I don’t have to tell you that accounts payable processes are very different than they used to be. AP automation continues to see a rise in popularity due to its significant value add, especially in its efficiency and cost-saving aspects. Not only are businesses open to reaping the benefits AP automation offers, but they recognize that eliminating paper checks has become essential.
While necessary, change can be scary and seem too expensive and too time-consuming to pursue, but that’s just not true. Staying up to date on AP automation trends is the best way to ensure you make educated decisions for your business. Follow along to see the AP automation trends we think payments professionals should watch for in 2022.
Embedded fintech or embedded finance will ramp up:
If you are not already familiar with the term embedded finance, it may be worth it to do your research. This term was originally coined by Matt Harris of Bain Capital a few years back. It’s becoming widely more popular as we continue to advance technology at a breakneck pace.
Embedded finance, which allows for seamless integration of financial services into any platform, is seeing a rise in popularity due to the value it provides to businesses. Providing integration with minimal internal changes is a desirable solution that not many can refuse. With this much flexibility, it will be common to see payments embedded in businesses’ choice of software, making it important for B2B payments/finance to stay innovative and adaptable.
Banks are more open to fintech partnerships than ever before:
Banks and fintechs can’t afford to work at loggerheads any longer, not with businesses demanding less friction in their processes and being unwilling to choose multiple partners when one will do. Whether it’s a reseller partnership, mergers and acquisitions, or other direct forms of cooperation, there will be an ecosystem where banks are stronger if they create holistic offerings alongside fintechs.
Supplier preference and supplier automation matters in B2B payments acceptance:
The industry has often focused on the buyer and automation for buyers. While there will be continued adoption of technology on the buyer side to automate financial operations, there will also be a rise in receivables and supplier automation. It’s necessary to ensure accounts receivable can catch up to the strides made in accounts payable.
Businesses will also offer suppliers the flexibility to accept fee-based payment types. And beyond that, AP & AR convergence will become more common, where businesses can focus on automation and efficiency gains both as a buyer and a supplier, and leverage one solution for automating both AP & AR.
Digital can no longer be ignored:
Covid-19 was the inflection point for corporates to transition from checks to digital payments. Prior to the pandemic, 49% of US companies were paid digitally. Today, that number is around 64%, meaning that only one-third of customers are still relying on paper checks. That number will continue to fall as the cumbersomeness and costs of checks become more evident, and remote work makes them a headache too large to endure.
Fraud is evolving; security and identity management has never been more important:
Perhaps this won’t surprise you, but 49% of businesses have suffered a known fraud attack in the last 12 months, and about one-third of these attacks were successful [1]. The savviest criminals are purchasing toolkits from the dark web and customizing them to defeat the technology built to detect and deter. They are requesting ransomware payments in cryptocurrency that does not have the traditional controls and oversight that are present in other payment types. Stepping up your security to be ready for any fraud threat has never been more important than it will be in 2022.
Business continuity will continue to be a major focus:
Between companies offering hybrid and remote options, as well as the employment turnover generated by the great resignation, business continuity will be vital in 2022. These circumstances will lead to extra pressure on resource planning, potential system weaknesses, and processes that companies have deployed. Automating, streamlining and making everything more efficient to cope with temporary staffing shortages and long-term workplace changes will be critical.
Supply chain crisis:
Disruptions caused by the supply chain crisis have hit companies hard this past year. While preventing these disruptions was nearly impossible, they still caused a strain between customers and vendors. All aspects of these relationships will be under scrutiny, and those who can pay quickly and provide additional data to vendors will be on track to mend relationships.
Cash flow:
With inflation rampant, chief financial officers are hard-pressed to control costs and maximize return on assets deployed. Regarding risks that inflation creates for CFOs, it will be important to focus on investing in your talent, financial performance, and future growth to endure not just short-term challenges but also long-term ones we’ll be talking about at the beginning of next year[SJ1] and well beyond.
Virtual card as a payment type will accelerate:
Wider adoption of straight-through processing is expected to cause a rise in the global value of virtual card transactions. Currently, the virtual card market is valued at $1.9 trillion, and it is expected to reach $6.8 trillion by 2026 [2]. Given that virtual card is perhaps the most secure payment method and one increasingly embraced by suppliers, it’s time to hop aboard the train before it pulls out of the station.
Talent Retention:
With employers under pressure to attract and retain the best talent, those finance organizations and AP and treasury functions, that make the day-to-day tasks simple—automated and digitized—stand to provide more strategic contribution opportunities for their teams.
Everyone seeks excitement in their lives, including their careers, and companies that find a way to challenge employees will pull ahead. Specifically those companies who encourage finance and AP professionals to tap into strategic thinking, will see results that have larger ramifications for the broader business.
No more status quo:
The way things were in the past is staying in the past. Period. The final takeaway I want to leave you with is that it’s time to rethink everything, stop treating digitization like something that’s just for snazzy user interfaces and consumer payments, and embrace true automation and digital processes in every corner of your business. It’s the right way forward not just for accounts payable, but also for your entire business.
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[1] “B2B Payments Research: The Tech That Drives Tomorrow,” Strategic Treasurer, December 2021.
[2] Dumasia, Joy. “Juniper Research: Virtual card transactions to reach $6.8 trillion in 2026,” IBS Intelligence, June 2021.
[SJ1]Are we talking about 2023 here or 2022 (based on when this was written I suppose). We should confirm the intent and edit accordingly.
Related topics
B2B Payments
Posted by
Justin Corum
