Automate This Episode #07: AP during the COVID-19 crisis
Automate This #07: AP during the COVID-19 crisis – Why digital transformation matters now more than ever
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Ryan Nelson, Chief Executive Officer at Goby, and Helee Lev, Chief Revenue Office at Goby, welcome guest speaker Jess Scheer from IOFM as they find themselves broadcasting from home in their “day jammies” (as opposed to their “night jammies”) amidst what has become an expansive global crisis. Though the effects of COVID-19 are certainly ubiquitous, the trio focuses on discussing the specific impacts of these uncertain times on accounts payable departments and processes, and explain why digital transformation matters now more than ever before.
Read the podcast transcript:
HELEE: Hello and welcome to Automate This; the podcast for conversations about accounts payable and beyond. We find ourselves today broadcasting from home in our day jammies, to be specific, versus our night jammies amidst what has become an expansive global crisis. Though its effects are ubiquitous certainly, today we will focus specifically on the impact on accounts payable and why the transformation to digital platform and AP automation matters now more than ever. I’m Helee Lev, Chief Revenue Officer of Goby.
RYAN: And I’m Ryan Nelson, Chief Executive Officer of Goby, and today we are proud to have a guest. I believe it’s the first guest we’ve ever had when both Helee and I were here anyway. So Jess I will let you introduce yourself.
JESS: Hi everybody. I’m Jess Scheer. I’m the Executive Editor at IOFM. The Institute of Finance and Management is the largest education and training organization for accounts payable professionals.
RYAN: Thank you, Jess. I’m so happy to have you today. We really appreciate what you’ll be able to bring to this conversation which is what we’re going to do. We’re going to have a conversation in knowing that the backdrop is Coronavirus or Covid-19. So you know we talk about it a lot. I’m sure everyone hears about it a lot as far as their day-to-day. It is the backdrop although we will get into some other things. Let’s quickly, first personally, Jess, how are you? How is everyone, your loved ones? How are you in general?
JESS: We’re doing okay. I’ve been working from home for the last twenty years and my wife has home-schooled our five kids for much of the last ten years. So this is just a normal time in the midst of craziness outside of our house. But so far, everybody’s healthy and that’s all we can ask for.
HELEE: Jess, you might be able to offer some pearls of wisdom as to this is your normal; what everybody is calling kind of their chaos. Maybe we should change the topic of the podcast and you should just tell us how to survive home-schooling and working from home.
JESS: It definitely involves pjs so you’re on the right track.
RYAN: Does that imply, Helee, that it’s stressful for you? Or how are you?
HELEE: Yeah, you know I’m living the dream. Two toddlers, one husband, everyone working
from home, happy household, no problems, could go one forever in fact; all of the above.
RYAN: Okay. I sense a touch of sarcasm there, but we’ll let that go. For me as well, I’m doing fine. There’s certainly people worse off. There’s no one super close to me that I know that has any particular issues or has the virus so I’m okay.
Here’s how I thought we would kind of start this if you remember back in October of 2011 shortly after 9/11. I thought it was very interesting on Saturday Night Live, one of my favorite shows, Paul Simon came on and he played “The Boxer”. And then Lorne Michaels, the head of Saturday Night Live, he was asking the question which was interesting because the whole country was in a situation where we all you know came together and had this strong emotion. And so it was like, “Well, can we even have this television show?” and Lorne Michaels says to Giuliani, Mayor Giuliani, which is kind of interesting now that he’s relevant, if you will, again. But Lorne Michaels says, “Can we be funny?” and Giuliani says, “Why start now?” So that was the opening joke yeah back to Saturday Night Live saying that they’re not funny. And then he went to say it is okay to laugh and we’re going to be doing some crying.
So I thought that whole concept, not to make too much of a connection to another terrible event, but I think the discussion is, “Can we do business? Can we advance projects? Should we start on things or make investments? Or can we do transformation?” I know you’re a big transformation expert in component, Jess. Is now the time? And maybe I’ll talk back to you first of all. Is it okay to start that stuff now?
JESS: I think you have to. I think the reality is from an AP perspective, there are bills to pay. And manual processes, paper invoices just is not practical or safe so here’s where my heart goes out. I’ve been talking to folks who were unprepared in many ways because they were vast majority if not 100% of their invoices were paper, they have manual processes, logistically, technologically unable to work from home and then they’re at a point where they have to. And they’re getting by, but just barely, right? They’re sending someone into the office to go into the mailroom to try to find whatever mail looks like invoices because unfortunately the mail clerks are not deemed to be essential employees so the mail isn’t sorted.
