How to Automate Your Accounts Payable with SMART Goals
AP automation can help you improve efficiency, reduce costs, and create transparency within your business processes. To make the magic happen, you will need a solid plan that will allow you to analyze your existing processes and put new and improved automated workflows in place. Turning your goals into SMART goals will allow you to track progress and add structure to your projects so you can get excellent ROI right from the start.
Despite the significant changes your AP department will undergo as you automate processes, setting accounts payable SMART goals will ensure you maintain control. With SMART goals, you can measure both effort and results throughout the duration of the automation project and create a new, highly efficient process.
So how exactly do you get started setting SMART goals?
Review Your Existing Process BEFORE Setting Goals
SMART goals are specific, measurable, achievable, relevant, and time-bound. To make your goals adhere to any of these characteristics you’ll first need to know what parts of your current process need improvement. That’s why the first step to setting accounts payable SMART goals is identifying your current obstacles and inefficiencies.
You should take the time to analyze and review your existing AP processes so that you can determine:
- How invoices arrive and what format they’re in (such as regular mail, email, or fax)
- Who’s involved in the invoice approval process
- The number of invoices processed monthly
- The approval process for both PO and non-PO invoices
- What information management needs access to
- How your staff handles exceptions and problems
- How invoices get posted
Start by building a roadmap that defines how invoices arrive and move through your organization before, during, and after processing. This will help provide insight into how these processes influence your current workflows as well as identify which improvements are most necessary.
How to Set Accounts Payable SMART Goals
When you’re able to identify the issues in your accounts payable processes, you’re more likely to set effective SMART goals.
Let’s say you set the goal of cutting down costs and increasing the efficiency of your department by adopting AP automation. Although better efficiency is indeed the aim, it’s not a SMART goal. However, decreasing invoice processing time by 20% in six months with AP automation is a SMART goal.
What makes the second example a SMART goal? Let’s take a closer look:
- Specific: Your objective is precise. Smaller costs and increased efficiency still lack definition. In contrast, “decreasing invoice processing time” is specific, because it refers to a particular and actionable concept.
- Measurable: Your goal is quantifiable. You’ve specified a percentage to improve by as well as a timeframe in which to do so. Even if you don’t reduce processing time by the intended 20%, you can still measure the progress you do make within the six months.
- Achievable: Your goal has a clear objective and point of completion. “Decreasing invoice processing time” is actionable and based on your analysis, a 20% improvement and a six-month window are both defined and realistically achievable.
- Relevant: Your goal is aligned with the company’s plans. By improving invoice processing time, your company will cut down costs.
- Timebound: You have a well-defined six-month window in which to complete the goal.
Other examples of SMART AP automation goals are: reducing data entry errors by 50% in two months; taking advantage of early-pay discounts for 70% of the invoices within a year; or having no late fees within nine months.
Keep in mind that your company needs to have the resources to achieve any goal you set, which means you should know your budget, your obstacles, and the personnel available to appropriately manage the task. Only then can you set realistic goals and delegate necessary responsibilities.
If you’re still unsure, look at companies that are similar to yours and see if they’ve had positive results following the same strategies.
Achieve Your Goals with Workflow Automation Software
Most accounts payable SMART goals are related to cutting down costs, reducing the number of data-entry errors, and improving processing times. You can reach all of these objectives with workflow automation software—a cost-effective solution to most of the challenges that AP departments commonly face.
Workflow automation software allows you to:
- Route scanned invoices to appropriate staff based on your business rules
- Send email alerts when action has (or hasn’t) been taken
- Determine if all information is present for processing and notify appropriate staff if something’s missing
- Track processing steps and employee productivity to help you quickly identify bottlenecks
- Provide management with visibility into the processes
- Electronically share data with your ERP or accounting system
Adopting workflow automation is the first step in maximizing and maintaining the efficiency of your AP department. By analyzing your existing processes, setting SMART goals, and implementing them with organization, clarity and greater ease, you’ll be on a fast track to improving overall productivity.