14 Oct 2016 Don’t beat yourself up over poor P2P – you could be working in an insurance company
Your purchasing processes are inefficient and your AP team struggles to pay on time. Whatever irritates you about your purchase to pay processes, don’t beat yourself up about it because however bad it seems there is always worse.
25 years ago I left a career in the financial services industry and I changed direction completely to focus on a tech career. At that time, the internet was a new and exciting thing and I could see exciting times ahead. I was right. But what motivated me was that I could see opportunities to transform the industry that I knew – opportunities to banish paper, automate processes, do things better. I we did. I took lessons learn from financial services to the world of procurement and joined the wave of pioneers that helped to develop the P2P world we have today with processes supported by ERP systems, e-procurement applications, supplier networks and AP automation. Today, it’s not perfect. Some businesses are better than others. Some procurement teams are great, some are less so. The same can be said of finance departments. But I can tell you, it could be worse – as I learned as a customer of the very industry I left 25 years ago.
I will not go into detail apart from to say that I wanted perform an investment transaction – actually to be more explicit, to cash in an investment. That’s an important point because it involves me taking cash out of a financial institution. Neither will I embarrass the financial institution because I’m confident that they are no worse than others. This was a transaction that took 5 weeks to complete that could have taken 2-3 days. I should emphasise that this did not take 5 weeks because something went wrong. There were no complications or unusual circumstances. Nobody did anything wrong. No-one made a mistake. There was no contractual timescale that required a delay. It just took 5 weeks because that’s how long it took. And why did it take 5 weeks? Because the financial institution was using processes that 19th century administration clerks would have been familiar with. Really, Charles Dickens would have been irked.
A couple of examples of Victorian processes that leading insurance companies employ in the 21st century: Sending paper documentation via 2nd class post? Does the world have “2nd class post” or is it just the UK? It’s snail mail made deliberately to go a bit slower. And how about taking a week to perform an online security check that actually takes seconds and could easily be automated? Furthermore, justifying 5 days by explaining “We had to perform a security check” is like a waiter saying to a customer in a restaurant “Sorry it’s taken 5 days to deliver your meal, we had to cook it”.
It doesn’t matter whether you’re talking about a standard accounts payable function or the paying out department of a bank or an insurance company, making the business case for paying out quicker is difficult. Holding on to cash for longer is always better when viewed from that side of the fence and for financial institutions, a paying out policy that moves from 5 weeks to a few days is going to cost them a great deal. However, maintaining archaic paper based processes that are simply not in keeping with the modern world is stretching things beyond what is reasonable.
As a customer, I feel let down and a little ripped off but more than that I feel embarrassed for the financial institutions and the staff that continue making excuses for this sort of substandard service. They must live in the real world themselves. They must know that we know they drag their feet deliberately. But I also feel a little proud that despite the short comings of many procurement and finance teams, purchase to pay processes in most organisations are a lot better than they might be.
Pete Loughlin can be found on twitter @peteloughlin