Internal culture and tools drive the operations of AP and procurement, but these things can also be roadblocks. A culture that is forward thinking and innovative will lead an organization to adopt the right technology to streamline purchase-to-pay processes. One that resists change and remains stuck on old ways risks a downward spiral. This can even occur with billion dollar companies; following is a real-life example. Call it a case of duct tape, wire, and chewing gum. What can happen if your organization resembles this one?
Duct Tape, Wire, and Chewing Gum
The MacGyver way is how “Paul” describes operations at his $2B employer, a large North American manufacturer. He wryly remarks that employees use duct tape, wire, and chewing gum to fix a problem because no one wants to fix the process at the root of the problem. Management is satisfied with ignoring an issue because, as Paul sums up, “Bill and John know how to work around it, and, as long as Bill and John are here, they think we are fine.”
Inefficiencies
The company uses a huge spreadsheet file (originating at least a decade ago) to manage certain purchasing activity. Because it repeatedly caused Paul’s computer to crash, the company actually purchased a second computer for Paul, so he could keep using the file. Making matters even worse are company acquisitions for which executive management has allowed the acquirees to retain their legacy systems indefinitely.
Excess Costs
Like many other organizations, AP is paper based at Paul’s company. He shares that a recent audit required them to make more than 2500 invoice copies for auditor review. In addition to printing costs, they incurred the cost of retrieving the original invoices from storage (with a records management company) and putting them back.
Paul proposed new AP technology, not realizing that the decision makers lacked basic information about payment strategies. He had to go back to square one.
Personnel Hurdles
Most employees have been at this company for decades. Paul says the cafeteria dining room is a “sea of gray” (as in hair color). Millennials do not stay around long. They quit because of antiquated processes and the lack of a similar-age peer group with whom to connect.
Further, Paul explains the impact of his retired employee, Judy, who basically took all operational and company knowledge with her. His new hire, Kathy, struggles to grasp the labor-intensive processes and systems. Given their limited resources, no one has time to train her. Everything has taken longer to get done. Poor processes + new employee = reduced productivity.
Does this look familiar? Organizations that do not equip employees with the right tools risk losing staff and, ultimately, revenue.
What to Do
“Traditional” culture and outdated tools are tough to battle. Nevertheless, I believe in making an effort. Tips include:
- Ensure procedures are documented, so knowledge is not lost when someone retires. This is the easy part; the real problem is outdated processes.
- Calculate the process costs of your most tedious processes and share with management along with potential solutions. Educate them on what is possible.
- Encourage management to explore why you do “X” and whether it is still justifiable beyond “Because we’ve always done it this way.”
- Talk with your bank, other providers of payment-related products and services, and your industry peers to learn more about the options.
Access more information and tips on payment strategy.
Up Next
What happens when management is ready to expand electronic payments, but employees stand in the way? Take a look at the next blog post.
About the Author
Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more…
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