In recent IOFM surveys, AP was voted as the No. 1 most time-consuming and most paper-intensive finance function. In addition, APQC has reported that labour makes up 60% of the total processing costs in AP. Overall, AP processes cost too much, take too long, provide too little visibility and frustrate internal stakeholders too often. The good news is, there is a way to correct that situation, and business are starting to act. Esker recently collaborated with IOFM to conduct a survey for a better understanding of the future of AP processes with the questions below:
- What technologies will be important to AP?
- How will AP operate?
- How will AP’s role within the enterprise change?
From that survey, we produced a white paper, which presents the results and provides a guide for AP professionals to prepare for the future.
AP was voted as the most time-consuming and high labour finance function, however, 70% of AP departments have at least started to automate their invoice processing with 25% of them have made significant progress in their path to complete automation. When automating their AP departments, below are the key technologies identified by respondents that will make a significant impact in the next three years, including:
- Image Capture (53%) — technology that converts paper documents to digital images
- Intelligent Data Capture (40%) — technology that automatically classifies, extracts and validates data
- Mobile (49%) — on-the-go technology that enables professionals to easily manage and approve purchase requisitions and supplier invoices 24/7, wherever they are, using a mobile device
Organisations have realised that AP has the ability to help improve profit margins, and digital transformation is what can give AP that ability. Through the digitisation of AP processes, organisations improve profitability through:
- Better spend management: 60% anticipate the importance of spend management to become more important in the next three years
- Higher card rebates: 26% anticipate the total card rebates they earn will in three years be up to 10% higher
- More early-payment discounts: 30% anticipate that the early-payment discounts they receive will be up to 10% higher in three years
- Longer standard payment terms: 34% believe their organisation’s standard payment terms will be longer in three years
Finally, AP is seen as becoming more strategically important to companies:
- 53% per respondents believe their AP department’s strategic importance will be higher in three years
For too long, poor visibility has made effectively managing working capital difficult, especially in a manual environment. But automated AP solutions, like Esker’s, put real-time decision making info into the CFO’s hands with personalised dashboards that give insight into Key Performance Indicators (KPIs). Senior stakeholders will be placing increased importance on KPIs in an attempt to improve efficiencies and profitability:
- 63% anticipate that the use of AP’s data in the organisation will increase in the next three years
AP is transforming and will continue to do so. The digitisation of the process will allow it to become increasingly profitable and of strategic importance to the organisation. Those who do not put stock in preparing for the future of accounts payable put themselves at risk of falling behind both their peers and the competition.
Read the special report by IOFM and Esker and find out the steps needed to keep up with the changes.