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Emerging Trends

Emerging Trends in Global Accounts Payable

Horizontal July 2018 GPR_CountrySpotZimbabwe

By Frank J. Mendelson, with Sven Lindemann

Sven Lindemann, CEO, Serrala is responsible for the areas of Consulting and Strategy Development on the executive board and spearheads the global expansion of the company and its complete end-to-end financial solution. After training as a software developer at the Vereins- und Westbank, he first joined Serrala (formerly known as Hanse Orga Group) as a software consultant, later moving into management. Since 2001, he has been on the executive board and in 2012 took over the chairmanship of the board from his father and founder of the company, Hans Herbert Lindemann.

How has the role of the AP professional changed?

Historically, the accounts payable (AP) department has adopted a slow pace of change due to the fact that companies are reluctant to tamper with proven and stable back office processes. However, as innovations are rapidly introduced in other parts of the business, the AP department must also be ready to innovate. Finance leaders must regularly review and update processes and introduce new technology to ensure that the AP department can keep pace with the rest of the business. Otherwise, companies risk being at a competitive disadvantage.

In addition to their own research and decision-making, AP professionals should consider ideas from others involved in the invoice process by asking members of the HR, finance, procurement, and IT departments, as well as key suppliers, for ideas on how to improve. This way, the AP team will be able to develop a more comprehensive view of the improvements that are required from the moment an invoice is received to the moment it is paid.

What emerging trends in AP/global AP are demanding your attention?

For the past few decades, AP departments have been gradually automating invoice processing by moving away from traditional paper-based processes and investing in technology such as Optical Character Recognition (OCR) and workflow to improve the efficiency of the AP department. Despite these investments, however, the pace of change in the AP department has remained relatively slow—which is surprising.

I think this is about to change, as several macro-economic factors are pushing AP and the entire finance department into a new era of innovation that includes robotics, cloud, and blockchain. Major drivers of this increase in the pace of change include:

  • Aggressive competition and rapid corporate expansion that require companies to automate processes to handle large volumes of transactions without increasing costs or headcount
  • New standards and regulations that are forcing companies to abandon paper and fully digitize processes so they are more transparent, and it is easier to respond quickly to audit inquiries
  • New technologies such as robotic process automation, artificial intelligence, and blockchain, combined with pressure from the IT department and business users, that are pushing the finance department toward a more modern and digital future

Another emerging business requirement for the AP department is fraud prevention. According to the Association of Finance Professionals Payments Fraud and Control Survey (2017), almost three-quarters of organizations have experienced actual or attempted payments fraud. Many organizations are urgently introducing new process controls, including supplier information management and supplier scoring, to help prevent fraud. However, until organizations move to completely digitized and transparent business processes with built-in fraud detection systems, it will still be very easy for a savvy criminal to continue this pattern of massive payment fraud. Fraud is also pushing companies to focus on their administrative processes.

Is there a frequently asked question or function that you expect will no longer be part of the AP conversation in a few years?

Many companies ask about eliminating manual steps and paper from processes to ensure they have the speed and transparency necessary to meet these new business and regulatory requirements. I expect this will change as companies become more automated. Fully digitized processes provide companies with real-time information as invoices move through the system, so companies can monitor supplier spend and payments and detect potential issues before they negatively impact the business or are discovered in an audit. The goal is to create a central AP automation process or central payment hub to increase security and improve visibility across global organizations.

What are the biggest challenges for AP teams and managing a global AP department?

The biggest challenge that every CFO and finance department is facing today is transparency around the processes and flow of payments within an organization. Ensuring greater cash visibility within an organization will help companies prevent fraud and improve compliance. All companies should be able to answer the following questions to prevent being in a mission-critical fraud situation:

  • Who am I sending money to?
  • Am I allowed to send money into that country or to that recipient?
  • What kind of suppliers am I working with?
  • Am I allowed to work with suppliers out of those countries?

What ways can the AP and treasury departments collaborate in transforming AP into a profit center?

AP and treasury departments can collaborate to create a central payment hub. Today, the AP department is responsible for processing the invoices and creating the payment files, while the treasury department is responsible for sending them to the bank. The two departments can centralize all of that in a way where it is a group-wide service. AP would centralize the invoice process; treasury would centralize the data collection of the invoices. Then, all the payment processes would be in one global payment factory and combine with a managed services component where the treasury department is responsible for connecting the bank in the easiest way. Working in tandem, a profit center is created.

What are some essential practices and strategic choices to put in place to manage risk and compliance?

With the European Union’s new General Data Protection Regulation (GDPR) that took effect in May 2018, companies are at risk of facing strict fines. Now is the time that companies should be optimizing their processes with these five steps to help tackle the new regulations:

  1. Identify risks—As a first necessary step, it is critical to know if you have to change existing workflows. Check if your policies are up-to-date and up to code.
  2. Involve your legal department—If you have a legal department that can oversee and advise your risk management team, take advantage of it. Seeing that legal qualifications can reach highly detailed levels, it is vital to have experts on board, who can point out crucial issues or give insights that are not readily apparent.
  3. Change workflows—You may need to inform individuals when and why personal data is collected and request that individuals give explicit consent to retain personal information.
  4. Develop a protocol—Establish standard procedures on how to handle personal data. Each area should be thoroughly considered, with the protocol clearly communicated to all key stakeholders.
  5. Communicate new measures—Inform your customers, vendors, and employees about new procedures to safeguard their personal information and be sure to communicate that you are taking the regulation seriously.

What career advice do you give to new college graduates?

I always try to tell young professionals that they should truly understand what their job is and what their business does, then spend time understanding what their colleagues do, so they can have a 360-degree view of the company. This will make them a more reliable employee for the business overall and a great asset to their colleagues. Understanding how everyone works will allow them to think strategically about how their work is affecting others and the business as a whole.

What are the most important qualities of effective leadership in your approach?

I am hands-on. I understand the fine details of the software business. I have worked for Hanse Orga Group for 24 years, recently rebranded as Serrala in May 2018 after a series of acquisitions.  Working my way up in many different areas of the business has allowed me to continue to be hands on and fully aware of processes within the organization.

It is also important to be a reliable person as a leader and a manager—I always try to fulfill what I promise to my employees and will never make a promise that I know I cannot deliver. I have an open-door policy and believe it’s important to be available and approachable to all employees.


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