Accounts payable (AP): digital, profitable and strategic.
When we think about the future of accounts payable, those aren’t usually the first words that come to mind.
In recent IOFM surveys, AP was voted as the No. 1 most time-consuming finance function and the No. 1 most paper-intensive finance function. That’s really something when you consider other finance and accounting functions such as tax, reporting or audit. In addition, APQC has reported that labor makes up 60% of the total processing costs in AP.
Overall, AP processes cost too much, take too long, provide too little visibility and frustrate internal stakeholders too often.
The good news is, there is a way to correct that situation, and business are starting to act.
Esker recently partnered with IOFM to conduct a survey to better understand the future of AP processes:
- What technologies will be important to AP?
- How will AP operate?
- How will AP’s role within the enterprise change?
From that survey, we produced a white paper which presents the results and provides a guide for AP professionals to prepare for the future.
While AP was voted as the most time-consuming and laborious finance function, the tides are starting to turn as organizations begin to digitize. Seventy-percent of AP departments have at least started to automate their invoice processing with 25% of them having made significant progress in their path to complete automation.
When automating their AP departments, respondents identified key technologies that will make a significant impact in the next three years, including:
- Image Capture (53%) — technology that converts paper documents to digital images
- Intelligent Data Capture (40%) — technology that automatically classifies, extracts and validates data
- Mobile (49%) — on-the-go technology that enables professionals to easily manage and approve purchase requisitions and supplier invoices 24/7, wherever they are, using a mobile device
Organizations have realized that AP has the ability to help improve profit margins, and digital transformation is what can give AP that ability. Through the digitization of AP processes, organizations improve profitability through:
- Higher rate card rebates: 26% anticipate the total card rebates they earn will in three years will be up to 10% higher
- More early-payment discounts: 30% anticipate that the early-payment discounts they receive will be up to 10% higher in three years
- Longer standard payment terms: 34% believe their organisations standard payment terms will be longer in three years
- Better spend management: 60% anticipate the importance of spend management to become more important in the next three years
And finally, AP is seen as becoming more strategically important to the enterprise:
- 53% per respondents believe their AP department’s strategic importance will be higher in three years
For too long, poor visibility has made effectively managing working capital difficult, especially in a manual environment. But automated AP solutions, like Esker’s, put real-time decision making info into the CFO’s hands with personalized dashboards that give insight into Key Performance Indicators (KPIs). Senior stakeholders will be placing increased importance on KPIs in an attempt to improve efficiencies and profitability:
- 63% anticipate that the use of AP’s data in the organization will increase in the next three years
AP is transforming and will continue to do so. The digitization of the process will allow it to become increasingly profitable and of strategic importance to the organization. Those who don’t put stock in preparing for the future of accounts payable put themselves at risk of falling behind both their peers and the competition.
Read the special report by IOFM and Esker and find out the steps needed to keep up with the changes.