Paving the Way to Automation

“Upper management knows what you do … but they really don’t know what you do.” So says Patrick Kurtz, Client AP Manager for HomeRiver Group. He explains that although executives understand in principle what accounts payable involves, it’s likely that they don’t comprehend the day-to-day challenges of AP. While collecting metrics to present to the C-suite when making a case for automation is a helpful strategy, you must also be able to explain in concrete terms how that will play into process improvement. 

Fear of change is also an important factor. Kurtz discusses how to analytically evaluate automation options to make sure you’re recommending the best solution for your situation. The AP team may also be leery, worried about how it will impact their jobs — or that they may even be unemployed after implementation. 

Listen in on this fascinating discussion between Kurtz and Grace Closta, IOFM’s Content Manager, to discover how to approach automation in a way that makes sense for the organization while gaining buy-in from the key stakeholders, all the way up and down the chain. 

Patrick Kurtz

Patrick has ten years in accounting roles with varying degrees of engagement in AP, AR, and general ledger accounting, but started my career in more customer-focused management roles in retail and food service. I have held various roles in many different industries such as fine jewelry, wholesale textbook sales, higher education management, and public accounting.

Transcription

Grace Chlosta: Welcome to the IOFM podcast. This is a podcast for accounts payable and accounts receivable professionals who want to stay in the know with current AP and AR trends and ideas. We'll be interviewing professionals in this space on a wide variety of subjects, including automation, artificial intelligence, career growth, compliance, leadership, and much more.

00:00:28 

Today, we'll be interviewing Patrick Kurtz, Manager of Client Accounts Payable with HomeRiver Group. Patrick has ten years in accounting roles, with varying degrees of engagement in AP, AR, and general ledger accounting, but started his career in more customer-focused management roles in retail and food service. He's held various roles in many different industries, such as fine jewelry, wholesale textbook sales, higher education management, and public accounting.

00:00:57

He has an MBA with an emphasis in accounting, and is an IOFM-accredited, procure-to-pay manager. His guiding principles are: Just because we've always done it that way doesn't mean we have to continue to do it that way, and working harder does not mean you're working better. His focus area include AP automation and technologies, change management, and cross-functional process improvement. 

Today he'll be interviewed by me, Grace Chlosta, Content Manager at IOFM. I'm responsible for the planning, organization, development, and implementation of all the content for IOFM's digital products and virtual and in-person events. I'm committed to ensuring that IOFM's content stays timely, relevant, and actionable for all financial operations professionals, and I work closely with a team of content developers, industry leaders, and subject matter experts to guarantee this happens. 

00:01:50

All right, hi, Patrick. Thank you so much for joining us today. We're so happy to have you. 

Patrick Kurtz: Thank you very much for inviting me. I'm glad to be here.

00:01:57                     

Grace Chlosta: Awesome. So our conversation today is going to focus a lot on automation, really how to gear up for something like that at your company. So we know that a lot of people are kind of hesitant and almost resistant of change, but also unsure how to talk to upper management about the need for automation and change, so we're really excited to just hear your thoughts and your input on that.

To get us started, your career journey is pretty unique, so could you talk me through your background to where you are today in specializing in AP automation and system implementation? 

Patrick Kurtz: Absolutely. So I started off my career after college actually in retail and food service management. I spent almost ten years doing that. So I saw the people side of it very, very heavily, but wasn't as involved in the back office operations.

In 1999, I went back and got my undergraduate degree in management, and when I got out of college I always had kind of a focus toward accounting, but I wasn't really utilizing that in any way for that first ten years. 

00:03:04 

And then I went to work for a large, Division I university in their Extension program, working in their finance administration office, and really got my hands into the accounts payable, accounts receivable, grants accounting, all of that stuff, and really kind of hardened that desire to really be involved in that process. But it also started me looking at process improvement and how we can take these processes that we're already doing, which were largely manual at the time (back in 2012 or '13). 

We were using a lot of Excel spreadsheets to do manual work, so I started looking at the process improvements from that angle: How can we automate these things with the tools we have going forward? And I've just kind of stayed on that journey as I've moved through my career. 

