It’s a hands-free hand-off as firms look to modernize their accounts payable (AP) payments processes.
That’s because, in a consumer landscape where everything has gone digital and the benefits are obvious, businesses are increasingly starting to question why it seems like they are the only ones left still using paper checks.
And they are increasingly starting to do something about it.
“In this day and age, when there’s a lot of software and a lot of capabilities around automation, there’s so much opportunity to remove the great clerical drudgery of paying bills,” Chris Wyatt, chief strategy and product officer of Finexio, tells PYMNTS.
After all, one of the primary challenges faced by companies still relying on manual and paper-based business-to-business (B2B) payments is the time-consuming nature of these processes.
“I don’t know if anyone ever likes paying the bill,” Wyatt says. “That just speaks for itself.”
By embracing automation and electronic payment methods, companies can reduce errors, save time, improve reconciliation processes, enhance accuracy and mitigate the risk of fraud, making modernizing AP a crucial step for companies looking to streamline their workflows and smooth out common B2B payments frictions.
“You’re going to save time, you’re going to reduce errors,” by transitioning away from paper checks, Wyatt explains.
Moving to electronic payments can also lead to significant cost savings for businesses.
That’s because by eliminating paper-based payments, companies can use their resources more efficiently, allowing them to focus on strategic activities such as vendor relationships and cash flow management.
“There’s a resource allocation benefit, making sure AP department employees are being used as effectively as possible versus making sure the checks get in envelopes on Friday night,” Wyatt says.
Additionally, he notes that the direct paper-based costs of legacy AP processes, which add up over time — including seemingly small things like printing, paper and postage — can be minimized or removed entirely, resulting in overall cost reductions.
Implementing automated AP can separately have a profound impact on a company’s operational efficiencies, especially for medium and large-sized corporates.
“The value add is realized across the entire AP spectrum. It can be on the very front end with invoice automation, invoice approvals, matching invoices to POs [purchase orders], making that more efficient and effective, and having digital copies of it,” Wyatt says.
Automating previously manual processes not only frees up time and resources, but also makes businesses more accurate and more secure, while providing more granular and actional visibility into both payments and vendor management dynamics, he adds.
Outsourcing AP processes to specialized service providers allows companies to leverage the expertise of professionals dedicated to handling these tasks, enabling them to focus on their core competencies.
As Wyatt notes, “Everyone has to pay the bills, but that doesn’t mean that paying the bills is what they’re good at — or even want to be good at. But when you have providers where that is what they do for a living, they’re very good at it and have thought about a lot of the nuance and complexity.”
Still, integrating an automated AP process into existing legacy enterprise resource planning (ERP) systems can vary in complexity.
“The perceived cost of change can sometimes outweigh the benefits of going for a more modern cloud solution, leading to institutional inertia,” Wyatt says.
But the good news, he emphasizes, is that most of the time automating AP payments can work seamlessly with any ERP.
That’s because, compared to other operational processes, AP payments are “just payments — they tend to be fairly straightforward, with nuances that when compared to other vendor services, are fairly easy to work through,” he adds.
“Once more traditional companies modernize and go to the cloud, they’ll understand that life is way easier. There’s so much more interoperability and things to take advantage of versus turning to bespoke or customer processes because the business has an on-prem solution,” Wyatt says.
The key is to evaluate the existing workflows, identify process bottlenecks and explore the available options for automation and digitization.
With digitized workflows, companies can gain real-time data, enhance spending patterns, detect process bottlenecks and improve decision-making.
These new insights increasingly contribute to compliance and regulatory functions by providing traceability, enabling accurate record-keeping and ensuring adherence to internal controls and policies.
By conducting self-assessments on their current state, companies can gain insights into the potential benefits of digitization and identify areas for improvement.
“You’d be amazed at how many C-level executives don’t know the time they’re losing on outdated AP payments processes — a lot of time there’s just a lack of awareness, no one really tries to peek under the hood and look for modern efficiencies,” Wyatt says.
That’s why it’s so important for businesses to proactively overcome institutional inertia and embrace digitization.
“I think ultimately, more and more companies will realize that AP is not just a cost center, but there’s actually a value add for the business, and it can really help drive growth, drive innovation, and put a lot of these companies in the driver’s seat in terms of their relationship with their vendors,” Wyatt says.
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