Today, we look at three important Accounts Payables’ BIG Trends for 2022.
Big Trend #1 – ePayments Continue their Rapid Expansion
The restrictions put in place because of the pandemic have had far-reaching implications for most businesses. For those working in AP, it was not simply a matter of losing facetime and having to contend with delays in gaining invoice and payment approvals; any volume of paper and manual work was exacerbated by an inability to work in the office. Many CFOs, treasurers, and other finance leaders were forced to rethink not only how to manage and execute payments, but also how these transactions can impact their suppliers’ financial well-being. This has led to more enterprises than ever before including payments in the scope of their AP transformation projects. By focusing on modernizing and updating their legacy payment strategies and adopting new technology, this movement is helping AP, finance, and treasury teams optimize their cash management and organizational resiliency while also helping to ensure solvency across their supply chains.
Ardent Partners research over the past twelve years has shown that the use of B2B electronic payments (“ePayments”) is on the rise, and now comprises 60% of all supplier payments. This is the highest percentage Ardent has seen since it started tracking this metric. Paper checks, while still popular, are in slow retreat from ePayment methods such as ACH, payment networks, commercial cards, virtual cards, and wire transfers that can all reduce costs while also improving the level of visibility, control, and accuracy in the vendor payment process.
Be sure to check out Ardent’s latest webinar: It Pays to Pay Well: Optimizing Your Vendor Payment Strategy.
BIG Trend #2 – Cash Remains King
When the COVID-19 pandemic hit, the area that captured the most headlines was the supply chain. Almost two years later, businesses are still managing the fallout from supply disruptions and 19% rank it as the area hardest hit by the pandemic. This means that 81% of businesses have felt the pandemic’s effects more intensely in other areas, including internal operations (25%) and the workforce (17%).
Notably, 35% of all enterprises say that the most significant impact of COVID has been on sales and overall cash positions. Thus, one of every three enterprises is now more focused on cash than almost anything else. When businesses struggle to maintain or grow the top line, they focus on what they can control; this has brought cash management to the forefront and kept it central to executive management over the last two years.
The old adage, “cash is king,” could not be more relevant today. During times of economic stress, businesses that have access to cash can weather major storms, survive challenging times, and use their liquidity to endure, and sometimes even thrive, in a crisis. Having the data-led insights to better understand, and therefore, manage, cash-on-hand, outstanding liabilities, as well as anticipate potential cash shortages or surpluses, can go a long way towards optimizing working capital, ensuring continuity, and aiding the overall viability of the enterprise.
Big Trend #3 – Holistic AP
Over the past decade, Ardent Partners research has consistently shown that transforming an Accounts Payable (AP) department is a worthwhile undertaking that can deliver significant bottom-line value while also elevating AP’s place within the organization. While some AP departments persist in continuing to view, manage and automate the AP Process in distinct stages rather than as pieces of one coherent whole, more are approaching their operations holistically each year.
To maximize the value created from their efforts, AP leaders must pursue a holistic transformation that incorporates people, technology, and a process that extends across the entirety of their department’s operations including invoice receipt, processing, and payment.
For a number of reasons (not the least being the COVID pandemic and the related increase in number of employees working from home), more AP leaders have realized that all receipt, processing, and payments are interrelated and should be thought of holistically from start to finish. This is supported by Ardent research which indicates that a majority of organizations will have automated all facets of the invoice-to-pay process by 2023 and the nearly 65% of businesses that state that within two years they will have automated the complete AP cycle, enabling AP and finance leader to better optimize efficiencies and deliver greater intelligence for enterprise.
