The Cash Flow Management Secret Weapon CFOs Didn’t Know They Had

Nearly every business pain point, over a long enough horizon, can be mitigated or solved.

The good news today is that those horizons are only getting shorter. And as businesses continue to embrace automation, the accounts payable (AP) function is emerging as a new frontier for efficiency and cash flow management.

“The main AP pain points are typically invoice ingestion, payment approval, the release of payments and specifically the release of payments around managing working capital and cash flow,” Steve Tackett, EVP of operations at Priority, told PYMNTS.

For companies still reliant on manual processes, managing these steps can be labor-intensive and error prone. Invoice processing often requires approvals from multiple layers of management, especially for high-value payments — a process that Tackett said can delay cash flow decisions and create financial bottlenecks.

“A final pain point is paper checks,” he said. “And the reality is that paper checks are an undercurrent and creator of other manual processes and inefficiencies.”

That is why there is a slow but certain change underway as companies recognize that automating payables is crucial to maximizing working capital and reducing operational friction.

Automating AP for Streamlined Cash Flow

Despite the available technology, cultural and integration barriers often prevent companies from fully embracing automation.

Many executives hesitate to release payments automatically, citing concerns about cash flow and the need for vigilance over working capital. Tackett acknowledged that these concerns are not unfounded but argues that they can be mitigated by advanced algorithms that provide the necessary oversight without manual intervention.

As noted, the predominant old model is the use of and reliance on paper checks, which Tackett described as the “cockroach of B2B payments” for the payment mechanism’s persistence despite its clear inefficiency. In many industries, the inertia to maintain paper-based payments remains due to familiarity and a desire for tight control over cash flow.

To guide companies in their automation journey, Tackett uses a framework of the “three Cs” of AP automation: completeness, configurability and curation.

He said businesses should seek an “integrated payables platform” that allows them to handle all payment types — whether card, check, ACH or wire transfer — within one system. This integration not only simplifies reconciliation but also eliminates the inefficiency of managing multiple payment systems.

Configurability is equally critical. Tackett said an AP automation platform should offer customization options for payment workflows, allowing companies to tailor the process from invoice receipt to payment reconciliation according to their preferences. A well-configured system can reduce onboarding time from months to days, making automation more accessible for companies without substantial IT resources.

Finally, Tackett emphasized the importance of curation in maintaining brand consistency and control over supplier interactions. From customized reporting to branded supplier communications, Tackett believes that companies should not settle for generic interfaces or stock templates. By curating the AP experience, companies can ensure that suppliers receive payment instructions and remittance advice consistent with their brand identity, enhancing the overall experience.

Turning AP From Cost Center to Profit Center

As companies look to streamline payables, Tackett advocates for the use of virtual cards, especially for suppliers who may be hesitant to share bank account details for ACH transfers. Virtual cards offer near-instant payment capabilities, unlike paper checks, which are subject to delays in postal delivery and manual deposit. Tackett said virtual cards not only accelerate payment times but also offer companies greater control over cash flow, lower fraud risk, and, in some cases, cash-back incentives.

For suppliers, virtual cards eliminate the risk of checks being lost or delayed in the mail and provide faster access to funds. Virtual cards have gained popularity in recent years, Tackett said, particularly among mid-market companies looking to optimize both payment speed and security.

“You have less fraud, more control, and the efficiency makes it all worthwhile,” he said, emphasizing that virtual cards can be a powerful tool in transforming AP from a cost center into a potential profit center.

After all, that should be the goal of any AP modernization initiative: turning the back office from a cost center to a way for businesses to monetize their payments operations and unlock new growth.

Beyond rebates and cash-back incentives, AP automation allows companies to better manage their working capital by using credit terms strategically. Tackett said companies can optimize their cash flow by leveraging available credit on corporate cards to extend payment timelines and free up working capital for other investments.

At the same time, he noted that Visa and Mastercard have introduced programs that allow companies to set customized interchange rates, offering greater flexibility and cost savings for those who rely on card payments. This customization, said Tackett, is “liberating,” providing companies with options tailored to their specific cash flow needs.

Looking ahead, Tackett foresees a future where artificial intelligence (AI) and data services enrich the AP automation landscape even further. He points to emerging solutions that leverage AI to analyze ERP data and create customized payment strategies. For example, AI-powered systems could automatically identify suppliers likely to accept card payments in exchange for faster payment terms, enabling businesses to negotiate favorable terms without direct outreach.