From Bottleneck to Breakthrough: AP Transformation in 2025

Amid a year of economic upheaval, many companies still find themselves bogged down by manual accounts payable (AP) workflows. Paper invoices, spreadsheets and fragmented approval chains may feel familiar, but they are proving to be liabilities in today’s fast-moving economy. Reducing payment friction is no longer just a way to cut costs: It has become a survival strategy. Delayed payments and recurring errors weaken supplier trust at a time when supply chain resilience is already under strain.

Meanwhile, businesses that embrace embedded, digitized payments delivered as a managed service are unlocking agility, transparency and real-time control over their financial operations. Those leveraging fully managed payment services are turning AP into a new source of revenue through virtual card adoption and rebates. The organizations that act now will emerge stronger, while those that cling to outdated practices risk being left behind.

Manual AP Still Dominates

Late Payments Magnify Volatility

Managed Payment Services Turn AP Into Growth Infrastructure

Safeguarding Continuity Through Modern AP

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Manual AP Still Dominates

Most firms still rely on paper-heavy AP workflows. These manual practices create errors, slow reconciliation and block cash visibility. Even as digitization plans rise, execution continues to lag.

Even in 2025, manual AP holds sway.

Despite years of innovation in financial technology, the vast majority of companies remain tethered to outdated AP processes. Research shows that 68% of businesses still manually key invoices into their systems, with high costs and frequent errors the result. Manual operations drain staff productivity, slow down payments and make it harder to forecast cash flow accurately. Even as 41% of finance teams plan to digitize soon, the gap between intent and execution is striking. In practice, AP departments are juggling fragmented workflows, paper records and limited visibility, leaving them vulnerable to inefficiency and fraud.

88%

of finance leaders face problems in AP operations, with manual entry and fragmented workflows fueling delays and errors.

Manual workflows create errors, delays and cascading costs across finance operations.

According to Modern Treasury’s 2025 report on the state of payment operations, 88% of financial decision-makers say their companies encounter difficulties due to legacy payment processes. Executives describe operations as manual (47%), complicated (35%), slow (27%) and inefficient (26%). Key issues include data quality errors (25%), lengthy reconciliation (24%) and high rates of payment failures (24%). Alarmingly, nearly 40% of companies experience a payment failure rate exceeding 10%, up from less than 30% just one year earlier. In an already shifting landscape, operational unreliability is proving increasingly untenable. Addressing these failures requires not just scalable processing but also artificial intelligence (AI)-powered controls that reduce errors, improve reconciliation and guard against fraud.

Manual processes consume enormous time and resources. Nearly all companies (98%) report at least some manual payment operations, with most conducting up to half their processes manually. On average, businesses lose a full workday per week to payment operations issues. For 30% of firms, this equates to more than eight hours weekly, while 9% lose more than two days per week. Unsurprisingly, 73% of executives say payments take too long, up from 69% the previous year. This “process tax” of inefficiency undermines workforce productivity and deprives organizations of time that could otherwise be spent on analysis, planning and growth initiatives.

Paper workflows create blind spots and fraud risk.

Adding to these costs are the risks of paper-based processes. Basware research shows that manual auditing struggles to keep pace with the transaction volume of large organizations. Without embedded, digitized payments, bottlenecks build around invoice approvals, duplicate payments go unnoticed and fraud risks escalate. Paper workflows and limited reconciliation leave blind spots that create vulnerabilities. Nearly one-quarter of AP teams rank reliance on paper (24%) and insufficient reconciliation (22%) as top challenges. In many cases, these risks go undetected for weeks or months until they inflict significant damage, whether through fraud, strained supplier relationships or regulatory noncompliance. Organizations adopting secure, digitized workflows not only reduce fraud exposure but also build resilience by ensuring suppliers trust the payment rails being used.

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Late Payments Magnify Volatility

Delayed payments are disrupting supply chains, threatening small business viability and potentially jeopardizing entire industries. In a volatile economy, cash flow and business resilience are paramount.

Late payments disrupt supply chains and erode resilience.

50%

of suppliers are paid late. Disruptions ripple across supply chains and raise business risk.

When payments are late, businesses across the supply chain feel the impact. According to Basware’s AP Benchmarking Report, half of suppliers are being paid late, resulting in supply chain disruptions costing $45 million per year. For small to mid-sized businesses (SMBs), the stakes are particularly high: Late payments can mean missed payroll, stalled investments or an inability to meet their own obligations. In today’s climate of uncertainty, the ripple effects of slow payments are magnified. They erode trust, amplify cash flow challenges and weaken resilience just when stability matters most. Reliable, timely payments are no longer just good business practice—they are a lifeline for industries navigating instability.

Modern Treasury data shows that payment timing remains outside many businesses’ control. For example, 60% of companies say checks take more than two days to post, 58% cite delays in international wires, and even same-day automated clearing house (ACH) often posts late (53%). Delays limit visibility into cash positions and complicate reconciliation, directly impairing decision-making. In effect, outdated rails slow not just payments but also the speed of business itself.

