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.
The goal of automating a business process, in this case supplier payments, is to eliminate the time-intensive, manual actions that enterprise departments perform day in and day out. Automating the invoice receipt and approval process, for example, allows the AP team to process more invoices per full-time staffer and eliminates the need to manually verify each invoice against a purchase order (“PO”) and/or other documents. In the case of payment automation, there are also several key benefits. Primary among these is more efficient and streamlined processing, which 52% of the more than 200 AP leaders surveyed in Ardent’s B2B payments study noted was the top benefit gained from automating payments.
More Efficiency through Electronic Payments
On an overall basis, electronic payments (“ePayments”) offer a significant efficiency boost over paper checks. This is primarily because every action taken to pay a supplier electronically is done digitally, which means there are no manual “touches” involved in processing the payment. With a paper check, on the other hand, an AP staffer must:
- Print the check onto special check paper,
- Verify the payment amount,
- Verify the payee name,
- Get the check signed,
- Address an envelope,
- Put the check in the envelope,
- Stamp the envelope, and
- Trust that the postal system will deliver the check to the supplier in a timely fashion.
These steps simply do not exist when a supplier is paid electronically. There is certainly verification going on, but the materials cost alone is much lower because there is no need to purchase extensive amounts of special check paper in order to pay suppliers each month. More to the point, however, is that ePayments are not subject to the delays inherent in paying with a paper check, i.e., the time between putting a check in the mail and the supplier receiving it. (Note that AP can schedule an ePayment for whichever day fits the enterprise’s payment strategy; ePayments merely eliminate the need to depend on a postal system.) The end result of this is significant process efficiencies, which lead directly to savings elsewhere as well.
Final Thoughts
Efficiency in payment review, approval, and execution is a key benefit of the transition to paying suppliers electronically. With the savings in staff time arising from automating supplier payments, AP becomes more able to focus on activities of strategic importance, such as working with Treasury on a supplier payment strategy in line with cash management goals or using operational data to help inform Procurement’s supplier management strategy. In essence, the more efficient AP becomes at its base tasks, the more likely it is to become of greater strategic importance overall.
Check out these related articles for more:
B2B Payments 2015: Why Supplier Enablement Programs Matter
B2B Payments 2015: The Top Barriers to ePayment Adoption
B2B Payments 2015: How Can Treasury Benefit from Electronic Payments?
B2B Payments 2015: How do ePayments Impact DPO?
B2B Payments 2015: The Top 3 Payment Challenges Facing Accounts Payable
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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