Why 40% of Businesses Are Making AP Innovation a Priority

When firms expect their monthly payables to increase and are concerned about how efficiently they can process them, they’re likely to be upgrading or planning to upgrade their payment platforms.

That’s certainly true among “mass-payout companies” that make large numbers of small-dollar-value payments each month — sometimes up to 2,500 invoices.

In a survey of these sorts of firms, 40% of respondents said innovations to their accounts payable (AP) systems are more important than other innovation efforts, according to “High-Volume Accounts Payable,” a PYMNTS and Routable collaboration based on a survey of 204 executives from four industries that deal with a high volume of payments: online marketplaces, the gig economy, virtual events management, and transportation, logistics and shipping.

Get the report: High-Volume Accounts Payable

Another 51% of respondents said AP innovations are more important than few others; tellingly, just 9% said innovation of their AP systems and processes is the least important of their technology investments.

Seeing the Need for Automation 

If reconciliation isn’t automated, executives are typically spending dozens of hours a month on closing the books — and that means a significant drain on time and money, Routable CEO Omri Mor told PYMNTS in an April interview.

Read more: Killing the ‘Double Whammy’ of Closing the Books with AP Automation

Following the money is no easy task. It means tracking funds as they wind their way up and down supply chains, finding out whether a bill was paid, or even submitted in the first place, while viewing dollar amounts in enterprise resource planning (ERP) systems, in accounting software and across records, Mor said.

No wonder B2B payments companies are heeding the clarion call. With the right technology, businesses can optimize workflows and improve integration between payments processes and ERP platforms, PYMNTS research found.

Technological improvements are helping companies cut back on labor-intensive tasks such as manual data entry. This change is helping companies conserve resources when the pace of digitization throughout the economy is accelerating alongside the number of payments businesses make to their vendors and contractors each month.

The companies with the most pronounced concerns about how well they can process payables are also more likely to be upgrading their payments platforms. Those that are making investments in AP automation expect to avoid the trouble of being overwhelmed by increased payables volume. They also expect to reap substantial rewards that will improve their operating performance.

Handling the Growing Volume 

The largest companies included in the survey are especially determined, with 55% of the surveyed companies with more than $250 million in annual revenue saying AP innovation is more important than at least some of their other initiatives. The same was said by 30% of the firms with annual revenue between $10 million and $250 million, and 43% of companies with annual revenue of less than $1 million.

A significant number of executives fear that the rising volume of AP may exceed their ability to handle payments and will prove to be a significant obstacle to long-term growth.

As the survey results show, a growing number of companies recognize that automating their AP platforms can help them meet the challenges this growth presents.

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