How Accounts Payable Automation and Agility Drive Long-Term Business Productivity

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How Accounts Payable Automation and Agility
Drive Long-Term Business Productivity
Transcript of a discussion on why business leaders need to prepare now to optimize and automate
accounts payable functions to elevate overall financial situational awareness.
Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: Basware.
Dana Gardner: Welcome to the next edition of the BriefingsDirect podcast series. I’m Dana
Gardner, Principal Analyst at Interarbor Solutions, your host and moderator.
Today’s discussion focuses on how optimizing and automating accounts payable (AP) functions
gives businesses the insights and levers to better transform. We’ll examine how improved
control and management over cash flow, payables, and related fiduciary functions elevate
overall financial situational awareness.
Stay with us now as we explore how adoption of intelligent automation joins the expected
consolidation and convergence of financial operations and applications in the office of the Chief
Financial Officer (CFO).
Soon, we may well see more shifts in the required skills and streamlined organization within
financial operations at companies. So, leaders need to prepare now.
Here to share his insights as a business operations
efficiency veteran and expert is our guest. Please join
me now in welcoming Jason Kurtz, Chief Executive
Officer (CEO) at Basware. Welcome, Jason.
Jason Kurtz: Glad to be here. Thanks for having me.
Gardner: Jason, before we begin, let’s put some
context around our discussion. What are some of the
major trends shaping the need for better accounts
payable automation, and why is there an imperative to
Kurtz

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add intelligence and automation to overall back-office business operations?
Global change: Taking it all into account
Kurtz: The imperative is we’re dealing in truly unchartered waters here for a lot of CFOs. If you
think about what’s going on in our world, if you think about the macro-environment, we have
potential recessions in some areas of the world. We have higher inflation rates, higher interest
rates, and all that affects us in our businesses in various ways. If you think about supply chains,
for example, we still -- believe it or not -- haven’t fully recovered from supply-chain disruptions
from the pandemic.
These trends impact CFOs, and what’s going on in our world. We still have people working in
hybrid or remote environments. We still have companies that can’t fill the jobs they have open,
including in AP. Then we also have countries such as France, Germany, Poland, and Spain that
are adding regulatory requirements for how you should send and receive an invoice. Countries
like Mexico and Brazil are changing their regulations on a regular basis.
Never before have we seen so many things impacting CFOs at the same time. You think about
people like me, I’m in my mid-50s, I’ve never worked in an environment where there’s a
recession plus high interest rates, plus inflation. You throw that in, and we’ve never seen this
before. For many of us in these roles, it’s a unique time in history -- and in our careers -- that
we’re dealing with so many challenges at once.
Gardner: Because there’s so much that’s unprecedented happening at once, it’s hard to look at
the historic record and say, “Okay, I know what’s going to happen next.” There’s very little clear
visibility as to what we’re going to be dealing with in terms of our top-line and needed
constraints on spending over the next six to 12 months.
Keep up with global compliance requirements with this interactive map.

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Kurtz: That’s 100 percent right. We are living with uncertainty right now. Few companies have
great data and information to help them navigate such uncertainty. But one of the key
documents, key pieces of information and data, is the invoice. If you can get that right, and
gather great data from your invoices, man, that makes your job as a CFO a lot easier.
Gardner: To get that look at the full record and all of the data, that usually means more
intelligence and automation around vital business processes. So, on the micro-level, what are
the challenges facing businesses to gain more tactical and strategic control over their finance
operations?
Kurtz: There are some really interesting challenges
that you wouldn’t believe are still challenges. For a lot
of businesses, we want to improve profitability in
uncertain times. We want to unlock working capital.
What’s one of the biggest barriers to that? Over 90 percent of companies say they can’t pay an
invoice on time because they don’t have it approved in time.
Because they have bad data, because they haven’t enabled their suppliers, and because
they’re often dealing with scanning and optical character recognition (OCR) documents of poor
quality -- and it takes time to manage difficult exceptions – those are all critical hurdles. So, it’s
important to solve these to unlock lots of hidden value.
Another challenge we talked about; companies don’t have a full staff in AP -- sometimes
people are working remotely. How do you make sure those new people are trained, are more
efficient, and effective? How do you know they’re following the policies and procedures for your
company? How do you quality check the work they’re doing via remote work?
Because you want to do more with newer and fewer employees, you need automation and tools
that can embed your policies and procedures into your workflow and your processes. You can’t
do that in a manual world. So those are just a couple of examples, but this is the reality for a lot
Over 90 percent of companies
say they can’t pay an invoice
on time because they don’t
have it approved in time.
OCR is no longer the answer to processing PDF invoices.

