For years, B2B FinTech players have pressed businesses to adopt electronic payments. With adoption rates now rising, accounts payable (AP) departments have improved their positions within the enterprise as strategic functions, with the potential to offer greater insight into company operations.
However, adopting electronic payments is only the beginning. After the checks have been ditched, some AP departments may be left wondering, "What's next?"
In Corcentric and Ardent Partners' latest The State of ePayables 2018 report, Chief Research Officer Andrew Bartolini and Research Director Bob Cohen conclude "the future of AP is now," with accounts payable departments reporting higher use of ePayments, eInvoicing and automated solutions. But even for businesses further along in their digitization efforts, firms must continually reassess their goals and processes, or else they risk stagnating their progress.
"In 2018, AP leaders understand that they must ascent to a path that is paved with transformative, innovative and effective strategies," researchers stated in the report.
Most professionals surveyed agreed accounts payable is either an exceptionally or very valuable function of the enterprise, and most have been able to standardize their AP processes, achieve two- or three-way matching capabilities, and automatically route invoices for approval. The majority reported having already adopted document imaging and scanning processes, and automated data capture tools in the AP function as well.
According to Ardent Partners, 59 percent of B2B payments in 2018 are electronic, suggesting businesses have finally overcome the hurdle of paper checks, which had held out with 50 percent of B2B payments volume in recent years. Businesses, though, are all at different levels in their accounts payable departments, not only in their journeys of digitization, but in their journeys to elevate their AP processes to deliver greater value to the enterprise at large.
Examining the gap between best-in-class AP departments and all others, Ardent Partners found best-in-class firms spend $11.86 less to process a single invoice. Invoice processing is also an average of 7.5 days faster for best-in-class firms. Invoice exception rates, ranked as the highest hurdle for today's accounts payable departments, are less than half for best-in-class departments than for all other firms assessed, with AP leaders experiencing electronic supplier invoice submission rates nearly three times more than others.
Across businesses at all levels of AP enhancement, challenges remain. In addition to a higher percentage of invoice exceptions, companies point to long invoice and payment approval times, too much paper, high invoice processing costs, and a lack of visibility into invoice and payment data as their largest challenges. So, while ePayments adoption has risen, and while a majority of firms surveyed by Ardent Partners have achieved key goals in their AP digitization efforts, many organizations still say it will take several years to achieve further progress.
By the end of the decade, 71 percent of firms expect their AP departments to be collaborating in a functional capacity with other areas of the enterprise, like procurement and treasury management. Most also expect accounts payable to be fully automated by 2020, and for the AP department to support an "innovation-ready" culture.
Other benchmarks of progress will take longer. Nearly half of survey respondents, for instance, don't expect an improved "enterprise experience" in how accounts payable is leveraged operationally until five years from now, while 44 percent said they expect digitally transformed payment processes to take up to five years to transform the enterprise. Even fewer firms expect adoption of cryptocurrency within five years, and only 28 percent predict AP to transform into an intelligence "hub" within the next five years, allowing the function to act as a source of finance, spend and cash insights.
What these predictions make clear is that the future of accounts payable is far from certain, with many paths taken to digitization and beyond.
"The discussion of where accounts payable can go in the months and years ahead is deep and complex," Ardent Partners concluded. "The AP function has many avenues in which to not only enhance its own operations, but also become a true partner in the digitized enterprise of the future."