As businesses shift their focus to efficiency, finance teams must find ways to do more with less in AP

By Annick Jain.

Continued economic uncertainty, geopolitical tensions, persistent inflationary trends and high interest rates are impacting everything from supply chains and supplier relationships to the workforce and workplace. As a result, finance leaders find their departments squarely in the spotlight – keeping a closer eye on their balance sheets, taking less risk and focusing more on efficiency and value over growth. In particular, Accounts Payable (AP) became zero as liquidity and cash flow became even more indispensable.

In a recent survey of North American finance leaders by automated payments provider MineralTree, 59% of respondents cited the need to do more with less as their top concern in this economic climate, followed by reducing AP processing costs (49%). improving their cash flow management abilities (43%) and gaining better visibility into their current cash position (42%).

Despite these pressures, finance leaders looking to hire are struggling. Almost half foresee challenges or delays in hiring. Additionally, many AP teams continue to work remotely, at least part of the time. MineralTree’s study found that 68% of AP work environments are hybrid or fully remote now, with this number expected to grow further to 72% in the next year. This makes it even more difficult for staff to collect physical invoices and manually submit them for approvals and authorize and make payments.

AP automation is a key strategy for many finance leaders

In the survey, finance leaders ranked AP automation as their top priority for back office digitization – ahead of accounts receivable (AR), expense management, lean management and forecasting. 52% of AP teams plan to adopt or invest more in automation this year, seeing the opportunity to increase productivity, better manage cash flow and reduce risk, among other benefits.

Although few survey respondents claimed to have automated all of their AP processes, AP automation opt-outs were in the minority. For starters, the most digitized AP task is invoice approval/workflows (71%), followed by invoice data capture and coding (66%), payment execution (58%) and payment authorization ( 58%), by the way. And they report significant benefits as a result:

  • 85% have realized an increase in efficiency.
  • 63% make faster and more timely payments.
  • 58% are able to handle an increasing volume of invoices and payments with the same size team.
  • 24% have reallocated freed-up staff time to other projects.
  • 17% process the same volume of invoices and payments with a smaller team.

In addition to these productivity gains, AP automation also offers real-time dashboards for much-needed cash flow and working capital visibility.

Digital payments also play an important role

Because paper checks take time to prepare and mail, it is difficult for AP teams to know exactly when these payments will clear. Not only does this hinder cash flow planning, but it can also lead to late payments and associated fees. Conversely, digital payments—in the form of wire transfers, ACH or virtual cards—give finance leaders greater predictability of cash flow. AP teams can time their payment withdrawals within 24-48 hours depending on the method used and depending on the funding model supported by their provider, maintain access to their funds until then. Digital payments also make it easier for finance teams to take advantage of early payment discounts.

Both buyers and suppliers surveyed by MineralTree value digital payments. Seventy percent of AP teams surveyed plan to increase digital payments in the coming year. The vast majority of suppliers (79%) also want to receive digital payments. One of the main reasons for this is that a large majority (76%) believe that when shoppers pay digitally, they are more likely to pay on time.

Embrace automation in 2024

If you haven’t started automating yet, now is the time to start. If you’ve already automated some AP processes, extend the benefits by digitizing others. Only 20% of AP teams have fully automated their processes, so there is a lot of room for improvement.

When companies automate AP, they are more likely to accept digital payments, and the synergies they achieve across the entire process from invoice to payment add to the benefits they receive. End-to-end automation increases efficiency so they can do more with less according to 89% of finance leaders. Enables faster and more timely payments, which helps keep sellers happy; provides greater visibility and control for cash flow management; reduce costs and streamline compliance; and protects against fraud.

The past few years have taught businesses and consumers alike to be prepared for the unexpected—whether it’s a pandemic, bank failure, inflation and monetary instability, supply chain challenges, or other surprises. Savvy finance leaders are turning to automation and digital payments to crisis-proof their AP function and gain the insight and agility they need to succeed in any economic environment.

————

Anik Jain is a Senior Product Marketing Manager for MineralTree, a global payments company. In his role, he studies evolving customer, market and industry trends to support MineralTree’s product development and communications efforts in AP and payment automation. He has over 20 years in B2B product marketing and consulting, including key contributions at Pitney Bowes, Verizon and PayStream Advisors.

Leave a Comment

Your email address will not be published. Required fields are marked *