[Editor’s Note: Ardent Partners recently published its Accounts Payable-themed report, “Accounts Payable 2025: BIG Trends and Predictions”. Over the next several weeks, this site will feature our series highlighting the key BIG Trends and Predictions from the report.
As we step into 2025, the world of Accounts Payable (AP) is poised for a transformative year, driven by the accelerating forces of artificial intelligence (“AI”), advanced automation, and the growing recognition of AP’s potential to deliver measurable operational and financial impact.
Since the pandemic began, AP has emerged as a strategic cornerstone for businesses looking to streamline operations, enhance cash flow management, and bolster profitability. AI-powered solutions are helping to redefine the function; the need for smarter cash management and stronger supplier relationships are also aiding the cause.
In this new age, smart executives have identified AP as an area of investment and a lever for driving strategic value. This attention has empowered many AP teams to move beyond transactional tasks, embracing roles that directly influence financial performance and operational excellence.
This Week’s BIG Trend and Prediction
BIG Trend #5 – The Cost of Capital Places More Focus on B2B Payments
To combat inflation in 2022, the world’s central banks (led by the United States) began raising interest rates with unprecedented speed. Almost three years later, the resulting higher cost of capital rates has prompted finance teams to scrutinize their cash flow management strategies. Their heightened focus on capital efficiency led to a more careful examination of B2B payment practices. By optimizing payment terms, negotiating discounts, and extending payment cycles where feasible, enterprises can preserve cash reserves and reduce interest expenses.
While payments only flow one way (from AP to the supplier), the supplier relationship is a literal two-way street. This means that smart AP/P2P teams are able to balance their own cash needs with those of their strategic suppliers to ensure smooth operations across the supply chain. Collaborating with suppliers to establish flexible payment terms can enhance cash flow predictability for both groups and strengthen business partnerships. By strategically managing vendor payments, AP teams can increase their impact and relevance by helping to mitigate the impact of higher interest rates and position themselves as an important group that can ensure long-term financial stability.
Prediction #5 – The Cost of Capital Stays Higher Longer
In 2025, the U.S. Federal Reserve will maintain its “higher for longer” stance on interest rates, driven by several critical economic factors. While inflation has moderated in recent months, it remains above the Fed’s 2% target, signaling that underlying inflationary pressures could persist. Ardent Partners expects that the Fed will need to keep interest rates elevated for much of 2025 to curb inflation effectively and avoid future spikes.
Of course, several risks could reignite inflationary pressures, including the introduction of tariffs and tight labor markets. The continued demand for workers that is pushing wages higher, coupled with potential supply chain disruptions due to geopolitical events or unforeseen shocks, risk raising business input costs further. This prediction assumes that the current Fed Chair remains in place and retains his control.
AP 2025 BIG Trends & Predictions (Part 6): Next week we’ll explore a new trend and prediction — Treasury and IT incorporate vendor payment data into cash management dashboards, respectively.
