FX International Payments
By Megan Doyle
In a survey of nearly 200 accounts payable and finance executives, leaders, and professionals, Ardent Partners took note of the performance and practices of AP departments around the world. Next-level technology, such as invoice processing automation, is beginning to change the AP process for businesses, reducing the time and cost required to process invoices and payments. Yet, despite the benefits of new technology, many AP departments have yet to adopt automation. This article explores the report’s findings and provides an overview of accounts payable technology, both today and in the future.
The role of the AP department is to “tightly-manage” daily financial-related processes, such as invoice and payment processing and fraud prevention. Currently, AP teams are a back end operation, doing most of their work behind the scenes. But that doesn’t mean they don’t play a vital role in day-to-day operations: 52 percent of respondents to the 2018 survey consider AP to be “very” or “exceptionally” valuable to their firm, whereas only one-third of organizations said the same in 2016.
Since AP departments do most of their work in the background, they are often not top of mind for many organizations – especially when it comes to digital transformation. While some businesses have embraced new invoice-processing automation technologies, there is still a large gap between organizations that are looking towards the future and those still working with paper invoices and checks, says the report.
Many AP teams, for example, “have been largely overlooked when it comes to digitization investments,” even though more than 80 percent of organizations say “data and intelligence are an important-to-critical piece of the greater AP function.”2 What’s more, 70 percent of enterprises believe “smarter” systems and technologies are critical to unlocking success for accounts payable processes.3 It’s no surprise, then, that Ardent Partners emphasized that “late adopters of electronic invoicing and automation are paying for their procrastination.”4
Many accounts payable teams continue to encounter inefficient manual daily tasks that are costly, drain energy, and take up time. These tasks include cutting paper checks, making supplier inquiries, dealing with invoice exceptions when discrepancies arise, and any other manual or paper-based process. All of these tasks, according to the report, “erode the potential value of AP by reducing the amount of staff time available for more strategic activities.”5 Additionally, manual tasks leave greater room for potentially costly data entry errors.6 Paper-based processes are slow and often inconsistent, while also unable to supply deeper insight, intelligence, and visibility into payment patterns and corporate spending.
But many of these problems could be addressed with technology such as invoice processing automation, which could enhance efficiency and productivity of daily operations for businesses by allowing invoices to be managed without paper or direct human involvement, as noted in a separate report by Deloitte.7 Yet, despite the benefits, most accounts payable teams still lack the resources necessary to make improvements, or have had issues adopting new technology.8,9
More efficient AP processes, according to the report, can be built on a series of interconnected “smart” systems and innovations. This includes moving toward a paperless accounts payable system that can take advantage of technologies such as robotic process automation (RPA), deep analytics and machine learning, and digital B2B payments, e.g., mobile payments, blockchain, and cross-border.10,11
RPA, for example, allows AP departments to automate a multitude of tasks that are “rife with inefficiencies due to consistent human intervention.”12 These tasks include invoice management, payment processes, workflow approvals, and more. Analytics and machine learning capabilities can generate “real-time intelligence” and “on-demand insights” to promote better, more-informed decisions. Machine learning can use pattern recognition to help detect fraud.13 Digital payments can rapidly increase the speed at which payments are settled.14
These kinds of technologies can greatly reduce labor costs, time-related inefficiencies, and offer more valuable insights for businesses. According to the report, “top performers” in the AP industry are more than 40 percent more likely to use artificial intelligence and electronic B2B payments, and almost twice as likely to utilize blockchain technology compared with their competitors. In addition, nearly half of the top performers in AP have networks in place to connect directly to suppliers, promoting more efficient payments.15
As a result, the top performing 20 percent of companies surveyed – those who are most often leveraging the technology above – are processing invoices at one fifth the cost of their peers. This is because technology enables these businesses to process invoices twice as fast as their peers, have a 2.4 times higher rate of straight-through processing, and deal with half as many invoice exceptions.16
While only some organizations are beginning to take advantage of new accounts payable invoice-processing technologies, several factors can help introduce innovation to more businesses over the next few years. According to the report, the combination of an expected increase in active collaboration between AP teams and other organizational functions, the rise of B2B digital payments, and an expansion of business culture that is more likely to embrace new technologies is apt to push organizations further down the path to full automation and digital transformation.17
Further, over the next five years, Ardent Partners expects accounts payable departments to improve enterprise money management experiences as a whole.18 This is because, as organizations become more interconnected, AP departments can become more involved in the entire enterprise by “producing actionable intelligence across a wide range of corporate arenas, such as supplier management, risk mitigation, spend management, strategic sourcing, financial management, compliance, cash management, and payment management.”19
The report mentions that organizations that have yet to begin leveraging new technology are already paying for inefficiencies in their daily processes. It, therefore, offers several suggestions to help accounts payable departments strategize for success. These strategies include: focusing on developing an agile operation that is not resistant to change; investing in technology and automation now to see results later; and utilizing metrics to understand how AP efficiency and effectiveness can be improved through invoice processing automation systems.20
Even though many organizations are seeing immense success with the introduction of new accounts payable invoice-processing technologies, many AP departments are still struggling to get ahead. As long as businesses are open to digital transformation, the future of the accounts payable department may be brighter than the back-end processing of the past.
Megan Doyle is a business technology writer and researcher based in Wantagh, NY, whose work focuses primarily on financial services technology.
1. The State of ePayables 2018: The Future of AP is Now, Ardent Partners; http://ardentpartners.com/APFutureNOW/ArdentPartners-TheStateofePay2018-FutureAP-FINAL.pdf
6. “Understanding the Biggest Challenges to Your Accounts Payable Process,” ACOM Solutions; https://acom.com/challenges-ap-process/
7. Strategies for Optimizing Your Accounts Payable, Deloitte; https://www2.deloitte.com/content/dam/Deloitte/ca/Documents/finance/ca-en-FA-strategies-for-optimizing-your-accounts-payable.pdf
8. The State of ePayables 2018: The Future of AP is Now, Ardent Partners; http://ardentpartners.com/APFutureNOW/ArdentPartners-TheStateofePay2018-FutureAP-FINAL.pdf
9. “The Transformative Power of Automation in Banking,” McKinsey; https://www.mckinsey.com/industries/financial-services/our-insights/the-transformative-power-of-automation-in-banking#0
10. Strategies for Optimizing Your Accounts Payable, Deloitte; https://www2.deloitte.com/content/dam/Deloitte/ca/Documents/finance/ca-en-FA-strategies-for-optimizing-your-accounts-payable.pdf
11. The State of ePayables 2018: The Future of AP is Now, Ardent Partners; http://ardentpartners.com/APFutureNOW/ArdentPartners-TheStateofePay2018-FutureAP-FINAL.pdf
13. “8 Ways Machine Learning is Improving Companies’ Work Processes,” Harvard Business Review; https://hbr.org/2017/05/8-ways-machine-learning-is-improving-companies-work-processes
14. The State of ePayables 2018: The Future of AP is Now, Ardent Partners; http://ardentpartners.com/APFutureNOW/ArdentPartners-TheStateofePay2018-FutureAP-FINAL.pdf