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of the companies we deal with. From an AP perspective, they need improvements because
these really are barriers to their success right now.
Gardner: Jason, both you and I have been in this business long enough to have seen wave
upon wave of new technologies and approaches. And that was great, to use the best-of-breed
solutions as they came online. But it has left many organizations with a scattered and disruptive
mix of apps and silos that come from different eras.
Invoice intervention imperative
Kurtz: Yes, without question. We joke a lot about an earlier era of scanning paper docs using
OCR, right? That’s just one example of what you’re talking about. For a lot of companies,
scanning and OCR checked the box on adopting electronic invoicing. “We’ve done it.” But you
and I know that that’s not really the case, right? You don’t get any good data out of that.
You have to have manual intervention. It slows your processes down. It’s like using a pay
phone, right? Or a fax machine. And no one uses those anymore. But there are still lots of
people who have that as their e-invoicing solution, which is crazy.
And, to your point, lots of companies have
layered different technologies onto their
environment over time. Maybe it was a
procurement solution, or a sourcing solution,
or their enterprise resource planning (ERP)
suites, and they’re trying to figure out, at least
in AP, “How do I make all of that work? My invoices come and originate in different places.”
They ask, “How do I put something on top of that that is modern, usable, and purpose-built for
me in that kind of an environment that’s very fragmented and has lots of different offerings and
capabilities?” They need something that sits on top of that to make it all more efficient and
effective for the AP department. So, again, you hit the nail on the head. There’s a lot of
complexity in the companies that we work with.
Companies have layered different
technologies onto their environment
over time. … a procurement solution,
or a sourcing solution, or their ERP
suites, and they’re trying to figure out
… “How do I make all of that work?”

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Gardner: Part of the good news, as you alluded to earlier, is that the modern invoice has a
beneficial role to play. When you go fully digital, you can layer into that resource lots of
metadata, you can bring added processes to bear, and you can use that asset as a powerful
tool to usher in benefits across other applications, data, and processes. When you do this right,
and you unlock the superpowers with your invoice workflows, how does that set off cascading
benefits?
Invoice data insights reap rewards
Kurtz: One that we haven’t talked about yet, when you get that invoicing data right and you
have good data from across your suppliers, that gives you aggregate insights into what you
bought from whom, how much you paid, and what the commerce trends are. That gives you the
basis for accurate spend analytics.
In the current uncertain macro-economic environment, we’re trying to save money and use that
money to fund growth where we can find it, or put it away in the bank for profitability, then spend
analytics is a great place to start to optimize, right? But you have to have that invoice data first
to fully understand what it is you bought from whom, the pricing, and all the added details. So
that’s one.
Two, the other part of the invoice data goodness, comes from unlocking working capital. Many
companies now discount payment terms so the buyer receives a two percent discount on the
net invoice amount if they pay within 10 days. Otherwise, the full invoice amount is due within
30 days. But, if they can’t pay something in 10 days, they can’t get the benefit.
But imagine if we could unlock literally billions of
dollars in potential early-payment discounts or
working-capital benefits that we could then use to
invest in our growth or direct to areas where our acute
Listen in to learn why data is the key to seamless invoice ingestion and
how to best implement invoice digitalization.
Imagine if we could unlock literally
billions of dollars in potential
early-payment discounts or
working-capital benefits.

