Accounts Payable – a case for Process Mining

This article examines the AP process (Accounts Payable), which is all about cash and good business relationships for companies. In addition, the financial data of the processes form the basis for important decisions – both operationally and strategically – and therefore for the entire development of the company. As an invoice travels “right through the company” and passes through a wide variety of processing steps in different IT systems, traditional analyses reach their limits: Although individual data points can be read for key figures and dashboards, they cannot be seen in the context of the entire process and interpreted in a meaningful way. Due to the lack of context, the data is often even interpreted incorrectly. What was missing: sorting, analyzing and making sense of this information.

Information in context instead of static data points

The idea of Process Mining is based on the fact that the entire story of the data is stored in modern IT systems. This makes use of the fact that an object with a unique ID – e.g., an invoice – is populated with time stamps and other additional information as it travels through to payment. This information, which can be read out in log files (event logs), is used by the Process Mining technology to reconstruct a process.

The key to cash flow insight

The potential of this new way of obtaining reliable information about financial processes such as invoice flows should not be ignored by companies. After all, these are the key to gaining insight into payment behavior and financial development. Process Mining also gives companies insight into what is really happening in a company's financial processes – no matter how many IT systems are connected.

Reliable & fast: Detect bottlenecks, patterns and violations

Especially in the AP process, accuracy and reliability are a high priority. After all, if financial data does not provide a true and genuine overview of a company's operations due to process anomalies or hidden process weaknesses, every decision will be based on a distorted reality.

Process Mining visually reconstructs a business process and provides it with key performance indicators. It can uncover automated and ad-hoc issues such as bottlenecks, patterns of rework activity, and dangerous regulatory violations. Process Mining thus provides a reliable basis for optimization measures and financial data-based decisions.

Process Mining also helps to achieve the necessary accuracy of financial reporting required by policies, regulations and audits, and to make timely payments. Inefficiencies in the accounts payable process also impact relationships with suppliers.

What can Process Mining do?

Within the AP process – between the receipt of the invoice and its payment – many problems can occur. Process Mining can solve most of these problems. Furthermore, Process Mining brings transparency to the reality and provides clarity. In concrete terms, Process Mining brings the following improvements:

What are Accounts Payable?

Accounts Payable (AP) refers to a company's liabilities resulting from the purchase of goods and services from suppliers. These liabilities are obligations that the company must settle in the future. On a company's balance sheet, these payables appear under the line item “Accounts Payable”. The efficient management of these payables is crucial to ensure the financial stability and liquidity of the company.

The role of Accounts Payable in the company

Accounts Payable plays a crucial role in a company's financial balance and cash flow. Efficient management of Accounts Payable can help optimize working capital and improve cash flow. Missing or late payments can lead to late interest charges and damage business relationships with suppliers. It is therefore essential that companies carefully monitor and manage their accounts payable to avoid financial disadvantages and maintain stable business relationships.

Challenges and solutions for Accounts Payable

One of the biggest challenges in managing Accounts Payable is the timely payment of invoices. Companies need to ensure that they pay their invoices on time to avoid late payment penalties and maintain their business relationships with suppliers. One solution to this challenge is to implement an efficient invoice management system that allows invoices to be processed and paid automatically. Such systems can help reduce errors, increase efficiency and ensure that all invoices are paid on time.

Process Mining – the solution for Accounts Payable

Process Mining is a discipline of data analysis that makes it possible to make the process data automatically collected in existing IT systems visible and usable via self-service approaches. By applying Process Mining, companies can optimize and automate their Accounts Payable processes to reduce errors and increase efficiency. This technology provides a detailed insight into the actual processes and makes it possible to identify and eliminate bottlenecks and inefficiencies.

Application of Process Mining in Accounts Payable

Process Mining can be applied in Accounts Payable in a number of ways. One example is analyzing invoice data to identify patterns and trends that lead to errors or delays in invoice processing. By identifying these patterns, the company can take action to optimize invoice processing and increase efficiency. Another example is the automation of invoice processing procedures through the implementation of Process Mining tools that enable invoices to be processed and paid automatically. These tools provide a reliable basis for the continuous improvement and adaptation of accounts payable processes.