Accounts payable (AP) — as a department and a general corporate practice — is critical to the long-term viability of any enterprise.
The payables, as a practice, represent taking care of the money owed to suppliers or creditors, typically within a timespan of just a few months, perhaps even weeks or days. On the balance sheet, the line item is representative of the liabilities that must be reckoned with. The liabilities are more than a dollar amount: If companies take too long to pay their obligations, they risk reputational damage, or may face interest charges or penalties. Stretch things too far, and the enterprise risks losing the relationship entirely, perhaps losing a critical link in the supply chain.
According to PYMNTS Intelligence’s study “Accounts Payable and Receivable Trends: What’s Next in Automation,” of the firms earning between 3.5 million and $15 million in annual revenue, only 5% of such mid-sized firms have fully completed the automation of all processes, and 15% have automated three or more tasks. Nearly 44% have only automated one or two AP processes. More than one-third have not started any automation and are still anchored in paper and manual duties. Paper checks, as noted elsewhere, have traditionally been tied to as much as half of all B2B payment transactions.
None of this is to say that the companies themselves are not cognizant of the advantages of AP modernization.
As many as 84% of companies we’ve surveyed that have automated all processes say they’ve enjoyed the benefits of savings and cash flow growth, which might come in the form of discounts from vendors for timely or even early payments.
Of the companies that have not seen an automation of those processes, a full 72% say they know that AP automation could help them realize those positive impacts. Meanwhile, 83% of CFOs reported that digital technologies supporting AP workflow automations have reduced frictions by better integrating buyer and supplier payments.
The companies that have yet to embrace automation may need some help with the modernization. And for a number of providers, what they have on offer has been of interest to other digital players keen to add to their own payments-related offerings.
Zone & Co. said last month that it acquired Staria’s AP automation solution, Staria Flow. This acquisition will add enterprise optical character recognition (OCR) capabilities to Zone’s procure-to-pay solution, the companies said —integrating that AP functionality with enterprise resource planning (ERP) software, enhancing capabilities like complex billing and revenue recognition, along with automation.
In May, Basware announced the acquisition of AP Matching. The acquisition will add AP Matching’s cloud-based solutions for managing invoices and reconciling statements to Basware’s accounts payable automation and invoice processing capabilities, the companies said. The AP Matching platform reconciles buyer and supplier statements and then delivers matched invoices to customers’ enterprise resource planning or source-to-pay (S2P) systems.
And last week, business management software firm Sage said it was expanding its AP automation offering. The company said that the offering streamlines financial workflows by automatically creating draft bills from uploaded documents and spotting issues such as duplicates, while reducing data entry efforts and costs.
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