The 2019 State of ePayables Report
The 2019 State of ePayables Report
As technology engulfs the world, businesses and consumers alike are becoming increasingly data-driven. Within the world of finance, new technologies are transforming accounts payable industry operations and expectations, helping the AP function rise in prominence, create value, and capitalize on data-driven strategies.
Ardent Partners, in partnership with Goby and others, provides an insightful look into “The State of ePayables in 2019”. This report presents an industry-wide view into what’s happening in the world of accounts payable today. While we encourage you to read the entire report, here are some key takeaways:
The State of Accounts Payable
According to finance executives, there’s been an increased focus over the last three years on the role of AP and its ability to impact value, savings, and strategy. While many AP teams pursue and capture efficiency gains, they are also finding themselves at the intersection of data-driven methodologies that support key decisions. In turn, AP teams and finance leaders are learning to develop and expand their organizations’ intellectual capacity and find ways to fully leverage use of their data throughout the company.
For AP teams to move forward, their first step must be changing perception. Historically, accounts payable departments have been seen as an unglamorous, back-office function fraught with time-consuming, error-prone processes. In fact, according to the report, Ardent Partners found only 19% of companies saw their AP departments as exceptionally valuable, while 21% reported seeing little value.
Technology and a rising enterprise software market have helped push a digital transformation that empowers organizations to reimagine accounts payable operations, integration, and performance. Over the past few years, automation has sparked a new journey toward more strategic territory and helped AP departments make major strides such as:
- Developing more effective process-led capabilities that transform tactical execution into strategic value
- Serving as a valuable conduit for more strategic activities like spend management and cash management
- Sparking the “Age of Intelligence” in how businesses ultimately perceive the output and contributions of the AP function
However, there are many barriers that still exist for AP departments to move to higher ground, particularly the longstanding pressures that exist between the expectations for fast invoice processing and the reality of lengthy approval times, inefficient bottlenecks, and operational deficiencies.
To address these issues, Ardent Partners reports that many AP teams have a plan of attack that includes improving AP reporting and data analytics, eliminating paper, reducing manual tasks, implementing AP automation, reducing processing costs, improving connection and collaboration with vendors, suppliers, and procurement, and improving visibility into invoice and payment data.
The State of ePayables
For AP teams looking to put their plans into action, innovations in ePayables (such as AP automation) provides the way forward. Not only AP departments benefit from innovative ePayable technologies and solutions; the entire organization will benefit from the analytical data and access to information that comes with an automated system.
AP departments can use technology to transform the way in which invoices are received, validated, and approved as well as how payments are executed. They can also:
- Shorten invoice cycle times through mobile AP applications
- Transform the way their businesses operate with analytics and augmented intelligence
- Reduce the pains of manual-and paper-based tasks through process automation
- Free up time by streamlining processes and reducing paper with digital payments
The utilization of more strategic forms of automation are expected to dramatically increase within the next decade, moving beyond just tactical implementation. Still, Ardent Partners reports less than one-third of all businesses (just 28%) have moderate-to-heavy automation in their analytics and less than 40% of business are heavily automating their cash management competencies.
For AP departments, utilizing the full scope of an automated system can create a new world of efficiencies, nearly eradicate menial and tactical tasks, provide predictive forecasting, planning, and budgeting, and revolutionize data flows. Deep, agile analytics remain key in helping AP teams achieve higher performance levels in years to come.
Best-in-Class AP Performance
As AP teams transform and momentum builds, how do we measure key performance and understand what an AP department operating at its full potential looks like? Ardent Partners has complied benchmark statistics for “Best-in-Class” AP organizations. These benchmarks highlight several attributes of a highly-functioning AP team, such as:
- The cost to process a single invoice is slightly over $10
- The time it takes to process an invoice is roughly 8 days
- The invoice exception rate is around 22.5%
These best-in-class performers have leveraged technology by streamlining their AP process, achieving processing costs nearly 6-times lower than the average and invoice processing times that are over 3-times faster than other groups.
So, how have they done it? Best-in-class AP functions include these foundational elements:
- Making electronic payments
- Two or three-way matching capabilities
- Processing invoices straight-through without human intervention
- Measuring key AP metric such as invoice processing cycle time
- Providing rich remittance information to vendors
- Matching invoices to contracts or payment plans
- Standardizing AP process across the organization
While the best-in-class businesses are able to drive superior performance across a series of key metrics, they also leverage key AP automation technologies which include imaging and scanning, automated routing and approval, and automated data capture. Ardent Partners reports they are also 92% more likely to utilize eInvoicing as part of their standard AP program.
Overall, best-in-class companies understand how data and the Age of Intelligence enhance operations and systems and support the growth of their talented employees as well as support other parts of the business. According to Ardent Partners, best-in-class organizations are:
- Nearly twice as likely to leverage data and intelligence as a means to improve stakeholder collaboration
- 2.2 times more likely than others to leverage data and intelligence to improve invoice exception-handling
- 1.6 times more likely to use AP-related data and intelligence for enterprise cash flow analysis
As process automation, cloud-based automation, mobile solutions, connected devices, and big data integrate into the modern business environment, AP organizations must learn to leverage their reporting capabilities and data-led efforts to evolve into an exceptional, intelligent operation.
Strategies for Success
AP functions have an extraordinary opportunity to become a hub of intelligence and effectiveness that drives an innovation-ready culture. CFOs, VPs of Finance, and department leaders will need to develop flexible management structures that empower others and create a wider range of analytics to process and parse more data. Treasurers must collaborate more closely with AP to evaluate cash flow using data and develop management strategies that benefit both buyers and vendors. For procurement, it means understanding traditional buying patterns and vendor relationships to optimize buying strategies. Lastly, budget holders and stakeholders must have full visibility into their spend.
Prioritizing data management and asking questions can help AP teams improve performance and make smarter decisions. But the core of accounts payable is the day-to-day operations, processes, and ability to execute efficiently. Regardless of size, industry, or scope, AP departments can transform by following these recommendations:
- Adopt a holistic, full, and comprehensive AP automation solution
- Integrate more progressive technology elements into AP (i.e. mobility and augmented intelligence)
- Adopt a customer service-led mentality for AP
- Transform AP from a tactical unit to a forward-thinking, strategic, value-adding team
- Leverage invoice data to pinpoint fraud and negotiate better terms with vendors
- Institute collaboration between AP and key stakeholders
- Prioritize the reduction of invoice exceptions
- Develop a three-year “capabilities roadmap” of innovation for the future
Now is time for AP leaders to prepare their teams for the Age of Intelligence. This new era provides the potential to transform not only how AP departments operate, but to showcase the true value they can offer an organization.