Win-Win Relationships Show AP and AR Automation Is a Must, Not a Maybe

In an uncertain economy, cash-on-hand matters more than ever.

Equally important is visibility over that cash, as well as the ability to look forward and plan smarter.

“Having the back office in order for all companies is really critical for them to focus on what matters most, which is running and growing their business,” RJ Ancona, VP/GM, B2B product, partnerships and client management, merchant services at American Express, said.

“And accounts payable (AP) and accounts receivable (AR) management are increasingly becoming a part of the equation to get that back house in order,”Ancona continued, speaking to PYMNTS in a conversation about recent findings from the latest B2B and Digital Payments Tracker® Series, which was produced by PYMNTS Intelligence in collaboration with American Express.

With the rise of payments automation providers, companies are leveraging AP and AR technology to streamline operations, saving time and effort. The acceleration of these automation efforts has been particularly noteworthy since the onset of the COVID-19 pandemic as more and more enterprises come to embrace the benefits of digital transformation.

“It involves digitization,” Ancona said. “It involves partnering with automation providers to streamline operations, and increasingly, it also involves partnering with your payment providers — both payables and receivables — to better streamline communications and data between buyers and suppliers.”

The transformative impact of technology on back-office functions allows financial professionals to redirect their efforts toward more strategic activities that can give back to the business in better ways.

“The progress that’s being made across a lot of B2B and B2C companies is substantial,” Ancona said, noting that in the U.S., businesses report saving upwards of 500 working hours each year by utilizing payment automation.

Addressing Cash Flow Management Challenges

The adoption of automation not only expedites processes but also significantly improves data accuracy, which is crucial to streamlining friction points that can arise within transactions and relationships between buyers and suppliers.

“What’s been lacking in many existing payments workflows,” Ancona said, “is removing friction in the process … automation is certainly helping and increasing the speed at which those friction points are being removed.”

For both buyers and suppliers, friction points arise in communication and from mismatched technologies between each party, affecting the speed and efficiency of payment processes and transactions.

Key areas such as timely invoicing, accurate pricing and seamless interactions between buyers and suppliers can help contribute to a smoother financial workflow, Ancona noted.

The solution, he said, lies in the adoption of technology that automates these processes, ensuring efficiency without sacrificing accuracy.

Companies are not only accelerating their in-house automation efforts, but forging partnerships with payment providers and key partners in receivables that contribute to a more holistic approach in delivering value to customers.

Strengthening Partnerships for Long-Term Cash Flow Optimization

More automation seems to be producing better results for businesses, PYMNTS Intelligence finds, and underscoring those results are more timely payments.

Timely payments, both outgoing and incoming, are crucial for optimizing AP and AR.

Automation and technology play a pivotal role in expediting invoice delivery to customers and ensuring prompt payment according to agreed terms, explained Ancona, because digital processes not only enhance payment speed but also improve the accuracy of associated data.

Additionally, getting that money both out the door and in the door on time is a keystone to building better business partnerships, as is timely communication between buyers and suppliers in addressing any queries or discrepancies.

“Partnerships start with creating a win-win situation for both parties, and then ultimately having technology and automation help facilitate that win-win,” Ancona said. “That means essentially helping the payables department and the receivables department achieve their objectives. But it also means keeping the customer first in the payment journey.”

One of technology’s best applications is in optimizing payment terms and information flow between buyers and suppliers, with preferences for payment methods considered alongside the financial value generated through payables and receivables processes.

“Partnerships are key to creating value in the long run,” Ancona said.

See more: Late Payments Push 64% of CFOs to Modernize Accounts Receivables

Fraud prevention has emerged as a critical concern for both buyers and suppliers in the digital age, and Ancona outlined how technology and automation contribute to reducing fraud risk across various attack vectors, including digital payments, logins and product distribution.

Automation introduces checks and balances throughout the payment process, ensuring that goods are received, payment terms are accurate and tracking is transparent. The data generated by these processes enables quick responses and adjustments to enhance controls and customer service, mitigating the risk of fraud and chargebacks over time, he explained.

That’s why, as companies continue to embrace these advancements in modern AP and AR solutions, they position themselves to navigate the complexities of modern finance while fostering strong and enduring partnerships in the payment ecosystem.