priced, they have cool & interesting food and the check out lines never seem to be too long. Trader Joe's has a great, dynamic check out system -- if a check out person's line gets more than 2 or 3 deep, he/she rings a bell and another check out line is opened immediately. When the check out traffic subdues, check out lanes are closed and the employee goes back to doing other tasks such as stacking or inventory maintenance. The number of check out lines are dynamically growing and shrinking as needed -- it's a great system that prevents long lines and yet keeps all the employees productive.
Pondering my grocery store experiences got me to thinking about queuing theory which is the mathematical study of waiting lines (or queues). I'll admit that my knowledge on this topic has long been forgotten since some brief exposure during my MIT college days. Dusting off an old text book, I was fascinated to (re)learn that a very small and seemingly insignificant change can quickly disrupt a smooth functioning process causing chaos --- like short grocery lines turning into long grocery lines in a matter of minutes. Without delving into the mathematics of queuing theory (not that I even understand it anymore), small changes at the margin (number of checkers, competency of checkers, average checkout time, number of shoppers arriving) can very suddenly lead to bottlenecks and long wait lines ... unless these small changes are detected early and additional checkout lanes are opened almost immediately. Some brilliant executive at Trader Joe's clearly understands these queuing concepts which is why you will hardly ever see a long line there.
Now, here's the thing about queuing theory --- it would also explain AP invoice processing bottlenecks. Think about it. Your staff is humming along processing invoices and then a small change happens such as someone calls in sick, or the number of invoices increases during period end or a few AP clerks get sidetracked dealing with unpleasant supplier disputes. Any of these small changes could result in a significant backlog increase - especially for larger AP operations. Using the Trader Joe's model, the best way to prevent these bottlenecks is early detection of growing backlogs. If you have real time visibility into each AP clerk's backlog, you could dynamically balance workloads or reallocate resources in real time to prevent backlogs before they get out of control.
A simple dashboard that showed each AP Processor's backlog could be a great productivity management tool.
-Rakesh
Posted by Steve Wilcox on Mon, Aug 18, 2008 @ 03:02 PM
"There are three kinds of lies: lies, damn lies, and government statistics."
Variously attributed to Mark Twain,
Benjamin Disraeli,
Alfred Marshall
and several other dead people.
Anyone who has worked with numbers knows the end results can be manipulated if one tortures the numbers long enough. Washington's smoke-and-mirrors number crunchers are infamous for this type of hocus pocus. As the cost of everyday items like gas, food, medical expenses, education, etc continues to rise rapidly, do the Government's sanitized statistics for CPI, GDP and unemployment really make sense? Of course not!!! Very few people understand that the government formulas used to calculate economic statistics are constantly changing! Yup, every year the government changes the formulas ... usually in a way to make themselves look good. I won't get into the details of hedonics and other statistical trickery but if you were to use the government formulas from 20 or 30 years ago to calculate CPI, GDP and unemployment, you would get very different and very disturbing numbers. John Williams (http://www.shadowstats.com/) contends there is rampant data distortion - the real unemployment rate is 4-7% higher than what Washington claims, inflation is 5-9% higher and the GDP is actually 5-6% lower (which would put us in a recession).
But it is not just the public sector which distorts the numbers; it is also quite common in the private sector -- specifically, corporate finance. The pressure to make the numbers and threats from bosses can result in exotic number massaging and some very creative accounting. Even with SOX, this nonsense continues. CFO.com recently published an article titled An Anatomy of a CFO's Agony which is a case study of one CFO's relentless, exhausting pressure to hit the numbers and the accounting cartwheels required to make ends meet.
Within Finance, potential skullduggery does not stop with accounting but also includes metrics -- the act of collecting data about systems and processes - and then reporting them in dashboards. Metrics allow you to track progress toward top goals, alleviate key pressures, and solve key challenges ... BUT figuring out which metrics to gather and how to gather them accurately is crucial despite Dogbert's consulting advice:
DILBERT: © Scott Adams/Dist. by United Feature Syndicate, Inc
Even worse than pointy-headed bean counters gathering metrics just for the sake of gathering metrics is gathering stupid metrics that can drive unintended behavior. Let me give you a great example in Accounts Payable - a true story of a really dumb AP productivity metric that led to unintended consequences.
I was at a company a few years ago where they actually measured productivity using a ruler. The dreaded ruler was used to measure the size of paper stacks on employees' desktops. The thinking was that if the stack was small, the employee was being very efficient. What was the unintended consequence of this metric? AP Clerks learned that if you store invoices in your desk drawer ... you become a lot more efficient. The "ruler" productivity metric was just a stupid lie and led to all sorts of visibility issues where invoices kept getting "lost" in desks, payments were late, discounts were lost, procurement and suppliers were unhappy, etc.
So what are the AP metrics that should be measured to promote the right behavior? And how and when should these metrics be gathered?
-Rakesh Shukla
@rakesh170
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