[Editor’s Note: It’s almost 2015 and, to cap off 2014 in style, Payables Place will run five of the best posts from the 2014 archives. Today we kick things off with the below article, which originally appeared on August 8, and coincided with the publication of our benchmark ePayables report.]
Ardent Partners recently published our annual ePayables report, “ePayables 2014: The Quest,” and, like all of our payables reports this year, the research is geared toward AP leaders, financial managers, executives, and those who aspire to these roles. The report presents a comprehensive overview of the state of accounts payable, as well as focusing on ePayables technology and systems in addition to providing a way for accounts payable teams to benchmark themselves against the Best-in-Class and improve their overall performance.
We spoke with over 190 accounts payable, finance, and other professionals across 25 different industries to give our readers a complete picture of the state of the market. The report is available for free (registration required) at four report sponsor sites: Ariba, Taulia, Basware, and Tradeshift.
The State of ePayables Technology
“If AP is going to improve, we have to continue to invest in tools. This is not the AP of the old day; there is a lot of technology that can make people more effective and this requires more technically-savvy people. AP has to build analytical strength as opposed to just processing [invoices].”- Director of P2P at a Global Chemicals Co. (during our interview for the “ePayables 2014” report)
Technology and process automation are clearly here to stay. The speed of business has increased exponentially in the past five years, and looks to accelerate even more in the next few. Governments here in the United States and across the pond in the United Kingdom have recently launched initiatives that are focused on making prompt payments to small and mid-sized businesses, which, when tied to the strong corporate push for AP departments to be lean, agile organizations, means ePayables technology and AP process automation are ever-more critical parts of the equation.
There are a handful of systems and solutions that directly impact what Ardent calls the ePayables Framework. This three-step process—Receive, Process, and Pay—is designed to help AP teams evaluate their various processes and automation options by dividing invoice processing into easier-to-understand segments. In terms of the technologies themselves, such as scan-and-capture tools or business networks, adoption has held fairly steady over the past few years. Where things become interesting is that adoption intent is stronger than ever before.
This is a clear indication that AP and finance teams recognize—and have managed to convince executives—that technology investment is required to speed up the procure-to-pay process so the AP department can actually help the enterprise drive value and save money in the long run.
The Tools of the Trade
The core solutions available to AP/finance teams hasn’t changed much since 2013. The AP/financial professionals we surveyed this year still use scan-and-capture tools, along with workflow solutions, eInvoicing platforms and business networks, dynamic discounting, supply chain finance, and ePayments software.
What’s interesting, as we said already, is that the number of companies looking to adopt these solutions in the next 12 to 24 months has skyrocketed. Clearly there is a new recognition among AP/finance teams that they need to get on the technology and process automation train before they get left behind.
To give you more of a picture, consider that in 2013 only 29% of survey respondents said they planned to use an eInvoicing solution in the next 12 months. The number of companies looking into an eInvoicing solution this year is nearly double the 2013 rate. Meanwhile the number of companies considering a supplier portal, which are typically paired with some level of eInvoicing capability, just about tripled to 57% from a mere 19% a year ago.
These are massive shifts from 2013, which makes it clear that more AP/finance teams have become aware of the need for change in their business operations. And no wonder—eInvoicing solutions can cut down on the number of manual touches significantly, including reducing the number of suppliers calling into the AP team to see what’s going on with their invoice.
Show Me the Money: Interest Growing in ePayments
There remains a strong interest in shifting over to ePayments. The shift itself hasn’t gone terribly fast—only a three percentage point change from 2013 in terms of actual electronic payments volume —but faster globalization has increased the level of interest in ePayments significantly. Consider this: once you cut a check and mail it, you have no idea when it will settle. With an ePayment, such as ACH or wire transfer, you can schedule payment down to the minute and know precisely when the payment leaves your account. This improves their cash flow, and allows for better analytics and reporting on your end because the payment stays electronic.
In a similar vein, supply chain finance and dynamic discounting have seen interest levels pop in recent weeks. Both of these solutions, when applied properly, provide cost savings and access to better cash flow over time. SupplierPay in the U.S. and the Prompt Payment Code in the U.K. mean that governments have taken a keen interest in the prompt payments of suppliers on both sides of the Atlantic Ocean.
Imagine if you could pay invoices on whatever timeframe you wanted, and your supplier could get cash more quickly. That sort of promise is where supply chain finance excels; Enterprises get to maintain a higher DPO to optimize working capital, and suppliers aren’t forced to wait the standard 60 (or 90 or 120) days to get paid or charge late fees.
The Future’s So Bright: ePayables Technology in the Years Ahead
The role that technology will play in the future of the accounts payable function is unquestionable: technology and process automation are here to stay. The majority of AP operations will eventually rely heavily on automated solutions to perform their duties. And, they will focus on analytical insights and gathering intelligence around invoices and payment as opposed to data entry, scanning, and responding to inquiries. There remains much room for expansion in the usage of these solutions, but considering where we were just a few short years ago, it’s fait to say that the “State of ePayables” is strong.
Interested in more detail about the state of ePayables? Check out the Ardent Partners report “ePayables 2014: The Quest,” available free with registration from Ariba, Taulia, and Tradeshift (and directly from Basware).
Check out these related articles for more:
ePayables 2014: Accounts Payable and Procurement Collaboration — Two Hearts Beat as One
ePayables 2014: Five Drivers of Top AP Performance
ePayables 2014: What Makes an AP Department Best-in-Class?
ePayables 2014: Three Tips for Better Buyer-Supplier Collaboration
