Categories: B2B Payments

APIs Pull Double-Duty With AP, AR Automation

Solution providers in accounts payable (AP) and accounts receivable (AR) are increasingly servicing not only their corporate customers, but their customers’ own business partners with their technologies.

AP solutions are placing greater emphasis on easing the pain of accepting payments for their users’ suppliers, while AR technologies are looking at how to help their supplier customers support the needs of their own business customers.

But there is another area of convergence for AR and AP. Often times, the company using an AR and AP technology is one in the same. This week’s look at the industry examines the latest initiatives that aim to interconnect AR and AP, sometimes for the same corporate user.

Wells, HSBC Eye APIs’ AR/AP Opportunity

This week, Wells Fargo Executive Vice President of Open APIs Imran Haider spoke with PYMNTS about the opportunities in API integrations for small businesses. The value in API integrations, he said, is for financial institutions like Wells to “bring the bank to” those small businesses that are “increasingly operating in digital environments.”

As more businesses embrace digital ERPs, accounting, AP and AR solutions, they’re tasked with toggling from one portal to another to initiate key functions like payments. API integrations, however, allow for businesses to initiate and complete tasks from directly within those portals.

This can mean major efficiency gains for businesses managing both AP and AR.

“APIs are the mechanism for real-time interactions between different parties,” said Haider.

HSBC is another financial institution that recently deployed APIs for the purpose of streamlining businesses’ AR and AP functions.

The bank announced the rollout of its corporate Treasury APIs, which enable treasurers to initiate, track and complete transactions from directly within their various platforms — rather than having to toggle between those portals and a bank platform.

Among the largest benefits of such integrations, HSBC said in its announcement, is the enhanced visibility — not only for the treasurers initiating the payment, but for the beneficiary, too. Such integration, and subsequent transparency, of corporate payments allows finance professionals to make “dynamic cash management decisions,” HSBC said.

The AP Impact of Late AR

Another way AR and AP converge is in cash flow management, and late payments are a frequent culprit of cash flow bottlenecks for small businesses.

AR solution provider CollBox recently spoke with PYMNTS about this shift, noting that often, late payments in a businesses’ AR operations can turn around and yield delayed payments in AP. In other words, vendors getting paid late can sometimes turn into late payers themselves.

“There’s a lack of education on what to do,” said CollBox Co-Founder and Vice President of Business Development Matt Darner. “At what point in the workflow can I prevent an invoice from going past due in the first place?”

Addressing the pain of receiving late payments — and preventing a company’s own late payments practices — means vendors should closely consider their customers AP operations and needs. That means setting clear expectations from the get-go, establishing payment terms and sticking to them, and deploying a firm-yet-kind approach to collections, said Darner.

A similar challenge was recently highlighted by Biller Genie. In a recent statement announcing the AR solution provider’s geographic expansion, Biller Genie CEO and Founder Thomas Aronica noted, “When customers don’t pay on time and receivables start to mount up, it prevents those busy business owners from investing in growth, paying vendors, or even making payroll.”

Automation Multitasks With AR, AP

Recent research from Invoiced and CFO Dive released this week found that AR and AP see the highest penetration of automation technologies (49 percent and 47 percent, respectively), a finding that could signal businesses’ acknowledgement that the two functions are closely related — and can equally benefit from automation. AR and AP also saw the highest satisfaction level among businesses that have deployed automation technology.

One technology firm tackling both AR and AP with automated tools is Mitchell, which offers players in the automotive industry solutions to manage the claims, quotes and labor estimate process. The company’s RepairCenter solution recently announced an integration with QuickBooks Online to allow its automotive repair customers to support automated AR and AP processes based on integrated data from repair orders and claims.

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The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.

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