00:03:50 

Currently, I am the Client Accounts Payable Manager for HomeRiver Group, which is one of the largest property management companies in the U.S. My team handles all of the bills that come in for the clients for whom we manage these properties, so we've got a large, large volume. Obviously, process improvement is a huge thing for us, efficiency. When you're dealing with the large numbers of invoices that we are — 40,000 properties, an average of 5 to 10 invoices/month for each property — it becomes increasingly valuable to have some sort of automation in your pocket, some sort of improvement plan in place. That's kind of where we focus a lot of our energy. 

Grace Chlosta: That's fantastic. You talked a little bit right there about how you kind of encountered manual processes when you first entered the field of AP automation. How did you kind of start approaching the task of streamlining that process, really when faced with a multitude of systems and people-related challenges, too?

00:04:58                     

Patrick Kurtz: When I first started thinking about automation and some of these ways you can automate tasks, we were locked into the systems we were using. There wasn't a lot of true automation we could bring on board, so it was more: How can we tweak the process to automate? It was using little things like Excel macros and things like that. But as I moved forward and into more solid accounts payable roles, I started to see these interactions with ERP systems and accounts payable. There were things we were doing for accounts payable in these ERP systems that weren't really set up for that, and so we started looking, at that point, at: Okay, if the system we had in place that we have to use for the company as a whole doesn't handle this and doesn't make this more efficient, how do we move to that direction?

00:05:47

And in a lot of cases, the answer to that is what we call "bolt-on systems," these third-party AP-specific systems to do the job that we need them to do and then feed that information to the ERP for the company to digest. 

Grace Chlosta: Right, that's great. Really, I think a lot of people struggle with kind of a resistance or a lack of clarity from their upper management or their senior leadership when it comes to automation. How do you approach kind of bridging that gap between technological solutions and manual processes with senior leadership? How do you get them on board to approach automation like this?

Patrick Kurtz: Well, I think the first thing you have to do is you have to make them understand what the reality is you're working with. What I found is that, in a lot of cases, upper management knows what you do, but they don't know what you do. It sounds kind of enigmatic. They know your job, but they don't know the day-to-day details of it. They don't know volumes. They don't know numbers. So I think when you're having these conversations with upper management, the best thing you can do is come equipped with ammunition. Bring those numbers. Bring the process descriptions.

00:07:03 

You're going to be compressed in terms of time and what you have to actual present to them. But if you have that data in your hip pocket to present to them, it's going to make your argument that much stronger when you start talking about what you need, and what you think you can accomplish. 

I think that's one thing that gets overlooked a lot. People, probably more often than not, do show up with those numbers and with that information in their pocket, but the one thing they don't have is: How does this improve what we have currently? This is what the numbers show we're doing right now, but what happens when we put this in place down the road? 

Grace Chlosta: That's so important. Also, kind of talking about fear of change, I feel like a lot of people are afraid of that change. Maybe upper management is. But also people are afraid of making the wrong decisions, and that can kind of be a barrier to automating for many teams. How do you start navigating that fear and kind of facilitating the culture of embracing automation at companies and making sure that decisions are still well-informed and strategic at the same time?

00:08:07                     

Patrick Kurtz: You're right. There's a total fear of change across the board. In terms of management, it takes a little bit different approach than possibly the teams that are going to be dealing with the change. I think for management the big thing is making sure that they feel comfortable with the information you're presenting. When you're going through these processes, you're vetting these different solutions and trying to bring these on board, figuring out the best choice. It really does take almost a collaborative approach of "This is what we're going to gain here, but this is what we're going to lose here," and you kind of have to evaluate every solution against the rest of them to see what's going to be the best fit for what you have.

00:08:50 

Some are going to fit better with Microsoft Dynamics 365. Some will work better with Intacct, those kinds of things. Those are decisions that kind of have to have a team approach to figure out, because not everybody is going to know the capabilities of every system. When you're dealing with multiple systems, it's always good to have a collaborative team from the upper management perspective to really evaluate that and put that together.

That's the biggest thing that I usually try to do first thing. That's usually my first step is to get with management and try to put those kinds of teams together so that we can make sure that we have the business processes mapped out, that we have the requirements really solidly in hand before we really even start talking to vendors. 

