How Accounts Payable Automation Addresses the 3 Biggest Payment Trends of 2019

Corporate Payments And Payables

Hugh Garber

Hugh Garber

Dec 4, 2018

Discussions about accounts payable automation are abundant and the message is clear: make the switch or be left in the dust. But is the hype really true -- is automation a necessity if your existing processes are working for you?

Well, that depends …. do you want your AP organization to make a positive contribution to bottom line profitability or continue to be viewed simply as a back seat player that’s a cost center?

It seems like a bit of an oversimplification to put it like that, but the reality is, there’s a lot of pressure these days for AP departments to drive greater value, cost savings and efficiencies across business functions. Organizations that embrace automation see significant benefits such as eliminating paper invoices and manual processes, streamlined operational processes and reduced costs.

So what are the trends that driving these changes and shifts in AP responsibilities? Let’s take a look:

Trend #1: The Demand to Become a Profit Center

AP has long been accepted as a cost center, but that expectation is changing. The status quo is no longer acceptable: it’s time for AP to take a proactive role in adding greater organizational value. Accounts payable automation is the key to making that happen. According to studies by IOFM and anecdotal information we’ve seen with clients, by automating your AP department you can:

  • Reduce invoice processing costs by 82% – from $15 to $2.74 per invoice
  • Earn rebates on AP spend
  • Realize an increase in early payment discounts
  • Achieve a 75% reduction in invoice processing time – from 18 days to 4.5 days

I’ve seen numerous examples of the benefits of automation and the impact it can have on generating profit. For instance, one customer earned $270K in cash-back rebates in one year on $82 million in ACH transactions. Another achieved $1.1 million cash-back rebates in one year on $168 million in ACH transactions. These savings represent budgeted funds that can be redirected back into the business to improve cash flow and support key objectives.

Trend #2: The Mandate to Provide Data and Analysis

Efficiency is key in any economic climate. Businesses today need to manage their cash as effectively as possible in order to maximize their assets and have the agility to respond to changing business conditions and market demands. Consequently, more than one third of AP organizations (35%) name reporting and analytics as a top priority, and more than two thirds – (69%) of controllers cite improved financial visibility as their number one AP priority.

Data and analytics can provide organizations with real-time visibility into:

  • Volume, trends and status of purchase orders, invoices and payments
  • Cash analysis such as sales forecasting, inventory, and cash flow
  • Liquidity management including cash balances and short-term investments

Obtaining such valuable data and analytics is only possible through the automation of end-to-end AP process. The manual processes that are used far too often create a “black box” where data cannot be captured, analyzed, and reported on. In fact, that “black box” can become a “black hole” – draining away your money, time, resources, agility, productivity, and competitive edge.

Trend #3: The Need to Tighten Security to Combat Fraud

The statistics make it clear that security continues to be an area of heightened concern for organizations. According to Strategic Treasurer:

  • 65% of corporates say that security concerns have a strong influence on planned technology spend
  • 46% have higher payment security concerns compared to last year
  • 47% of corporates indicated that their most important B2B payment initiatives are centered around fraud control

In addition, new invoice and payment fraud schemes are forcing companies to adopt preventative measures and upgrade security policies. More than half (52%) of corporates were victims of B2B payment fraud attempts in the last year. Paper checks are particularly vulnerable to fraud: research shows that businesses experience 10 times less fraud with ACH and wire payment combined than with paper checks. But risks are present with online payments, too. 75% of firms have experienced a business email compromise (BEC) attempt in the last two years – an attack in which a real or fake vendor sends a fraudulent invoice and asks for payment directly into an online bank account. 16% of these attacks were successful.

One of the ways you can combat fraud attempts is by utilizing a closed payment network that validates all members and their banking information (even checking with the Office of Foreign Assets Control, or OFAC). This creates a separation of duties and prevents fraudsters from diverting your company’s funds into unknown accounts.

With the pressure from these trends bearing down, you need to ask yourself: is your AP department up to the challenge? The solution to all three of these trends is the same: end-to-end automation of your invoice-to-payment processes. Automation empowers your AP department to improve efficiency, deliver ROI to the business, ensure real-time visibility into critical data, and reduce the impact of sophisticated fraud efforts.

When all is said and done, the trends are not going to change: the change is up to you. The next step is yours.

Hugh Garber

Posted by

Hugh Garber

With 15+ years of experience in technology and cloud solutions, Hugh Garber helps AP departments automate the end-to-end AP lifecycle. He is the Director of Solutions Marketing for Paymode-X Business Solutions at Bottomline Technologies.
Browse all posts
footer curve