[Editor’s note: We will soon be taking down the “State of B2B Payments” market report, so do not miss your opportunity to get our latest research on B2B payments. Get the report before it is too late!]
Each year, Ardent Partners conducts a series of market research studies focused on the accounts payable (“AP”) and P2P markets. Our most recent of these looked at the state of business-to-business (“B2B”) payments and captured the key findings in a report called “The State of B2B Payments: Emerging Business Value.” The report captures the perspectives, experience, and performance of more than 200 AP and finance leaders, and also examines the key trends impacting the market; as with all of our state of the market reports, it also includes a series of recommendations. The full report is available for download by clicking here (registration required).
The AP function has gone through many changes in the past 15 years; from a team that focused on the transactional duties of processing invoices and scheduling payments, to one that now can offer immense strategic value to the organization. These are positive changes, and with a business environment that is constantly shifting, are likely to continue happening. In fact, there are likely to be further shifts in AP—and in B2B payments—over the next few years, especially as more and more AP and finance leaders convince executives that implementing electronic payments (“ePayments”) can provide significant value to the enterprise. This article outlines the three top changes expected in the next two years where ePayments can have an impact on the current state of AP.
Expected Change #1: A Reduction in the Amount of Paper
Most prominent among the expected changes over the next 24 months is that the amount of paper involved in the AP process will be reduced significantly, with 88% of enterprises expecting less paper involved in AP. Reducing the amount of paper involved in the AP team’s work is absolutely critical to moving the function to the “next level” of performance. The simple truth is that the preponderance of paper in the AP workflow holds many departments back from adding strategic value to the wider enterprise; the high-touch, manual environment of a mostly paper-based process precludes the AP team from offering greater strategic value. This expected change could take the form of enterprises digitizing more paper invoices and switching to more electronic payment methods, which could signal a change in how AP operates.
Expected Change #2: Fewer Manual Tasks
The second major change expected in the next 24 months is that AP staff will move away from manual tasks (86%). Much like the reduction of paper in the AP process, eliminating manual tasks from the AP team’s workload can do wonders for efficiency. Paper-based manual workflows are woefully inefficient when compared with the ones that electronic methods enable, and inefficient processes cost enterprises more money in the long run. Also, as AP moves away from manual tasks more and more, there is greater opportunity to spend time on strategic activities. An AP team that is not focused so closely on invoice processing, for example, can spend time working with Treasury on developing a flexible supplier payment strategy or analyzing invoice and payment data to present insights to other internal stakeholders. This will have, as its end result, a more valuable AP team than ever before.
Expected Change #3: A Largely Automated AP Process
A largely automated AP process (82%) is the next change expected to spread through the accounts payable department. This expectation ties closely to the previous two; as AP moves away from manual tasks and the amount of paper is reduced, there must be a corresponding increase in the level of automation. Automated AP processes also tend to improve visibility into invoice and payment data, as well as the ability to monitor activity for any sort of fraud. Ironically, ePayment solutions tend to leave a better “paper trail” than paper checks, making AP fraud easier to guard against, which means a largely automated AP process is an even more effective tool for the enterprise to leverage.
The AP team has already experienced a shifting business environment since the early 2000s; the trend toward globalization has altered the modern marketplace, and enterprises now find themselves trying to uncover value in departments that previously served primarily back-office functions. The rate of change is only going to increase over the next few years, but that is a good thing—as part of these shifts, AP will ideally become more strategically important to the enterprise, and reign over a much more efficient payment process than it ever has before. This will, in the long run, be good for the entire enterprise.
Our annual “State of ePayables” research survey is now open. Your responses will help us establish the Best-in-Class metrics that readers can use to benchmark the performance of their AP operations. If you have a few minutes, We encourage you to click here and take it. Thanks in advance!