Performance Controller

"However beautiful the strategy, you should occasionally look at the results"...WC Print

A few weeks ago John Kogan posted for discussion on Linked-In 10 Best Practices for Accounts Payable.

John with an experienced CFO track record is someone who shares practical tips as part of his business. Especially if you are in business or responsible for any of the CFO functions. I recommend a look at what he has to say.

This got me thinking about how we pay our providers, so I took a look and found we waste a lot of time in process and have poor practices with potential to de-motivate, or even lose, our service providers who we rely on in our delivery capability.

I also found things like taking early discounts, returns great value with little or no effort. And improvements in approval processes can also let us see better where we waste money on things we don’t need.

It is all too easy for an AP processes with poor tracking processes to get it all wrong and pay more than we should or worse, pay twice. For example when there are issues on untracked invoices they can get lost in a too hard basket somewhere And then as people change jobs things go wrong. Gaps in systems and delays also open up opportunity for error and fraud. Vendors too learn very quickly how to walk their invoices thru an organization. So as copy invoices are sought to be processed, in the meantime the original may have also been cleared.

And as emailed PDF versions are now best practice originality checking is even more important.  And remember not everyone is supply chain integrated and has fully automated processes.

Using John Kogan’s example, which have I précised here, I suggest you examine your accounts payable process, as he says are in no particular order. 

1. Always pay from original invoices or double check copies. 

2. Before paying ensure tax info is correct. Fines can hurt

3. Have a policy on how invoice numbers are entered E.g  if there isn’t a number.

4. The person entering should be different from the person approving or signing the check.

5. Have all invoices first logged by accounting before sending out the approval(s) black hole.

6. Don’t batch enter. Do it individually so you have an audit trail.

7. All invoices to have the account coding on them and any notes about special handling.

8. Enter the billed amount then issue credit memo to provide an audit trail.

9. Send a new vendor welcome letter and include where to send invoices, and other info needed etc.  Vendors appreciate this and will ensure their payments aren’t held up.

10.  Watch to take advantage of discounts offered by vendors.  It can add up to a nice sum.

Getting linked with customer based supplier systems sees many providers hook their systems directly into the customer system and send invoices that way too. But for most in business, especially the small ones everywhere and also in some very large ones in Australia and Asia that I know, and where over 60% of global supply comes from, the process is still largely people based process dependant.  Mind you Asia is not backward and is highly wired.

To add to the ebb and flow of the discussion, subscription messages on my in-box set it blinking today with discussion updates and a bunch of great comments. You can see then if you are a member of the SuperCFO group.

It is a great discussion. but as many reading here will not have access, I have précised some of the discussion below along with authors links so you can communicate with them directly. I have also added some of my own responses which you can also challenge or add to what’s there. 

Click more so see these conversations

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In sales situations the quality of the competitive product is not always the issue. Varied solutions options and quality of offerings all too often compete in the same race for the buyer’s prize money.

In this complex marketplace, where snake oil salesmen are always about for the pickings, winning deals requires good fit and positioning, good timing,  and a highly informed understanding of the prospects performance requirements.

But regardless of approach a difficult responsibility of selling is to ensure prospects are fully informed about what they are buying. This is amplified as procurement processes look to fine print to transfer consequential risks to vendors. Even more telling on Vendors promises is linking them to KPI measures to give  Buyers very sharp fangs to strike back fiercely. Then beware any vendor whose product or service promises fall short of buyer’s supply chain expectations.

Vendor lined KPIs aside, due diligence in sales needs high attention for other reasons.

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As we morph more to a demand responsive services economy, products software and process fuse. This makes software ubiquitous and therefore of less Intrinsic value on its own.

As the market itself continues to change and reshape at a great rate this makes investment in ideas quickly redundant as it finds even smarter and more integrated ways to deliver product and services.

This post relates to a web discussion question, “What is the future of Intellectual Property rights in the New Economy?

With delivery and logistics capability now global and supply chains and services unrelenting in their goal to get flatter, the demand is for merged software innovation and knowledge products to be delivered as services.

As this occurs and products mature, brand sensitivity of the respective parts is diminishing with barriers to entry lowered. For example engines for web services are no longer visible and hence have a different value on their own with much more plug and play procurement choices. Open platform integration products and open source software projects to resolve business problems are also changing the value and positioning of intellectual property.

With services moving more into the mass market of business and consumer bases process itself, it cannot be protected by conventions, intellectual property rights patenting or related copy right laws.

