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The 17th-annual State of ePayables from Ardent Partners examines the general competencies and capabilities of AP organizations today and highlights the management strategies and tactics that leading departments have utilized to drive their organizations forward over the past few years, as well as their plans and priorities for 2022 and beyond.
This report also presents a comprehensive, industry-wide view of what is happening in the world of accounts payable. It captures the experience, performance, perspective, and intentions of 184 AP departments. The report includes benchmark statistics, analysis, and recommendations that AP, Finance, and P2P teams can use to better understand the state of AP today, gain insight into best practices, benchmark their performance against the Best-in-Class, and ultimately improve their operations and performance.
A Whole New World: The COVID-19 pandemic underscored the fact that manual processes impede efficiency and visibility and can threaten business continuity and organizational resilience. It also highlighted the increasingly important role the AP function plays within an enterprise’s financial operations, which has resulted in a more broad-based understanding of the function and its ability to impact value, savings, and intelligence.
The New Normal Workspace: Post-pandemic, the workplace for most AP and Procure-to-Pay (P2P) pros (85%) will mean some version of hybrid work. Less than 10% of P2P teams plan to return to the office full time, while only 6% plan to be fully remote. AP leaders should use the next few months to fine-tune their department’s approach to ensure that staff productivity is optimized and worker satisfaction is maximized (an increasingly important factor to success amidst the highly-competitive job market and “The Great Resignation”).
Performance Is Reality: For many years, executives have failed to see the larger potential of AP, based on its history as a highly-siloed and very tactical unit, and generally ignored the department’s needs for new resources, attention, and systems. The pandemic has enabled executives within finance and the business to see AP with new eyes and evaluate it based on its impact on performance and operations. That said, there are still many hurdles to AP success. Read the full report for details on AP's top priorities, risks and challenges in 2022.
The ePayables Framework: A Master Class: The ePayables Framework was designed to help AP departments of any size improve their processes by segmenting them into smaller, more manageable pieces, which ideally makes it easier for AP teams to establish an unfettered perspective on the current state of their operations and then improve upon it. It is organized into three major phases:
ePayables Technology Adoption in 2022: Ardent Partners’ research has consistently shown that automated invoicing processes can cost between 40% and 90% less when compared to manual, paper-based processing methods. A majority of organizations will automate all facets of the procure-to-pay process by 2024. Within the next two years, nearly 68% of businesses state that they will have automated the complete P2P cycle, enabling a robust union between procurement and finance that generates power, value, and efficiency.
The Answer Is Obvious: Any CEO, CFO, or Controller worth their salt would choose automation over manual, paper based processes for supplier invoicing and payments. So why haven’t more enterprises fully automated their AP operations? While statistics show a steady progression towards greater automation, the paper problem is still much too persistent in a world that has become digitized and globalized. Today, in a world where cash is tight and every dollar is crucial, the paper problem must be solved as soon as possible.
The Great Leap: Automation as the Foundation to AP Mastery: The best and smartest step to take towards AP mastery is to invest in automation. Eliminating paper is a powerful way to drive operational efficiency while gaining greater visibility into liabilities, B2B payments, and cash positions, enabling smarter cash management decisions. On average, 13% or less of businesses today have fully automated cash management, supplier onboarding, spend management, and exception management. These competencies may be more strategic than traditional invoice processing, and thus more difficult to automate. However, the opportunities are too large not to aggressively pursue. Read the full report for more on barriers to mastery, and Ardent Partners' step-by-step Technology Adoption Plan.
Examining AP Performance: The measurement of key performance metrics is an important part of understanding any business function, especially accounts payable. AP and finance leaders can use the core benchmarks in this section to compare their performance to the overall market and to better identify and understand the bottlenecks and hurdles that must be surpassed to drive true AP mastery.
Best-in-Class AP Performance: For nearly two decades, Ardent Partners has leveraged a unique framework to highlight the performance of top-tier organizations by analyzing a specific set of performance benchmarks. In this research study, Ardent Partners has defined Best-in-Class performance as the 20% of enterprises with the lowest average invoice-processing costs and shortest average invoice process cycle times. Top-performing enterprises have taken their AP operations to the next level by leveraging technology to streamline the AP process, making it more efficient and enabling more strategic activities.
The Best-in-Class Tools of the Trade: Adoption of technology is one area where the Best-in-Class differentiates itself from the rest of the market. These leading groups not only deploy solutions to a much greater degree, but just as importantly, their users and suppliers adopt and use them more actively. The differences in technology usage manifest themselves in the large metrics gaps.
The Best-in-Class Key Competencies: While quality tools are essential to top craftsmanship, it is the skills, experience, and ideas of the master that are the creative elements that bring his/her work to life. For the Best-in-Class AP department, key competencies serve as both the foundation for top performance and an enabler of continuous improvement. The Best-in-Class AP team's distinct advantage in key competencies is detailed in this section of the full report.
The results from Best-in-Class organizations show that an investment in AP can pay large dividends. Beyond modeling the Best-in-Class attributes, capabilities, and approaches, Ardent recommends the following strategies for AP departments seeking to improve their performance and build a better, brighter future:
In 2022, mastering AP is evidenced by consistently delivering Best-in-Class levels of performance that translate into high value and a competitive advantage in the market. AP mastery starts with automation and builds upon broad-based proficiency. Read the full report to find out why organizations of all sizes and in all regions that master AP have a window of opportunity to deliver outsized-performance at this critical time and into the future.
Best-in-Class AP teams achieve per-invoice processing costs that are 76% lower than their peers, and invoice processing times that are 81% faster than all other groups.
Join us in the on-demand webinar for a look at the results of this year’s State of ePayables research. Ardent Partners analyst Bob Cohen and Gunita Bindra from Bottomline will share tips and best practices that leading organizations have taken to ensure efficient and fraud-free AP operations, surpassing their peers and impacting their businesses.
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