Every year, Ardent Partners publishes several benchmark studies into the accounts payable (“AP”) marketplace. One of those is the annual research effort into the state of business-to-business (“B2B”) payments, called “The State of B2B Payments 2015: Emerging Business Value” this year, which Ardent is proud to announce is now available. The report captures the perspectives, experience, and accomplishments of more than 200 AP and finance leaders, as well as examining the trends affecting the marketplace and offering recommendations for improvement. The full report is available for download here.
One of the key pieces of the 2015 state of B2B payments market report involves examining the top payment-related challenges facing AP departments. As part of this discussion, it is important to remember that legacy systems and processes historically combined to create a situation in supplier payments akin to the “good enough” attitude that stymied implementing invoice automation. In this case, paper checks were seen to work “well enough,” which resulted in many enterprises seeing no reason to move away from paying suppliers with checks. More to the point, however, is that many suppliers have never bothered to ask for any other form of payment.
This combination of what amounts to enterprise inertia and lack of supplier interest have resulted in three major challenges that AP must face if it wants to move its supplier payments to the “next level” of performance. These three main challenges are:
- Lack of visibility into payment data (34%): The business world is becoming increasingly data-driven, so lacking visibility into any form of internal data can be a huge roadblock to success. Improving visibility into payment data can, more specifically, allow for nuanced financial decisions and a greater overall strategic impact for the AP team. It also has the potential to drive greater collaboration with Treasury, and should ideally rise to the level of the CFO as a focus area. (Please see the article “B2B Payments 2015: The Importance of Payment Visibility” for more detail.)
- Payment approvals take too long (27%): As a general rule, payment approvals that take a long time cost the enterprise more money to process. A longer approval time can also harm relationships—if it takes a long time to approve a payment, suppliers may start to wonder when they will receive payment. This could result in less favorable contract terms the next time around. Internal stakeholders may also receive delayed information, which may potentially delay other activities throughout the enterprise. Typically, manual AP processes are the culprit of lengthy payment approval times.
- Getting the budget to invest in automation (22%): Much like finding the budget to automate the invoice receipt and approval process, finding budget to invest in payment automation can be difficult. That AP is even facing this obstacle in the first place is a good sign, however, as it means that at least some AP teams are self-aware of the challenges they face and the associated opportunities. Technology can play a key role in surmounting operational difficulties, so it is imperative that AP find a way to convince upper management to invest in automation.
Final Thoughts
The tools and solutions used to combat AP’s payment related challenges are not new, just as the challenges are not themselves insurmountable. Electronic payment technologies have existed for decades, but are only now reaching a “tipping point” of sorts where many enterprises can take advantage of these solutions to streamline and improve their B2B payments processes. It is this rising maturity and market sophistication of the new breed of solutions that will, in part, position ePayments to become the default method of paying suppliers in the future.
Download the B2B Payments 2015 benchmark report here to find out more about AP’s top challenges and the state of the B2B payments marketplace today!
Check out these related articles for more:
B2B Payments 2015: The Importance of Payment Visibility
Ardent’s Chief Research Officer Discusses New “State of B2B Payments 2015” Report (Video)
B2B Payments 2015: The Emerging Business Value of Electronic Payments
Ardent’s “The State of B2B Payments 2015: Emerging Business Value” is Now Available
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