Grace Chlosta: That's so important. I feel like, as you're making these decisions, too, sometimes some team members could be hesitant and scared that maybe their positions — it's going to take a lot more of their power and their time in order to deal with these changes. So how do you prepare yourself and your team for the challenges associated with implementing these new systems?

00:09:52                     

Patrick Kurtz: In my experience, the best way to handle this at a team level/supervisory level is to really be transparent with the folks that are going to be affected. I worked with one company recently that we did an AP automation for, and that was the big concern. When you start talking about automation, people start saying, "Okay, well, that means headcount is going to go down. I'm going to lose my job. I'm no longer going to be needed." So you have to, again, come with the data in your hip pocket of: "Okay, this is what you're doing now, but this is what your job is going to look like here," and really be transparent with them, line it out, show them the plan, and just get them to buy into that plan.

Some people aren't. That's the way with change management. Some people, no matter what you put in front of them, are not going to buy into it. But if you come equipped with data, equipped with a plan, and they can see your vision, and you're excited about that vision and it looks good for them, they're going to buy into that. 

00:10:56 

That was kind of what we ended up with at this company. A lot of the folks were really hesitant because they had been doing manual processes for so long that when you start talking about automating and doing anything that takes manual pieces of their process away, they feel like they're losing control. They feel like they're no longer going to be needed, so they start building up this doubt, and you just have to squash that immediately. You have to figure out how to get past that, how to break those walls down, and have them be part of that collaboration. 

Grace Chlosta: Yeah, I think transparency is the biggest key there. That's great advice. What about some success stories? Could you share with me a notable success story, or even a challenging experience, maybe someone was automated with the wrong product for them, or anything you could think that might be a good story to tell the listeners that maybe they could relate to or gain some advice from?

00:11:46                     

Patrick Kurtz: I've actually got one of each.

Grace Chlosta: Perfect! [laughter]

Patrick Kurtz: We had a former company that I used to work for that, again, we were — everything was manual. We were working completely out of the ERP system when I first started. One of the first things I did was go to the CFO and say, "I understand why we do this, and I understand that the information has to be housed here in the ERP, but we really need to figure out a way to try to automate some of these," because what was happening was we were getting invoices in via email. We were getting them in via mail. We had some invoices that were being processed on spreadsheets. All of this, we manually keyed into the ERP system. There was no automation whatsoever.

So you had the lag times. You had error rates. Just all these things that you think about with manual processing that were coming into play. When I finally got him to have that conversation, it took me about two years to really finally get — not necessarily senior leadership but really the whole of the company. It was the CEO and president of the company that we had to really get on board because it was a smaller company. 

00:12:56

It took about two years to really get them to have the conversation. When they did finally sit down at the table — honestly, by that time, I had had plenty of time to prepare, so I had all of the information for them right there, but I had also been talking to the team about it as well, and kind of explained to them what my vision was to start getting that early buy-in. So then, when we started looking at vendors and interviewing and evaluating them against each other and against our current processes and what the system could handle, I didn't have as far to go with the team. 

I had one holdout. We had one person actually leave as part of this because she could not get on board with the process changes. We did have a little bit of attrition, obviously, but ultimately, even the one holdout that we still had, we were finally able to move her to a point where she understood what we were doing. She was actually comfortable with the fact that she wasn't at 110% capacity all the time. 

00:13:59 

I think that's a big part of this conversation, right? People, if they're running at 110% capacity, they start thinking that anything less than 100% means that they're not doing their job. 

Grace Chlosta: Exactly.

Patrick Kurtz: So you have to make sure. You have to get that mindset right. You have to make sure that they understand it. Not everybody is supposed to work at 100% all of the time. It's okay to have a little bit of time here and there to move around and stop and think about things and do extra things that you need to do, like training. You kind of have to combat that, and we did a lot of that. Eventually, we did get her to come around, and she was singing the praises of the system by the time we were done.

Grace Chlosta: That's fantastic.

Patrick Kurtz: She finally got to a point where she understood that she could have that downtime and not feel guilty about it, which was really her big concern. That was pretty successful. To my knowledge, they're still using that system. It has drastically curbed the workload for them. They're no longer having to work overtime for month-end closes because it has simplified things so much.

