Accounts payable (AP) automation is helping companies do much more than accelerate payments.
Businesses that initially perceived the technology as a temporary necessity have rapidly come to embrace it as a strategic, multipronged tool for the long term. AP digitization helps them reduce friction and operational costs, heading off supply chain disruptions and improving customer retention.
PYMNTS research has found that nearly all chief financial officers — 96% of them, in fact — say the central purpose of digitizing their AP and accounts receivable (AR) functions is to benefit their vendors and customers, according to the “AP Automation Tracker,” a PYMNTS and Beanworks collaboration
Get the report: AP Automation Tracker
Avoiding Supply Chain Disturbances
Manual processes hindered many workers’ ability to be fully remote, as many said they had to make office visits during the pandemic for tasks such as obtaining checks or pulling files. Not surprisingly, then, nearly two-thirds of finance professionals noticed delays in invoice processing, expense reimbursement and vendor payments.
In fact, a recent study found that 94% of U.S. finance workers believe AP automation has been essential to navigating the roadblocks put in place by the pandemic. Payment automation helped these companies avoid supply chain disturbances and retain their customers while simultaneously preventing fraud and reducing friction.
Beanworks CEO Catherine Dahl told PYMNTS in a February interview that automating AP processes means that recurring payments such as utilities or rent can be set up to pass through from invoice (which may be standardized in its presentation and may be for the same charge every month) to payments with approvals of the purchase order already in place.
Read more: AI-Powered Payments Platforms Put Paper Processes on Watch
“You should be able to take the invoice all the way through to payment and have one person at the end make sure that ‘yes, all the dots lined up,’” Dahl said. “There are dashboards on a daily basis where the accounting team is managing the process, but they’re not doing the process.”
Remaining Competitive
AP automation also helps businesses more accurately balance their incomes and expenditures. More than 95% of CFOs in PYMNTS’ research believed that AR/AP optimization played a “very” or “extremely” important role in maintaining healthy balance sheets, for example. It follows that these firms would also recognize the importance of automation, which can help accelerate and streamline inbound and outbound payments flows.
Despite global digitization efforts, however, manual processes continue to govern the AP space, with approximately 40% of all invoices still arriving on paper.
Still, the increasing demand for transparency and greater efficiency is expected to drive the global AP automation market to $2.5 billion this year and approximately $4.5 billion by 2026.