You’re going through mounds and mounds of envelopes being touched at a time when you shouldn’t, leaving your home when you both shouldn’t; in some states, legally can’t. Then because you don’t want to then distribute those and risk the safety of the rest of your team, you bring them all into your own home. You scan them or key them all in and them come up with manual work arounds. That’s on the front-end. The back-end is even just as crazy, right? If you’re still dependent on paper checks, and for small or mid-size organizations, somewhere between a third to half of all payments are still made through paper checks. It would be a fraud nightmare to bring a check printer home with somebody so that’s going to be done in the office.
So again, you’re leaving your home, you’re going into places, you’re risking your health and safety, you’re printing those, you’re grabbing as many of those as you think you’ll need. Then you’re driving to whoever has signatory authority. You’re waiting on their front porch for them to sign weeks and weeks of checks because you don’t want to do this often. And then hope you can find a post office that’s open and stand in line six feet from the person in front of you to drop off the hundreds of thousands of dollars, if not more, of checks. Only to do that all over again.
That is just not a long-term way to sustain a basic process like accounts payable or procure to pay. There’s got to be a better way. And if organizations that have been postponing their move to automate you know I think one of the things we’re seeing is that automating AP isn’t a nice to have, it’s not simply an opportunity to drive a greater efficiency and the kinds of conversations we’ve all been having for years, but now I think it’s just the cost of doing business. And so what we’re starting to see is projects that were postponed are getting greenlighted. Organizations that were going to roll it out to one business unit are now rolling it out enterprise-wide. And organizations that were on the fence are trying to desperately figure out how to catch up.
And so it’s a difficult time, right? Change is hard on many levels and we’re all dealing with rounds and rounds of change from where we do work to how we do work to how we deal with crises, both financial and personal, and health-wise. But you know this is just one of those times where the crisis has exacerbated the challenges of manual paper processes.
RYAN: Yeah. You paint a rough picture there. I was trying to put it together in my head if you weren’t automated, the steps you’d have to go through. So you painted that pretty clearly and it’s interesting. We had all of those, a lot of those pros and cons and the challenges that you can get around with automation or the things that you can improve with automation that make sense in normal circumstances. Well, this really becomes a stress test. And you know those legacy processes are failing that stress test or are creating a lot of stress if you will.
And I imagine you know to actually hear you explain and I’m sure as part of the IOFM, you’ve heard a lot of the stories and are on the tip of that. That people are actually doing all those things and waiting in line and piling up the checks and not getting the mail sorted by the people that are good at sorting it. Yeah, that’s a lot of sorting. And then are you implying, do you believe then that somebody who was automated or was running let’s say cutting edge or close to cutting edge AP process, they have to be affected somehow also or not at all?
JESS: It’s much more seamless, right? So organizations that already had technology in place that allowed folks to work from home you know in some cases, they had policies that allowed people to work from home you know once a week or as needed. Now, the change is well now we’re all going to work from home simultaneously, but they had all sort of tested it. They all knew their VPNs work, they all knew they had Wi-Fi that was strong enough, they had all worked through those basic kinks in the system and it worked. And so there’s challenges and those of us with children know there’s additional challenges of trying to work and balance children especially younger children. But at least from a technological side, they can make it work. They’ve got new opportunities that they couldn’t have imagined a month ago.
So let me give you an aspirational story for a second. We got a question from one of our members saying, “Look, early pay discounts typically were 2%. Well, my company is highly automated. We can still pay invoices in two days if need be and we’re blessed enough to be sitting on a pile of cash.” Strategically when there’s an opportunity, what’s the new 2% for early pay discounts? Can procurement start asking for 5% early pay discounts or more, right? Because vendors, especially in some industries, are desperate to get paid and it’s well worth it for them to offer a discount of and it’s anecdotal to say 5%, but far more than 2% to be able to pay early. Now, that’s aspirational and fantasy for those folks that only get access to their invoices a couple times a month and it’s taking them every bit of 30 days and then some. And they’re spending most of their time apologizing…
JESS: To vendors for their issues. But for those that had previously made the investment or for those that just need one more bullet to justify to their executives as to why automating AP makes sense, it’s not just all the reasons we’ve talked about. And it’s not just that AP can become a profit center instead of a cost center, but it can derive now significant profitability. I mean typically the old rule of thumb was for every billion dollars you spend, there was a couple hundred million dollars, there was a couple million dollars, three or five million in early pay discounts. If 2% is now 5% then that three to five million might be closer to six to ten million for every billion in PO spent. I mean it’s significant and it’s certainly more than, by orders of magnitude, more than the combined salaries of the AP team. And so I think it’s easier and easier to both make and justify the business case. But I think for many organizations, it’s not an alternative. It is just the cost of doing business. It’s like asking if you know employees really need computers. Does everybody need their own telephone at their desk?