00:15:03 

As far as I know, they aren't having to work any overtime at all anymore. I consider that a pretty good success for me. 

Grace Chlosta: Absolutely. That's a huge success.

Patrick Kurtz: Now, on the flipside of this, it wasn't a full AP automation, but it was a payment processing automation we did, actually with HomeRiver. We had tried to go with a provider to automate our check printing. We're still printing quite a bit of our vendor payments on check, so we were looking for a way to take that check-printing process kind of out of the physical office so that we could go more remote as a company. We found a third party that could handle it. The process that they gave us was fairly straightforward. It was fairly simple.

00:15:53

I was brought in a little late to the process, and it wasn't as solid when they first started the implementation as it should've been, and kind of set us up for failure to a certain degree. What happened was we got about six months into this, after we went live — so we'd already gone through the full implementation process, user testing and all of that. We got about six months in, and we started finding all of these little problems. We had certain markets where the banking and accounting structure of the setup didn't work for the legal requirements for the market. We had payments that were being mailed to bad addresses because we had had them on ACH in our ERP system, paying them that way previously, and then when we switched to the new payment manager, they were being paid by check because the ACH information wasn't transferred over. 

00:16:48 

There were all of these just little things. After about six to seven months, they really started to add up, and we actually just terminated that contract about a month and a half ago because it wasn't working, and we're currently in the implementation process for a new payment manager. [chuckles] Yeah, it's not exactly a fun thing to go through. It's really tough when you — 

Grace Chlosta:  I'm sure you're not alone.

Patrick Kurtz: It's tough because they always want somebody to blame. It's tough to say, "Hey, we couldn't see this coming because everything wasn't done at the frontend of this."

Grace Chlosta: Sure. So kind of talking about the future, there's a lot that goes on with automation. There's a lot of different layers. We have AI, we have people using paper processes still, trying to automate to something just a little bit different. What do you envision kind of as the future of AP automation and its role within organizations, AI or anything involving those sorts of things?

00:17:54                     

Patrick Kurtz: I know everybody wants to say "AI is the future" because that's the new, sexy buzzword, obviously. Ultimately, in my experience, and in working with some of these vendors, what I'm finding is that there's no one specific type of automation that's going to work for everything. I think, going forward, it's going to be some kind of a meld between RPA (which is repetitive process automation), AI, they're still going to be using OCR (optical character recognition) for invoice reading, but I think that the solution going forward is going to be some kind of a marriage of all of those. I don't think it's going to be one technology or another because there's just no way to apply one single technology to everything that we do.

00:18:50 

I think that if you want to have it be as broad-based as possible and be able to use it for different things, not just accounts payable but accounts receivable, certain types of accounting functions. You want it as flexible as possible, and I think you're only going to get that flexibility if you marry them all together. 

Grace Chlosta: That's a really great point. To kind of close this out, what advice would you offer to professionals kind of aspiring to navigate this intersection between management and dealing with leadership, all within the realm of automation and system implementations?

Patrick Kurtz: Well, first of all, I think that you have to make sure that you're confident about it. Do the homework. Understand the material you're talking about. Understand what it is that you want to accomplish. Don't just address it from "What do we need right now?" But address it in terms of scale, in terms of scaling processes up, in terms of efficiency, and take a really solid look at nine months, a year, two years down the road. Don't be afraid to look at the future and present that as a part of your plan, because I think people get really hesitant and get locked into right now, and they don't look far enough out to be able to sell the benefits of what's going to happen.

00:20:04 

When I did my first automation, I was very conservative. I told them "give me a year and you will see a definite change." We hit that mark in six months. Don't be afraid to look out into the future a little bit and try to forecast what that's going to look like, but you can't do that if you don't really have a handle on what it is you're talking about. 

Grace Chlosta: That's fantastic advice. Thank you so much, Patrick. It's been fantastic to have you today, and we look forward to talking to you again in the future.

Patrick Kurtz: Absolutely. Thank you, guys, very much for having me. I appreciate it.

Grace Chlosta: Thank you so much for listening to the IOFM podcast. Remember to head on over to the Member Forum to discuss today's episode and provide ideas for our next one. And to stay up to date on IOFM's current events, both in-person and virtually, head on over to IOFM.com.