Following our series on trends in accounts payable, CPO Rising is going to take a look at predictions for the future of AP. Today’s installment, the second of four, will take a look at why networks will become the critical link to suppliers in the near future.
Supplier enablement has long been a critical issue for enterprises of all sizes; as a result of this challenge, many enterprises are tightly connected to only a small number of their suppliers. This situation is untenable in the current business environment, particularly as globalization increases and supply chains expand to include more and more geographic areas. It is this far-flung nature of commerce that all but requires enterprises to be more aware of their supply chains, in addition to communicating more effectively with each and every supplier within their network.
It is for these reasons that business networks, including payment and supplier networks, have risen in prominence. Networks connect buyers to their suppliers the world over, in addition to simplifying some of the management of the increasingly complex relationships that make up the average enterprise supply chain. In most cases, networks even allow for the full transaction flow of business-to-business (B2B) commerce, which allows for suppliers to submit invoices as well as enterprises to approve those invoices and submit payment.
Over the course of the next few years, Ardent Partners anticipates that business networks— which Ardent defines as web-based platforms that enable interconnected buyers and sellers to trade, communicate, and collaborate with each other—will become the critical link to an enterprise’s suppliers. There are a few reasons for this, such as:
- Greater visibility into the accounts payable process—Business networks connect buyers and suppliers together, allowing them to transact across the network. This means that suppliers are in tune with invoice-processing status and when they may receive payment. This change will eliminate many of the more tactical exchanges with the buyer organization, such as invoice- or payment-status calls.
- More efficient communication with suppliers—Along with greater visibility, buyers and suppliers can more efficiently communicate over a business network. With some networks possessing messaging capability and storage of practically every document related to a transaction, enterprises could have at their fingertips every document related to a particular supplier. This access to information can mean buyers are more informed, and can even “talk” to suppliers more efficiently when needed.
- “The Network Effect”—Business networks, which are primarily cloud-based, offer the possibility of additional modules that extend an existing infrastructure. These potentially third-party applications add to the functionality of the network and create a true “network effect” where each participant gains more value for each additional participant.
The proliferation of business networks is already changing the world of business-to-business commerce. For many enterprises, using networks to connect with suppliers has already altered the way they communicate; in the future, more and more organizations will join business networks in order to facilitate improved communication and visibility into transactions as well as invoicing. This will result in a true “network effect,” and alter B2B commerce even further.
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