RYAN: Right, right. Absolutely.
JESS: It’s just kind of…
HELEE: Because we get…
JESS: Where we are.
HELEE: Yeah. I was going to mention you know to the point that someone made earlier about stress testing and just how ready you were for a disaster like this to happen. We’ve talked to people across the board, people that were able to flip the switch overnight. They already had the infrastructure and the culture in place to support working from home and it was just a matter of making that judgment call and I’m proud to say we at Goby were one of those companies. And it’s fairly you know didn’t impact the way that we do business. And then I talked to other folks who literally, like you said, don’t even have laptop computers. Perhaps their office has desktops. The first thing they need to figure out what to do is get everyone a laptop. Oh and by the way, laptops are backordered because you’re not the only ones that didn’t have laptops who weren’t prepared.
HELEE: So people are struggling you know with all those kinds of things depending on where they’re at and how ready their business was. And then the other ironic thing is like so now you know even if pushes come to shove when people are realizing that they need automation, they can’t be endangering the lives of their people to run to the office to pick up checks and that that’s kind of a bad process. They want it, they’re ready for it, but then they have a hard time biting off you know the spend for it.
So they’re saying well I want AP automation, I need it obviously, but we don’t have budget, all projects are on hold, these are tough times. Then you kind of find yourself in the situation where you want to help them understand that there is an ROI there and they understand that in the long term. Everyone knows that there’s an ROI, that automation makes sense, that there’s no way that the process, Jess, that you walked through earlier is the most efficient way or the way that anyone should be doing business. However, it’s still just you have to be able to stomach you know biting that off or paying for it. And that’s something we’re trying to work through with folks is how do we get you that automation you need, how do we get your business quickly up to speed if it wasn’t ready before, but then make it a little bit less painful for you to bite that off during what might be the toughest time your business has ever seen.
JESS: Yeah. I think there’s a couple different pieces to that conversation. I mean is the CFO or the VP of Finance, the decision maker ready to make that decision? Separate from there, there’s also the conversation about is the AP team ready and are the processes ready? Because what you don’t want to do is simply automate a bad process, right? That just makes bad worst faster, but they need to in a hurry, right? If there was ever a burning platform that forces change, this is it. And I think you know if the question is change management and changing your processes and learning how to do something new versus risking your safety or one of your colleague’s safety, I think it’s a no-brainer. And so…
JESS: The cost isn’t just the cost of a system versus the cost efficiencies. The cost is health.
HELEE: So I liked too you said the word “change.” You reminded me of something a colleague of mine used to say, “If you dislike change, you’ll hate being irrelevant.” And it’s kind of you know telling in these times, right? Like no one likes it, okay? It’s tough, it’s different, everything’s upside down, but you know what? You’ve got to roll with it, you’ve got to go with it, you’ve got to embrace the change, you’ve got to figure out a way to keep business going or that’s exactly what you’re going to become. The train’s going to leaving the station and you’re going to be at the station.
RYAN: Yeah. You know at some point, not to be too frank about it, but at some point, how long will we be having this conversation about the value of digitizing business as a digital strategy of some sort? I mean our concept at Goby is “Rethink what AP can be” and we always want to be talking about what it can be and what’s next. And you know then you get to what’s next and then we want to talk about what’s next and the industry will grow and mature. And then I guess I’ll read this note here from an Accenture article that the Coronavirus crisis is nothing if not a selling point for a so-called cloud burst strategy which is another aspect of digital business. Cloud burst companies look to adapt SAS and infrastructure as a service before considering on-premise solutions.
And to me that’s just like we keep saying you must have some sort of digital strategy, you must be open to cloud technology at this stage. I would think especially the small, medium business you just need to be talking about it and starting to be open about it or open to it. And not to toot our own horn, I think you touched on it Helee, but we saw almost, and I’m saying this to friends and colleagues in the other small businesses, zero disruption. I mean we’re managing the fact that people aren’t socially connecting as much and we have a company culture and all of that, but we knew how to work remotely. Our supply chain, not only do we know how to deliver our service, you know we know how to work. We have work computers and we have UCaaS, Unified Communications as a Service.
