While the stock market continues to rise, there’s volatility inside businesses, busy budget planning, tempering forecasts, and finance leaders aren’t having it. According to ISM, Manufacturing PMI contracted in June for a fourth consecutive month. Yet despite the unstable market, leaders want to fortify financials and keep money moving. Like, now.
But even those who undertook modernization efforts during the pandemic are now finding those fixes outdated. Facing an urgent need to keep critical functions current, the modernization of Accounts Payable (AP) is being singled out as the vital next step.
Companies are seeing the opportunity of turning to digital payments solutions to weather current financial storms and to future-proof operations. What many are discovering for the first time is that AP, long consigned to cost center limbo, can be an automated cash flow optimization machine. That bodes well for reducing costs, improving working capital management, and even for revenue generation.
Also, importantly, there’s a growing sense that AP transformation is a central factor in what kind of future companies will have. It sounds a bit harsh, as the hard truth often does. The process doesn’t happen overnight, nor should it be ‘the never-ending upgrade.’ There are ways to accomplish an AP transformation efficiently. Calling in experts may be the best.
Partners play a central part in the quality of any AP modernization project. They need to have the right combination of solutions and services to bring about meaningful results.
Transforming Cost Centers into Profit Generators
The traditional view of AP departments as ‘necessary but costly’ is changing fast.
AP automation solutions are perhaps the main reason, providing new and better tools to not only reduce expenses but to generate revenue when making payments.
By digitizing payment processes, organizations flip the AP script, decreasing hard costs associated with manual operations while improving visibility into cash positions.
"AP automation helps businesses optimize resource constraints, maximize working capital, and improve cash flow," according to Jeff Feuerstein, Senior Vice President of Paymode Product Management and Market Strategy at Bottomline. "You can turn what has traditionally been a constrained area into a profit center by digitizing checks and reducing hard costs.”
This conversion extends beyond simple cost controls. Feuerstein said the evolution of AP automation has progressed significantly, moving from a limited virtual card-only solution to AP taking a comprehensive approach, managing all payment types, and the data requirements behind that.
He added that taking a more integrated approach is now enabling finance teams to redirect resources toward strategic initiatives, rather than to routine transaction processing.
Security – The Bedrock of Digital Transformation
As cyber threats continue to escalate in both frequency and ingenuity, security has become paramount in the AP modernization journey. Organizations are prioritizing partnerships with providers that can implement unique protocols to safeguard business payments.
"Finding partners that use the best technology and multiple layers of security is crucial," Feuerstein said. "The right provider should validate vendors and transactions to ensure security and reduce fraud risks." And that’s just the tip of the iceberg.
Networks are a core capability of automated AP, with major implications for B2B payments. By accessing a network of validated vendors, businesses can substantially mitigate the risk of payment fraud while simultaneously enhancing efficiency.
But rust never sleeps, and neither does fraud. That’s why the most high-performing solutions incorporate continuous fraud monitoring, sanctions screening, and real-time transaction verification to create a comprehensive security framework.
Sustained Success Through Continuous Vendor Enablement
The efficacy of any AP automation initiative hinges on successful vendor participation. Traditional approaches to vendor enrollment often result in shrinking membership and diminished program value over time. Instead, strategies should emphasize ongoing enablement that refreshes the ranks and sees to relationships.
"The industry has transitioned from legacy one-time vendor enrollment processes to continuous enablement and onboarding," Feuerstein said. "Continuously bringing new vendors into digital programs supports businesses with ongoing growth, changes in spend, and maintains business continuity."
A persistent focus on vendor enrollment ensures that the benefits of automation extend throughout the B2B payments ecosystem. By consistently expanding the network of digitally enabled vendors, organizations can maximize the return on their AP automation investments while fostering stronger supplier relationships. Feuerstein said the most successful implementations treat vendor enablement as an constant initiative, not a project milestone.
Getting the Measurements Right
Establishing appropriate performance indicators is essential for evaluating the impact of AP modernization efforts. Organizations should begin by creating baseline measurements of current operations before implementing new solutions.
“Effective AP automation should result in a significant reduction in paper-based payments and an increase in monetization," Feuerstein said, adding that "Creating a baseline to measure current costs and performance against progress can help organizations achieve their goals.”
A measurement framework should track the transition from paper-based to digital payment methods across multiple categories. Feuerstein recommends a multi-payment approach incorporating virtual cards, premium ACH, traditional ACH, and a minimal remaining check volume. While total elimination of paper payments may not be realistic for organizations, substantial cost savings can be achieved by focusing on key metrics and regularly tracking performance.
The timing for implementing these changes couldn't be more opportune. Despite (or perhaps because of) current economic headwinds, organizations that invest in AP modernization position themselves for both immediate operational improvements and long-term strategic advantages.
Additionally, by partnering with experienced providers, businesses can minimize implementation burdens while maximizing financial benefits.
"The best time to start an AP automation project is now," Feuerstein said. "The right partner can reduce the workload for the end customer and help integrate payments into existing systems."
As economic pressures linger, organizations that embrace AP modernization will discover that a former back-office chore can be transformed into a strategic asset. Through thoughtful implementation of digital payment solutions, businesses can simultaneously enhance security, improve cash flow, and create new revenue opportunities, turning financial challenges into catalysts for even greater transformation.