Tech Is Turning $1T of Outstanding Bills Into Actionable Assets

Software isn’t just changing the world. It’s also giving CFOs better access to working capital.

In most cases, that means access to their own money in the form of outstanding or unpaid receivables.

This is as modern tech solutions for finance and accounting teams are helping organizations put a dent in the more than one trillion dollars of outstanding B2B receivables that PYMNTS’ research estimates smaller firms are carrying for their larger suppliers.

Working capital is the oxygen that keeps enterprises healthy, especially in economic distress.

Improving the flow of information, funds and relationships between buyers and suppliers is a fast-growing innovation space that savvy chief financial officers are watching closely as businesses enter the New Year.

Streamlining workflows to enable real-time access to funds better is only becoming more critical when waiting days for money transfers to clear can effectively hamstring a company’s operations.

After all, cash is king — and many businesses consider it imperative to get their money right away, particularly with the threat of a recession just around the corner.

Digital Evolution Marches On

The importance of access to capital, particularly those big-ticket receivables and invoices owed by vendors and other B2B partners, is becoming more pronounced as economic headwinds continue to blow and broader marketplace sentiment dampens.

Forward-looking CFOs are making strategic investments in payment and finance systems that will give them more control over their cash flow and working capital, including modernizing their accounts payable (AP) and accounts receivable (AR) processes.

Research in the PYMNTS report, “Payments Technology’s Future,” finds that a majority of surveyed companies are investing in improvements to their procurement functions (53%) and AP systems (54.7%).

Suppose a business runs its AP and AR operations with a traditional approach that requires spreadsheets, manual processes, and legacy workarounds. In that case, it makes it much more difficult to get a transparent, error-free overview of real-time operational needs.

“In every environment, you should always be looking for how do we get rid of that spreadsheet, how do we improve that experience, how do we save money, how do we get paid faster?” Ingo Money’s Drew Edwards told PYMNTS.

Friction and fragmentation have historically plagued document digitization and workflow automation, causing friction for finance teams leveraging 1:1 single-fit solutions siloed in various departments, like tax reporting or credit, with minimal communication between the teams, much less the data sets.

Modern organizations realize that intelligent data collection and activation can help inform high-level operational decision-making and lead to pivotal shifts in an organization’s point of view.

The Evolving Role of the CFO Office

PYMNTS has been closely tracking how transformative approaches to holistic business planning powered by digital tools are evolving the responsibilities of finance teams.

Hazeltree CFO Kevin Held told PYMNTS during a recent conversation, “finance and accounting teams have become much more of a business partner than just the ‘bean counter’ we were before.”

Many CFOs and their teams are increasingly being turned to for proactive cash flow strategies and not just reactive, check-the-box spend management. These teams are, in turn, leaning on next-generation innovative tools that help manage overhead and improve collections by consolidating account systems and streamlining billing processes.

As PYMNTS reported, automated AP/AR systems that replace or assist legacy operational functions can help CFOs optimize cash flow more easily by allowing for greater, more accurate visibility and help solve scalability issues.

Separately, 94% of CFOs indicate they plan on prioritizing digital payment tools to maximize efficiency within their organizations.

Artificial intelligence (AI) and machine learning enterprise software tools are helping finance leaders establish a competitive moat of effective cash management for their organizations by uncovering key opportunity areas and increasing transparency over previously siloed departmental spend ledgers.

The most competitive companies and their finance leaders are increasingly focusing on a strategic, digitally-driven modernization of their operations — with many telling PYMNTS that providing value through cutting-edge analytics is a key priority for the New Year.

Those companies, particularly small and medium-sized businesses operating in traditional industries, who haven’t yet integrated or embraced these data-driven solutions for their B2B payment management will soon find themselves at a crossroads as their competitors leverage new tech to solidify their advantage within the marketplace.

“Companies in every industry need to assume that a software revolution is coming,” wrote Marc Andreessen in his oft-quoted 2011 op-ed, Why Software Is Eating the World. The revolution came, but the transformation is just beginning.

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