We have all this stuff, but our supply chain for delivering to our customers is all cloud-based. Every component of our business is cloud-based and maybe you know five, six, seven, eight years ago, you may have thought there were some risks in that. I don’t even know today what those might be, but in a situation like this, it proves to be effective for our customers you know and our staff. So I am pretty proud of that actually.
HELEE: Yeah and you think back to the lady who she was talking automation, we were down a path of automation, we were actually on the one year outline talking about implementing automation. All of a sudden this happened and she got slammed and you’re back into half my staff have no laptops. I mean that’s a real example and now can’t focus on anything current because she has to go solve that problem because you know they didn’t keep up with the time.
RYAN: So let’s just talk for a minute. We’ve just got a few more minutes here. Let’s just talk for a minute about this question here. Do you think it is a tricky time to make decisions about implementing new tools? You touched on cash management, Jess, and the value that we know AP can bring to treasury and procurement and cash management and that’s awesome because that’s important for a lot of companies right now. But let’s talk about literally making a decision right now. To me, you say something like, “Well, you know we’re getting ready to do something. Let’s put it off a week when we can get back together.” Well, a week is no longer a week. It’s who knows how long. So at what point are we saying I’m no longer delaying the things that I’m thinking about or starting and I’m just accepting that this is my environment that I live in and I need to move projects along. What do you guys know about people? Helee, you see people as the Chief Revenue Officer delaying things and I’m not saying it’s a terrible idea. They have their reasons. What might other reasons be that people would put projects on pause right now? Have you heard anything, Jess, and it’s very specifically about hesitations or how to get over hesitations?
JESS: Well, I’m going to push back on the scenario you raised which is we’re not going to make a decision until we can all get together. As a leader, if you can’t make a decision until you’re all physically in the same room, it’s a communication issue. It’s a leadership issue, right? It is not a business decision issue because there’s nothing that space prevents you from talking through. In a day and age where we have Zoom and WebEx and any number of ways of seeing each other, if that’s the piece, you know you want to be able to make eye contact and sort of gauge the leadership team’s views on something, you have that.
I think the only justification is if your industry is so vulnerable that you’re not sure you’re going to still be in business in two weeks then why make the investment. If you’re you know and I’m just thinking about industries that are especially hard hit, if you’re a restaurant chain, how long can you go without customers? And yes it is horribly inefficient, but maybe in those circumstances you can say well we may be filing for bankruptcy in a couple weeks and this is not the right decision. But with a couple isolated examples like that, I think for the vast majority of organizations, for any B-to-B business, for any logistics company, financial services company, business services company, transportation company, manufacturing company, there’s a need. It has been there for a while and you’re sort of running out of excuses.
Now, the other challenge, and Helee I’d be interested in your take on this. If you’ve been dragging your feet on automating AP, it may not be the only function you’ve been dragging your feet on automating. And so what do you prioritize? I would argue basic core functions like AP should be at the top of the list, but are you hearing pushback that there needs to be investment other places first and that this can drag out longer?
HELEE: Yeah. No, I mean I think there’s this notion in a mode of crisis which is hold on to cash, right? Like this is all going down, we’re not going to start new projects, we’re not going to spend any money, hang on to everything, don’t do anything. And I think it’s harder to see the big picture and especially now, right? Because this is so raw, it’s new and we’re still in the first few weeks of this happening. And to your point about restaurants, the perfect example because we have one and it’s an extreme example that we were moving right along, everyone was excited, it was heading in the right direction, the ROI made sense, the business case was there, but then this happened. And to your point, I mean business jumped from a 100% to 0% overnight. So you have to kind of be sensitive to what you’re seeing on the other side. And I believe you know with these relationships, if you’re the kind of company that’s just looking for the quick fail, it’s not a great long-term strategy.
You need to be looking to really empathize with the people on the other end and what their business is going through and how you’re can genuinely be helpful, not just jam in a solution because you want to make your numbers that month, but you want to be a partner to that food chain you know now. What can you do to help them now even if they’re not going to spend a dollar with you for the next six months? So that’s what I like to think about you know as I hear different people and their problems and think about how we can be a collaborative partner through thick and thin.
JESS: I think that’s where Goby and I have a lot in common. At this point, we’re not trying to sell anything, right? One, we’re not a software business, but we’re not trying to sell membership and certification and tickets to our live events, right? We’re doing a lot of things in front of the firewall providing help. We’re just you know. And I think if for nothing else, it’s the right thing to do, right? Let’s help our community, let’s help build and support each other. And I think the companies that have that attitude, those friends in your social network that have that attitude are going to be there for you, with you when we return to whatever normal looks like as opposed to those that are trying to exploit the situation.