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business needs are. But, again, you must have a working invoice with good data, well-
structured and in a timely manner, to be able to handle that management of working capital
optimization. Yet, lots of companies still can’t do that.
I think those are a couple of examples where the modern invoice can unlock a lot of economic
benefits for companies in these uncertain times.
Gardner: It has only gotten more important to best manage cash flow now that we’re up to five
percent or more on overnight interest rates. The imperative to get fast and detailed cash flow
data, and bring that organizational efficiency and agility to bear in real time, is higher than at any
time in at least the last 15 years, right?
Kurtz: That’s 100 percent correct, and so intelligence is more valuable for us as an
organization, and for our large customers. That’s because, in many cases, they have billions of
dollars in spend, so that they can unlock millions – even hundreds of millions -- in working-
capital dollars due to those higher interest rates.
But that intelligence is also important for their suppliers because their cost of capital is going up
as well. In this world, where we still have some limited supply chains, suppliers can’t always
deliver 100 percent of what they did three years ago. They may still be at only 85 or 90 percent.
Who then gets what when and at what terms?
Who gets that 85 or 90 percent instead of the
requested 100 percent? I would hypothesize --
and our customers are telling us this -- those
good payers, the people who pay on time for timely delivery, become the customers of choice. If
there’s a limited supply, they may get more of their fair share. There are a lot of benefits for
doing this well, being able to pay when you and your suppliers want to pay for the right reasons.
Gardner: You’re teeing up some of the changes needed in CFO-required skills. Whereas due
diligence, operational integrity, and process efficiency may have been top of mind when it came
to bringing new people into the office of CFO, now you’re talking about more analytical,
entrepreneurial, and innovative skills. We need a different kind of person in these strategic
thinking and data analysis roles, right?
Those good payers, the people who
pay on time for timely delivery,
become the customers of choice.

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CFO role now encompasses tech, data, analytics
Kurtz: Yes, absolutely. In almost every role in the finance department now, comfort with data
and analytics is becoming more critical. Those are the skills that help with automation and
gaining insight into how you best manage your resources and capital. Those two skill sets --
comfort with technology and proficiency with data and analytics -- are probably two of the most
important.
The other thing we’re seeing is the office of the CFO is broadening its responsibilities, too.
They’re taking on more operational responsibilities and further impacting their organizations. So,
that means being consultative and being good influencers and educators. Those are all part of
the skill sets that a good finance organization has to have right now.
Gardner: There is no closing the door to the back office and then only coming out once a
quarter with an audit or report anymore, right?
Kurtz: That’s right, you can’t do that. You just can’t do that.
Gardner: Let’s put some meat around some of these solutions in practical terms. How are these
AP automation solutions paying off in brass tacks?
Productivity, processing, profits -- all up
Kurtz: We’re seeing incredible benefits. When we see automation in the AP function, you go
from a company on average processing maybe 5,000 to 7,000 invoices per full-time annual
employee equivalent (FTE) to companies processing, 30,000 to even 50,000 invoices a year per
FTE. So, that’s a massive productivity benefit. You see the level of electronic invoices from your
suppliers going from, on-average for most companies at 34 percent to some of Basware’s best-
in-class customers attaining 99 to nearly 100 percent.

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So, again, that plays into the benefits of accessing
great structured data around an invoice. If, for
example, you examine invoice processing time, most
companies average around 11 days for AP functions.
But Basware’s best-in-class AP customers are
looking at hours or minutes, certainly less than a day,
for processing. And that’s part of what you need to
do to unlock the working-capital benefits. And you see companies with 20 to 30 percent of their
invoices being touchless -- meaning you never physically have to manually have an intervention
into an invoice from receipt through payment – are up from formerly around 21 percent. But
again, Basware best-in-class customers are gaining with more than 90 percent being touchless.
These are the kind of metrics and value that AP automation solutions, and in particular
Basware, customers are able to achieve.
Gardner: Can you apply these tactical metrics to also measure improvement in overall business
productivity and financial returns?
Kurtz: Sure. Take a look at a customer of ours like Heineken. They implemented Basware’s AP
automation solution. It streamlined invoice processing, reduced manual efforts, and improved
data accuracy and efficiency. All of that resulted in greater than 40 percent reduction in their
cost to process invoices within their function as a whole. So more than 40 percent reduction in
overall AP team and organization costs by implementing an AP automation solution.
We can be really impactful. The same kind of thing happened at Toyota Industrial, another
customer of ours, where they saw similar benefits from streamlining the invoice processing,
reducing manual work, and getting suppliers to send invoices electronically. They attained better
data, but also significantly reduced cycle times and earned invoice processing time savings.
And that lead to better spend visibility and access for a well more than 50 percent reduction in
the cost of processing within accounts payable as a whole.
Those are some of the benefits. I think the order of magnitudes are really incredible and
transformational. We’re talking about literally millions of savings in hard dollar savings and then
tens of millions of dollars in potentially in working-capital benefits as well.
Companies with 20 to 30
percent of their invoices being
touchless are up from formerly
around 21 percent. But again,
Basware best-in-class
customers are gaining with more
than 90 percent being touchless.