Overdue invoices are straining small business survival.

According to recent findings from CreditSafe, 86% of businesses report that up to 30% of their monthly invoiced sales are overdue. Two-thirds wait for up to $70,000 in overdue payments monthly, and 31% say late payments are rising. This unpredictability forces firms to defer wages, vendor payments or investments—a dangerous cycle when margins are thin. For many small firms, even a modest delay can be make-or-break.

As evidence of this sobering reality, a new survey reports that small businesses are losing an average of $40,000 annually due to unpaid invoices, with nearly two-thirds holding receivables 90+ days overdue. For many entrepreneurs, overdue invoices now represent as much as 11% of annual revenue. Similarly, 82% of advertising agencies across the United States report that unpredictable cash flow caused by late payments is throttling growth, delaying hiring and stifling expansion. These stories are not isolated—they reflect systemic inefficiencies across industries. Without reform, payment delays risk becoming the norm, embedding fragility into the economy itself.

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Managed Payment Services Turn AP Into Growth Infrastructure

Embedded B2B payments can transform AP from a cost center into a strategic asset. Fully managed AP payments as a service reduces manual work, accelerates settlement and improves visibility, giving finance leaders more control over cash, risk and supplier relationships.

CFOs are investing in AP as infrastructure for growth and resilience.

In today’s uncertain economy, CFOs are investing in smarter AP infrastructure. Manual processing is being replaced with digital-first payment tools such as virtual cards and faster-payment solutions. The case for embedded payments has never been stronger. Organizations that digitize their payment operations can process invoices up to four times faster, reduce late-payment penalties and gain unprecedented visibility into cash flow. Beyond efficiency, digitized payments enhance accuracy and security, helping companies stay ahead of fraud risks while strengthening supplier relationships.

84%

Reduction in AP task time reported as a result of fully managed, embedded payment services

More than 80% of companies have invested in payment operations recently, with software firms leading adoption. Nearly all decision-makers (99%) view automatic reconciliation as vital. Key investment areas include payments automation (67%), bank connectivity (58%) and enterprise resource planning (ERP) integration (56%).

AI-driven features are emerging as the next frontier, with 11% of firms citing advanced capabilities such as predictive analytics, fraud detection and AI-powered invoice processing as key priorities for investment in 2025. These tools help finance teams anticipate cash needs, prevent duplicate payments and ensure compliance. Companies investing in digital payments paired with AI gain transparency, lower risk and a competitive edge in strategic financial management.

Managed payment services are shifting AP teams from execution to strategy.

Finexio’s fully managed AP payments solution is one example of how embedded AP payments and AI-powered fraud detection can transform finance operations from reactive functions into proactive, strategic assets. Customers report an 84% reduction in AP task time, enabling teams to shift from manual processing to analysis and vendor negotiations. Results include reduced workloads, better fraud detection and stronger supplier relationships. Combined with AI-powered supplier targeting that is capable of predicting adoption with greater than 90% accuracy, firms are achieving extraordinary results, with 60%+ virtual card acceptance among suppliers invoicing up to $100,000 annually, unlocking new revenue streams through rebates from payments. This transformation is redefining AP from a cost center to a cornerstone of financial resilience.

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Safeguarding Continuity Through Modern AP

Manual AP no longer suffices in 2025’s fast-evolving business landscape. Firms that cling to paper-based workflows risk mounting errors, strained supplier ties and diminished cash clarity. AP must now be as streamlined, secure and resilient as possible to support growth in volatile conditions.

PYMNTS Intelligence offers the following actionable roadmap for companies considering modernization of their AP processes:

Eliminate manual entry and fragmented workflows. Replace paper invoices and email approvals with automated capture and routing to reduce errors and free staff time.

Address payment delays that heighten volatility. Shift from checks and slow rails to faster settlement methods that stabilize cash flow and maintain supplier trust.

Adopt managed AP services. Offload execution, exception handling and supplier outreach to specialists, allowing teams to focus on strategy and analysis.

Leverage AI to expand supplier adoption. Use predictive targeting to increase supplier adoption, reduce fraud risk and strengthen vendor relationships.

Modernizing AP step by step can deliver lower cost, fewer delays and stronger trust. By embracing embedded payments, businesses not only reduce risk but also gain the ability to make finance a driver of growth in 2025 and beyond.

Finance leaders are realizing that automation alone doesn’t solve the AP challenge. What’s needed is embedded B2B payments delivered as a fully managed service—AP payments as a service—to optimize efficiency, monetize supplier adoption and secure every transaction. At Finexio, we’re proud to provide this capability so our partners and their customers can focus on growth, profitability and resilience while we handle the complexity of payments.”

Ernest Rolfson
CEO & Founder, Finexio