B2B Payments

How AP Automation Goes Beyond Cost-Cutting For Businesses Willing To Change

By its very nature, accounts payable (AP) is a cost center: It's where money leaves the enterprise, after all. However, as with so many back-office enterprise functions, AP is now shifting its reputation as one that can add value to businesses. At the highest levels, accounts payable has the opportunity to even add money to businesses, too.

Executives' views of AP remain largely unchanged, though, despite the possibilities, and this mindset presents a catch-22 for AP departments: Since AP isn't viewed as a potential profit center, it's often overlooked for investments in digitization and automation  and because it's overlooked for these investments, AP isn't able to evolve into a profit center.

"What it comes down to is accounts payable being seen as a cost center, and not [approaching] it as a way to contribute to your bottom line," said Zach Fiorelli, senior product manager for information management software provider Hyland, in a recent interview with PYMNTS. "It's about having a strong business case internally."

There's sufficient evidence today, he continued, that AP is a justifiable target for internal investment in automation technology. A report published in September from Corcentric and Ardent Partners, "The State of ePayables 2018," found a rising adoption of electronic payments and eInvoicing in accounts payable departments. Companies with the most digitized AP processes averaged faster invoice payments and processing times, as well as fewer invoice exceptions.

These benefits all stem from the ability to automate, and the key to automation, Fiorelli said, is the ability to collect electronic data. It's a major hurdle for many firms, particularly considering the continued use of paper purchase orders (POs), paper invoices and other physical documentation that demands manual data entry. Automation can save businesses money in a variety of ways, from reducing the time it takes for staff to key-in data to cutting back on the costs of producing paper checks and POs.

Danielle Simer, Hyland's industry solution marketing manager, told PYMNTS that there are other, less obvious ways for automation and digitization to save on costs.

"There are a lot of cost savings from a real estate standpoint," she said. "Just being able to get rid of all the storage needs companies have for paper files, not having to rent space for storage, is a big opportunity for savings that's not insignificant."

However, there are more advanced ways that accounts payable can not only save a business money, but generate revenue, too. Industry experts are beginning to look at how adoption of ePayables and cards can yield benefits like cash-back rewards, but Fiorelli said the biggest opportunity here is in automation's ability to accelerate invoice payments and processing, thereby presenting the chance for businesses to capture early payment discounts.

"I think it can be realistic [to turn AP into a profit center]," he said. "Dynamic discounting is not a new concept, and it's starting to become more prevalent, and that's because of automation solutions. But if you can't even pay your invoices in a time period that's predictable, then there's no way you can take a discount on them."

As executives begin to view accounts payable as a way to actually generate money for their companies and make significant impacts on bottom lines, the industry is also exploring an entirely new field as a result of automation: business intelligence and analytics. Just as the financial impact of AP automation can reach beyond the AP department itself, the data produced in accounts payable can have a greater impact on an organization's ability to analyze key performance indicators, like relationships and spend with strategic suppliers, fraud detection and prevention, and more.

A recent report from cloud ERP company Workday recently found an increasingly important relationship between CFOs and CIOs, signifying the impact that corporate finance and data analytics have on each other. Yet, Workday's survey found that CFOs and CIOs are struggling to adequately communicate and collaborate with each other.

Another barrier to obtaining the benefits of AP data analytics is the ongoing resistance within the enterprise to fully automate accounts payable. Hyland's own research, the "2018 State of Accounts Payable Report" published earlier this year, found a lack of consensus as to exactly what "automation" means in the AP department, with professionals reporting an ongoing deluge of paper documents, manual data entry, processing delays, a lack of user-friendly systems and data errors all making their jobs more difficult.

Considering all the points of friction involved in a lack of AP automation, and the evidence for major benefits of digitization, it's difficult to understand why transformations are not widespread. Hyland is pressing for change, recently announcing that its AP solution OnBase has been certified by Workday for integration. However, according to Fiorelli, the biggest hurdle isn't so much the adoption of technology, but the change in perception.

"Sometimes," he said, "it's just overcoming the barrier of change. AP departments and older organizations are sometimes resistant to change. But when they see their peers and the market adopting solutions in AP, I think that barrier becomes a little easier to get past."



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.