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Gardner: You can’t define productivity much better than that, right?
Kurtz: I like to think so.
Gardner: Okay, we have those direct, hard number AP improvement benefits. But as we
alluded to earlier, there are some burgeoning types of benefits that come from having the data
analytics and capability to innovate on larger strategies for buying, spending, and paying. Let’s
talk a little bit about some of the ancillary benefits that come when you automate, when you go
truly digital, and when you explore innovations around how the business itself operates.
Tech-savvy, budget-aware people thrive
Kurtz: Yes, there are a bunch of benefits. Let’s not underestimate the people benefits, right?
So many of us are working in hybrid working patterns and remote working environments. I think
one of the real benefits is to be able to onboard our people faster and have better productivity
from them that much faster than you can in a non-automated world. So that’s one.
Two, you can attract a higher level of quality of
candidate, particularly -- not to stereotype -- younger
generations who are attracted to the technology that we
need to incorporate into finance functions over time.
They’re attracted to great technology and purpose-built
technology. So, that’s another interesting example of ancillary human capital benefits of
modernizing AP operations.
Another one is clearly the savings visibility, right? And we have customers who are using that
spend data that you get from invoices that we talked about to identify tens of millions of dollars
in savings from having better data associated with invoices.
Toyota, again, is a good example. If you think about the overall finance function, one of the
things they use our AP solution for and can gain from improved invoices data is the capability to
rapidly monitor budgets. By improving their budget awareness, and having better conversations
A higher level of quality of
candidate ... younger
generations who are attracted
to ... great technology and
purpose-built technology.

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sooner in their fiscal quarters, they get a head start on performance metrics to know where they
stand relative to budgets -- and being able to then act swiftly. They tell us that’s one of the really
big benefits.
Again, that fits in with the overall CFO theme of being more consultative, being more of a
business partner. That comes in large part from being able to see data, gain insights, track
trends – all much earlier in the process. You simply can’t do that if it takes you 11 days to
process an invoice, or you retain only 50 percent of the data, or you get garbage for data
because it’s scanned, and then you have to go back and manually figure out what it is.
All of those are some of the ancillary yet impactful benefits that we’re seeing.
Gardner: Given the ongoing tight labor market, it sounds like the role of the finance people can
now better help innovate for other parts of the organization, such as human resources. Better
tracking payments and processes can help exploit a gig economy of contractors or use different
forms of labor while tracking the costs in full.
So, is there an elevation that we should expect to see in terms of the status and impact that the
finance office can have across the business?
CFO evolution: From counter to consultant
Kurtz: Without question that’s the case. Here at Basware, our CFO is becoming more of a
consultant, business partner, and adviser to other functions within the organization. That is a
very common trend and theme we’re seeing as CFOs have broad influence and more
operational span of control. They are changing from being the counter to being the financial
consultant.
Are you tracking the right metrics when it comes to your AP?
See how you stack up to other AP pros.