And as knowledge products mature and become part of common practices relying on licensing and the law to guard them is less effective and less relevant. To protect its investments in innovation, business leaders, developers and inventors need to look to re-engineering other barriers.

Selling of Knowledge based products is now be seen to be moving akin to the way most omnipresent industry is. For example, the motor vehicle Industry now has shared reproduction, supplying to separately branded product. This in turn is delivered in an end to end service model replacing the “Acquire and Maintain” model. This shift sees much of the end product delivered as a cycle based operating product based on fully serviced rights of use rather than ownership. In large industries such transport and logistics it even goes a step further as these outsource service providers have and continue taking this to the next level.

In the end like market itself, which will continue to change at a great rate, natural mechanisms such as speed to market, process maturing and brand loyalty, comparative advantage and quickly achieving critical mass usage will become the only real mechanisms for protection of ideas.

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Most people believe simple is best practice . But I also believe we often get it wrong when we describe our product and services.

Software vendors by nature to survive must be leaders of best practice, but they often talk in riddles and high fluting assumptive terms about basic processes and activity. I was drawn to an article I read at Technology Evaluation.com by Sherry Fox This is good read about enigmatic terms used by the software vendors.  My contribution here adds my perspective to her opinions.

Like processes I believe simple is best to describe product and services.  A colleague once said to me, “I had looked your  web site and for the life of me, I could not figure out what that you guys do.”

I was thankful for the feedback but that bombshell sent me immediately to have it changed. And it was easy too, we just cut all the crap.

In her article Sherry Fox talks about software vendors who call their product “Solutions”. That drives me crazy too and I sell and recommend their software for them in my consulting practice. They really make their life hard and puts buyers and consultants offside as we  have to sort out for ourselves the confusing product names and acronyms, badly positioned sales mumbo jumbo and filter out the meaningless non-information, to try to see what they really have to offer. Of course it is all part of the game to look impressive while also keeping the competitor confused.

I like Sherry carpenter’s tool example of the hammer, to drive a nail. It is clearly a tool not a solution. In another spectrum to resolve a war conflict a government  can use the army and that is are not a solution either. It is a tool of war or defence. Equally to negotiate for the same end uses a diplomatic tool.

Software is software, no-more no-less, so why not just call it that. Of course we all agree it is not just technology but includes people with skills to set it up and train us how to use it. And to put it into a process requires consulting for implementation and change management, which can add to the effort. But in the end what we finish with is still just a software tool.

A spreadsheet is an office tool and no one calls it a solution. Operational, accounting, work-flow, client, project budgeting, collaboration, presentation, communication asset and human management reporting and so on you can go, they are all software tools to do a job. Analytical, mathematical, scientific, educational, etc in every walk of life and function of business you will find software. As I rattle them off I can see synergy to combine some or all into enterprise level tools that provide structure rules and a place of work for many elements of business and operational process.

Like any invention or idea software is invented and used to solve problems of many origins. But there is no way it can presume to be a solution. It is still just a tool. When enterprise software vendors talk about solutions I think of problems and I turn off. If I have something to do I use a tool to do it. If I have a problem I figure what to do to fix it. Then I use a tool.

Even the end game, the result, may depend on my approach. and the tool, the solution used or for the outcome I want to deliver the benefit I want may vary. (Sorry Ms Jane Ordinary, I still need the business case.)

And I don’t always just have a problem. I many just have something to do like a strategic change or tactical move for an opportunity. For that I plan an approach then we get the tools and resources I need, to get outcome I seek. In the process we look at choices and choose. This could have many solutions as we proceed.

So the real test of what software is shows up when I ask the question. “If I need to get a result would I asked the software company get it for me”. Of course not. I would ask an expert to look at the choices. Then set up a team to go and see if there is a software tool (not a solution) that can fit our culture and we can learn to use it to get what we seek.

What Software Vendors have is one piece of the process. So they confuse me too talking about all of these aspects in the same terms of as a “Solution”.

Like Ms Jane Ordinary I am just your average  Jo C who likes to use the best tools to get the best result. And assembling solutions is just a step in the process to get there.

By the way if my business colleagues, knew I was a Solutions Salesman they may figure I had an important job but would would be unlikely to call me. On the other hand if they knew I sold business performance management software they would know what I had to offer and may suggest it as a choice to their bosses to create a solution for a business problem.

My advice to Software Vendors is drop all the bull. As much as I say this to  my fellow software salesmen I am going to take it my own advice myself too to make it easy on everyone and just call a spade a spade.

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