So I don’t think you know we’re not talking about forcing solutions onto anybody, but it’s a matter of letting folks know that they don’t have to struggle as much as they are, I think may be the message. And you know one of the things that we’re doing is preparing organizations that were not ready from a process perspective to consider automation; what do they need to have sort of in place. And then I think from your perspective, it’s helping them then take things to the next level of all right we’ve got some ownership in place. We know what we need and that we need to figure out the most efficient way of turning it on. Because you know…
JESS: We’re talking about automation. There’s not a switch. You don’t just plug and play. There’s a lot of…
JESS: The discussion around what is the right solution, right mix of solutions, what’s going to best integrate on the back-end with procurement on the front-end with accounting and how do we make all those pieces work. And so people need a partner now more than ever so I’m glad to hear you say that. I think that…
HELEE: And that’s not to say, I mean there are some companies. So my brother, he works for a marketplace that is medical equipment, right? His business right now is like off the charts. So one of the things we’re also trying to do is figure out which industries are actually you know prospering during this time that might actually still be experiencing that hand over fist growth where they don’t want to grow their AP department, but their business is actually a fit for crises and they need automation you know from that standpoint. And there are some out there. I mean I could tell you a couple of the industries that are taking off. There are some that you would you know assume and others that are just kind of wild, but yeah you know focus on that as well. Helping the people that need it and being there for the people that might need it someday.
RYAN: Yeah. And it’s our job to you know clear hurdles for those who want to do stuff. Yeah, I appreciate what you are both saying. I mean first is about being human and helpful and empathetic of our prospects and our customers and our employees. So you know that actually comes first. Now, being excited and pushing transformation and cutting-edge business processes is just in our nature. I know it’s in yours, Jess, and it’s just you know what we’re always talking about doing, but that does look different for different organizations. Just be thinking about it and start to have a plan.
You guys were talking about some food service and that reminded me it’s time to get to our crowd-pleasing quiz here that we call “Beans or Beer” inspired by the craft revolution, the artisan revolution which this one’s interesting. Those are some of the most impacted right now so I kind of say this in a somber way, but Jess I’m going to name a craft either coffee or beer and all you’ve got to do…
RYAN: Is tell me if this particular place, it’s a real place, you just need to tell me if it’s coffee beans or is it craft brewery. That’s all you’ve got to do.
JESS: All right.
RYAN: All right?
JESS: All right.
RYAN: It is called “Dancing Goat.”
JESS: Oh that is absolutely a coffee place.
RYAN: That is absolutely correct. And how do you know that?
JESS: They have a chain here in Atlanta.
RYAN: Ah, that’s right.
RYAN: I figured we’d give a shout-out to Atlanta. I know very little about Atlanta, but I did a little research. Ponce City Market in the Fourth Ward? Does that sound right?
JESS: It is. And there is a “Dancing Goat” coffee place around the corner from it.
RYAN: Ah, all right. That was a little too easy. Well, good. I think I’m undefeated and Helee’s missed almost every one and you won one. So…
HELEE: Yeah. I was just going to say…
HELEE: I don’t know if you just did that one because I’m like O for five and I like to win stuff so that’s tough for me. So thanks for coming here on your…
HELEE: First podcast Jess and showing me up.
JESS: My pleasure. Does this mean I get invited back now? Or do I get to leave undefeated?
HELEE: Well, you have to answer me this. Riddle me this, okay? Because while you guys were plying that fun game, I was breaking up an epic battle here on the home front between Moana versus The Little Mermaid…
HELEE: And there is a correct answer.
JESS: Oh I mean…
HELEE: So Jess, tell me. Moana or The Little Mermaid?
JESS: Oh I’ve got four girls and I am not a fan of the message of The Little Mermaid.
RYAN: I’m going Moana.
JESS: Yeah. A woman has to…
JESS: Change who she is to please a man? That’s just, that’s not a good image. I’m surprised it was even…
HELEE: Yeah. We’ll save that for next week’s episode, but you’re right. Moana was the best answer in that case.
HELEE: Okay, great. Well, then it sounds like at least the three of us are all in agreement. It is in fact okay to laugh. It’s definitely okay to do business and it might even be okay and suggested to go ahead and start a new project. So with that, thanks again for listening to episode seven. We hope to catch you next time and perhaps even back at your office healthy, happy and past the thick of this crisis that we find ourselves in today. Check us out at handle automate this on your favorite social media channel and thanks again for listening.