It is sometimes easy to forget that when you work in an industry that delivers regular incremental innovation, that the aggregate steps taken forward can be quite significant. This is very true in the world of accounts payable (AP) where the common misconception is that not much has changed over the past ten years. Invoices arrive, Invoices get paid, end of story. Remember, ten years ago, most people were talking about leveraging OCR to capture invoice data, filling in missing data manually, and then routing invoices for approval using a workflow engine. eInvoicing networks were starting to gain traction, but there were (and still are) too many invoices being sent and received in paper format.
A decade ago companies were just starting to send invoices electronically. At the time, this usually meant sending static PDFs via email or fax. This was certainly a step in the right direction, however, the problem for most AP teams receiving these static PDFs was that they had no real way to automatically import them into their back-end systems. As a result, AP staffers would be left to print them off and manually key them in. eInvoicing Portals had started to emerge, but they were few and far between, and not widely used.
The payment process wasn’t much better, in fact, for most AP groups, it was worse. After an invoice was approved, it was typically put into a batch with other approved invoices where it would sit, awaiting transfer for payment. After that, it was put into a queue for payment based on a due date, and then paid via manual check or ACH. Conversations about spend analytics and working capital management when they did occur, were limited at best. This was an idea that was just starting to talk hold and be discussed.
Fast forward to 2018…let’s look at where we are today. Electronic invoicing has taken a firm hold and, according to recent Ardent Partners research, now accounts for roughly 50% of all invoices sent in North America. While you might wonder (as I do constantly) why this number is not (much) higher, the simple answer is that Americans and Canadians love their paper and are reluctant to give it up. While suppliers are still sending PDFs, their customers are now using technology that enables them to be automatically ingested into an AP system, with little or no human intervention.
eInvoicing networks, like those from Ariba, Coupa, Tradeshift, Basware, and Zycus, have matured and are now much more than just a way to send and receive invoices. Many have grown into powerful networks where suppliers can be found, agreements made, and business commerce transacted. Supplier portals, such as those provided by Coupa and Tipalti, are also much more commonplace and many, if not most, suppliers use one or more of them to submit invoices to their customers. While the portals and networks offer value to suppliers, they reach a point of diminishing returns when the number of platforms used to invoice customers becomes overwhelming, but I’ll save that issue for a future ‘First Thing” column. Supplier portals today are used for much more than simply submitting invoices; they are used as a self-service way for companies to onboard suppliers and capture not only contact information but also banking information, payment preferences, and compliance data.
The world of B2B payments has morphed tremendously over the past decade. Use of paper checks is down and dropping fast. In fact, our research shows that electronic payments are now the norm rather than the exception. Payment providers, like Bottomline Technologies and Nvoicepay, have gotten much smarter and are now integrating themselves at the very beginning of the P2P process rather than the end. They are using either the aforementioned networks or portals to onboard suppliers and capture all required supplier payment information from the start. This change, coupled with more and more companies leveraging invoice automation solutions to process their invoices, has opened up options that did not previously make sense to use or were not readily available.
On a day-by-day basis, and even year-by-year basis, it can be hard to see the large strides made by our industry, but as I just showed, the changes that have occurred in AP over the last ten years have been dynamic and impactful.
There are, of course, many other significant developments not mentioned above such as the use of spend analytics, machine learning, artificial intelligence (AI), robotics, mobile applications, and the strengthening of the relationship between procurement, accounts payable, and treasury, to name a few. I will delve into each of these in future columns. Just remember, the next time somebody says nothing new ever happens in Accounts Payable, you can set the record straight.
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