Business payments and AP automation enter the predictive zone

Corporate Payments And Payables

Paul McMeekin

Paul McMeekin

Sep 8, 2022

With a week to go before the release of Bottomline’s B2B Business Payments survey, and the webinar that launches it, the urgency behind AP/AR automation continues its pace. As businesses approach what will be a make-or-break final quarter of the year, the efficiency and accuracy of advancing your operational excellence simply can’t be overlooked. Not if you want to be competitive, anyway.

To get a sense of the potential consequences of the key findings in the report, we quizzed Paymode-X VP of solutions marketing Paul McMeekin, who found some concerns in the preliminary findings.

Q: Paul, one of the things that shows up in the preliminary results from the survey is continued difficulty with cash flow forecasting. Do you have any tips on that for businesses and how can AP and AR help businesses be more predictive?

McMeekin: Actually, I have two parts to my answer here. The first one is the importance of the transition to digital payments. Specifically, the ability of AP/AR automation to time a payment when the cash is available to us is critical. Especially now with the increasing cost of capital, using paper checks has huge disadvantages.

Consider that if a check takes 10 days from send to clear, then may take a while to apply that to my bank account. And every time the Fed increases the interest rates, the cost of capital goes up. So receiving checks isn't just labor intensive. It costs money as it takes longer to receive and apply that cash. And even now, if I have to get short-term working capital to help me with the times I don't have the cash, it will be much more expensive than it was in the past. So that time intensity is more crucial in this environment.

Q: Second point?

McMeekin: It comes down to data. To build predictive models AP and AR teams need data and I’m not talking about the scale of data that can be managed via Excel sheets. Effectively managing liquidity and working capital requires visibility into cash and accounts receivable.

Automation makes that easy; analog processes make it potentially inaccurate. Understanding the dynamics of data is crucial to be successful.

Q: The survey showed the fraud defense is the most important factor in evaluating vendors. Does that worry you?

McMeekin: It does concern me. When our audience gets to dive into the data in the report, they will find that 15% of respondents have seen fraud losses in business payments. There’s a constant barrage of attacks people actually losing money.

It's pushed the fraud urgency quotient very high. We pride ourselves on having a fraud free network. Security is paramount for AP and that means both security for your business and security for your vendors. But it’s just one of many evaluation criteria.

Q: Should businesses have a wider lens when evaluating partners?

McMeekin: Yes. And that’s not to downplay the seriousness of fraud. But I would also say the ability to enroll more rebates on your AP spend is also important. Vendor enrollment without the attitudes of building those good relationships with your vendors is very important. I would also consider having a multiple payment types of support your holistic payment strategy.

For example, standard ACH or virtual ACH should be part of that evaluation. I understand people being concerned about fraud, and we are always looking to prevent fraud, but being a top of mind was surprising to me.

Q: I think readers will also find that larger enterprises are more receptive than last year in regard to new payment technologies. What does that say about development in virtual cards, for example?

McMeekin: Virtual cards are tokenized. And this limits that fraud risk significantly if there is a data breach. They also cost much less than checks, and should definitely be added to the overall mix. And virtual cards also bring me back to rebate generation and working capital optimization. As I said earlier, payment timing is becoming more important by the day. Especially with the Fed getting ready to launch its instant payment rails.

Virtual cards also increase vendor satisfaction. So the vendors get paid faster typically, and the best solution in the market offer a good set of value-added AR tools. Be informed about virtual cards and I have to believe businesses will see their benefits.

Paul McMeekin

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Paul McMeekin

Paul McMeekin, VP solutions marketing and channel sales enablement, has a passion for building high performing teams and disciplined marketing which has been proven to efficiently grow the business. This is achieved through formulating key strategies, precise market positioning, creating unique value props and executing campaigns.

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