Fueled by digitization and data, function stands poised to create value across the enterprise
Accounts payable has come a long way. As organizations large and small embrace technology to digitize their processes, the function is making significant progress in transforming from a back office task focused on short-term efficiencies and cost savings to a key driver of insights, intelligence and long-term financial goals. The needle will continue to move in 2016, as AP leverages digitization and data to create more broad business value. Here are five things you can expect in the year ahead:
- Intelligence will trump efficiency
Process improvement will remain a top priority. But AP leaders will shift their focus to the collection and analysis of financial information and the intelligence they can deliver across the enterprise to fuel better budgeting, planning and forecasting. Data within invoices, for instance, can be used by procurement to uncover spending patterns and drive more optimal negotiations with suppliers. And finance can mine it to identify opportunities for discounts through early payment and optimize working capital.
- Electronic payments will take hold
AP will increasingly go digital, replacing paper-based processes with electronic ones to increase the speed, accuracy and efficiency of payments. In doing so, it will drive costs out of the business. But beyond this, it will provide greater visibility into the amounts and timing of supplier payments that functions like Treasury can leverage to improve overall liquidity. Or enable new processes like dynamic discounting and supply chain financing to better manage cash.
- Collaboration with procurement will increase
AP and procurement are inextricably linked. Neither function can achieve its cost, revenue and cash flow goals without being connected. In the year ahead, AP and procurement will leverage automation technologies and digital networks to collaborate more closely and achieve their mutual objectives. AP, for example, will use the information contained within invoices and related documents to identify opportunities for early payment discounts from suppliers and mitigate both financial and supply risk. Procurement will use the real-time visibility it has into whether an invoice has been matched against purchase orders and contracts and is OK to pay to help turn payables into a profit center.
- End-to-end solutions will replace process-specific apps
The benefits of an automated and well-aligned P2P process are clear. Shared data and processes yield richer reporting, greater efficiency, better compliance and improved financial results. AP will embrace comprehensive procure-to-pay solutions that allow them to link their systems to those of procurement and their suppliers to drive this process and finally close the loop.
- Business networks will unleash new value
Just like Uber and Airbnb, business networks are disrupting finance, creating communities through which companies can connect to their suppliers, banks and other partners to exchange and settle funds in the simplest possible way. Innovative AP organizations have embraced networks to simplify the basic blocking and tackling associated with invoices and payments. In 2016, they will take things to the next level and use them to centralize data collection and analysis, improve collaboration and drive greater value across the supply chain.
Technology has fundamentally changed the AP game. Organizations that embrace the change and digitize their operations will fuel the innovation needed to play it well and win.