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These new types of CFOs are bringing the insights from all of that data that we’ve talked about
and helping the whole business operate better and deliver on expectations of profitability,
growth, or whatever it is that that function is focused on.
And then, if we want to be really provocative about where
this leads, you might have AP organizations that become
profit centers. Because of the cost-reduction elements
that they can take out, the working-capital benefits that
they can unlock, and the ability to attract more supply --
all of those things help with investment, innovation, and growth. We might someday be looking
at finance functions that are profit centers instead of cost centers.
Gardner: Interesting! Well, that’s a good segue to the last part of our discussion, which is what
can we expect next? What’s in the future when we exercise true and pervasive AP automation?
When will we be able to further avail ourselves of tools like machine learning (ML), artificial
intelligence (AI), and instill an analytics culture within our businesses? What does your crystal
ball show you coming for the modern accounts payable impact when we do it right?
Kurtz: We’re going to see a world in the not-too-distant future where in 95 percent-plus of the
time, an AP person won’t ever have to touch an invoice. We will have better data from an
invoice. Using AI, we will gain the capability to match and handle nearly all exceptions. We
already have this today, but it’s going to keep getting better and better.
And you’re going to see these AP teams become much less, “How do I manage this
exception? How do I go track down who the buyer was; what happened?” and all of that, to
more of, “Hey, now I can think about what’s the best way to deploy my working capital. How do I
take this data that we’re getting and spot impactful trends in it?”
We might someday be
looking at finance functions
that are profit centers
instead of cost centers.
Transform from manual and ways of working into
the most automated AP process possible.

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As we become more touchless and automated, it’s going to free up value-added time to enable
CFOs to be the business optimization partners, to spot trends, to understand better what’s
happening in the business, and to bring ideas, solutions, and creativity to the rest of the
organization. That will, in turn, fund the innovation that we want, fund the growth that need, and
not just be a cost of doing business that we’ve been in the past.
Gardner: Yes, no better way to get a sign-off on something then when you can tell them it’s
going to pay for itself, right?
Kurtz: That’s right. That’s exactly right.
Gardner: Jason, where can people go to learn more about these trends and solutions? Where
do you look for good analysis and information about these trends, markets, and solutions?
Kurtz: At Basware, we do our best to be educational and share what we see happening in the
industry as well as track industry trends and benchmarks. You can go to Basware.com to see
that or follow us on LinkedIn. We post a lot of content on our LinkedIn page.
I like to read a lot of the industry analyst content that comes out. I think there is some really
good stuff. I know recently I’ve done some good reading on benchmarks from Ardent Partners.
They’d done some really interesting studies. Forrester has interesting studies that I’ve been
reading about as late. So, those are two great examples.
Basware is also a founder and innovator around EESPA, one of the leading associations of
invoice and AP automation providers across Europe. We’re constantly working together to bring
forth ideas and innovation on how to bring more automation to the industry.
And then frankly, Dana, most folks joke about me being a Chief LinkedIn Officer, and I’m a
LinkedIn addict. I think there’s all kinds of great data that I find around LinkedIn and I’m
constantly looking on there and finding interesting articles and information. So, just a few
thoughts on where we can find some interesting insights.

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Gardner: I’m afraid we’ll have to leave it there. You’ve been listening to a sponsored
BriefingsDirect discussion on how optimizing and automating AP functions gives businesses the
insights and levers to better transform.
And we’ve learned how improved control and management over cash flow, payables, and
related functions elevates the overall financial situational awareness and sets the stage for
better shaping the office of the CFO for the future.
So, please join me in thanking our guest, Jason Kurtz, CEO at Basware. Thanks so much,
Jason.
Kurtz: Thank you, Dana.
Gardner: I’m Dana Gardner, principal analyst at Interarbor Solutions, your moderator for this
ongoing series of BriefingsDirect discussions. A big thank you to our sponsor Basware for
supporting these presentations.
And a big thank you as well to you, our audience, for joining. Please pass this on to your
business communities. LinkedIn is an excellent way to do it, as Jason pointed out, and do come
back next time.
Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: Basware.
Transcript of a discussion on why business leaders need to prepare now to optimize and automate
accounts payable functions to elevate overall financial situational awareness. Copyright Interarbor
Solutions, LLC, 2005-2023. All rights reserved.

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