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This time last year we talked about the significant shift in the world of Accounts Payable, as the department moves from a processing department to an essential financial analysis team. In 2020, accounts payable’s (AP's) value to enterprise rose 5% higher; to 60% of all businesses rate it’s functions as "exceptionally" important to organizational operations, according to Ardent Partners' study, Accounts Payable Metrics that Matter in 2021.
This is not without challenges, however. For example, approval process deficiencies now rank as the top obstacle. 60% still face a lengthy invoice process and approval times. Paper-heavy departments are an obvious stall, as well as a high percentage (48%) of exceptions. Another drawback is that up to a quarter of an accounts payable processor’s time can be spent on supplier inquiries. How to mitigate these bottlenecks? Self-service tools and regular updates to provide supplier information as well as investing in efficient platforms that use artificial intelligence (AI).
Some of the top B2B challenges of 2021 for payments include gaining timely approvals, managing vendor payment details and processing manual checks. The influx of invoices being received is still split almost down the middle with 51% being electronic and 49% manual. Processing them shows that electronic payments “ePayments” are slowly rising to 57%. It bears repeating that ePayments can reduce costs and improve control and accuracy compared to manual or paper processing.
Last fall, the AP Processor role was centered around the execution of payments flowing out from the company. We love seeing now that AP is becoming “command central” for enterprises by supplying liability context, supplier performance, and B2B payment timing. This can influence an organization's decisions in real-time. For AP to reach the next level, automation and using analytic tools is key. According to the 2021 report, 69% of businesses attribute their success to smart, tech-driven and efficient systems.
Now, let’s look at what AP departments can do to improve payment efficiency:
Payments automatically processed without department interference saves time and money
Link Invoices to Purchase Order
Make it easier to push payments through with automated matching
Request Suppliers Submit Invoices Electronically
Ardent’s report shows that those deemed “Best in Class” are the 20% of organizations that all have the lowest average invoice processing time and cost. Being able to streamline financial transactions results in a 74% faster invoice processing time. Best in Class enterprises use touchless processing that eliminates virtually all human interaction to maximize efficiency and expend resources elsewhere.
Today's technology has grown to allow organizations to monitor and analyze 100% of spend near real-time as well as seeing it all to spot the patterns. These tools allow for every transaction to be assessed automatically for errors and risk and to be flagged for review in advance of fraud, misuse or waste. Organizations can then expedite payments and resolve problems before they happen. These smart systems are savvy enough to identify the source of the problem whether it’s a particular vendor or a process breakdown, then alert the processor. We like seeing organizations adopt streamlined methods to make their departments run smoothly.
With purpose-built, AI-driven technology solutions, organizations today can quickly scan large volumes of data from multiple source systems to identify, prioritize, and mitigate otherwise undetectable risks, transforming their accounts payable processes' effectiveness.
The organizations that have already undergone this transformation from clerical to strategic in accounts payable functions are using data monitoring and analysis to detect fraud 58% faster. I know their CFO's are happy to share this data in year-end reporting. Because 2020 was a year like no other, companies had to be nimble in adopting and adapting to a digital transformation. More leaders are apt to use automation as a result, which means a need for more agile accounts payable automated solutions.
And importantly: where once these organizations spent a million or more dollars in a recovery audit, today they spend zero. Setting aside the money saved from recovery auditors and only comparing the technology costs against regained revenues, these in-house spend management programs typically show ROI in 3-6 months.
One year later, we are still educating clients on the benefits of a fully automated, 24-7 tool to minimize spend risk, cash leakage and fraud detection. Where do you want your accounts payable efforts to be in 2022?
Want to learn more about Oversight capabilities? Follow along with our Nothing Gets by You Now Series, check out oversight.com, or request a demo to see our AI-powered platform in action!