5 accounts payable trends for 2020
- 16 Dec 2019
- AP Automation
It is time to summarize 2019 and look forward into the year ahead to identify the trends that will impact, or continue to impact AP professionals in 2020. Most of these accounts payable trends are not entirely new. Some have been on the radar for a couple of years, but 2020 will be the year that these trends accelerate in maturity and get adopted on a larger scale.
# 1 – AP Automation is considered a necessity rather than a luxury
AP automation is one of those accounts payable trends that’s been around for some time now, even if many organizations have yet to implement automation technology. If your company hasn’t done so already, you should make sure to include an AP automation project on your agenda for 2020.
In 2020, accounts payable automation is no longer considered a luxury that only applies to the largest corporations or shared service centers. Automating your accounts payable process will be a necessity to compete in today’s increasingly digital and fast-moving business climate.
The technologies that lay the foundation for automating the invoice process, i.e. optical character recognition (OCR), document imaging and invoice data capture for accounts payable have been around since the early years of the 21st century. Nowadays, the automated invoice processing applications in the world can be counted in the thousands. There are solutions available to organizations of all sizes from large enterprises to SMEs, so there is no reason not to take advantage. Also, the growth in cloud-based AP automation solutions makes implementation easier and quicker than ever before.
The benefits of automating the AP process are enormous and goes way beyond the time savings and data accuracy that comes with just digitizing the invoice workflow. More importantly, modern AP automation solutions provide advanced automation possibilities enabling truly touchless invoice processing as well as essential data insights to increase financial control, spend visibility and cost-saving opportunities.
# 2 – Snowball effect: accounts payable is gaining momentum as business value-center
Over the last few years, the view of accounts payable has transitioned from a traditional, transactional oriented back-office function to a strategically important intelligence hub for business critical finance data. The State of ePayables 2019 Report indicates that 55% of organizations perceive the AP function as either “very valuable” or “exceptionally valuable” to organizational operations.
This accounts payable trend will be solidified in 2020 when we’ll see a shift in drivers for automation. This year, the main reason to automate accounts payable is no longer to remove manual processes and increase operational efficiencies, even if that is still a noteworthy thing. Creating visibility into the business-critical data that lies within the invoice process is an equally important driver, if not the most important one. Accessing the invoice data in a user-friendly format is the first step, but real business value occurs when data is leveraged to inform the decisions that drive improved performance and the overall business moving forward. This value includes areas such as spend analysis, cash flow management, working capital as well as strategic sourcing.
AP professionals will contribute to the overall organizational growth and success by using the invoice data that sits in the AP automation solution in a way that makes sense to internal stakeholders in the finance and procurement departments as well as the C-suite.
# 3 – The modern cloud is reinvented, and brings laser-fast speed to value
For accounts payable, however, the public cloud has significant advantages. Only a few vendors still offer solutions that can be deployed on-premise or as hacked plug-in modules inside the ERP system. Businesses are realizing now, in 2019, that just because an ERP offers some levels of automation does not make them automated at all. And furthermore, the ERP “built-in” solutions only end up bringing on-premise inflexibility and upgrade complexity into the future.
The array of new considerations in the current economy make the nature of navigating supplier payment increasingly complex. And compliance with regulations and vacation obligations is a significant issue for organizations to tackle in 2020. By truly automating your accounts payable through a best-of-breed solution that works with your existing ERP, businesses are better prepared to face a challenging, if not uncertain, economy in the years to come.
Taking advantage of pre-packed integrations allow for rapid deployment and thus improved ROI and time to value. Long gone are the complex implementation projects that finish just in time for your first upgrade project to start. With public cloud solutions, product upgrades and new features are shared with all cloud customers at the same time on a regular basis. This ensures your company can reap the benefits of continuous innovations and new technologies to stay on the forefront of accounts payable process efficiency. With these benefits available in standard cloud AP automation solutions for companies of all sizes, it is hard to imagine anyone implementing an outdated on-premise solution in 2020.
# 4 – AI and machine learning will be the new reality for AP in 2020
AI and machine learning technologies are sometimes referred to as a means of replacing human resources with intelligent machines. We believe 2020 will be the year when these terms are used concerning turning data into business intelligence so that human resources can focus on making smarter decisions.
Forrester reports that between 60 to 73% of business data goes unused. And while that number appears to drop year over year, the idea of making business critical decisions on only 27 to 40% of the available data seems mind boggling. CFOs and finance leaders will be looking to bridge the analytics gap in 2020, with a focus on what unused data can become structured within existing or new automation technology stacks. As mentioned in trend #2 above, we’ll see increased use of invoice data to deliver greater business value in 2020. To support this transition of accounts payable to a business intelligence hub, AP automation solution providers will continue to invest in AI and machine learning technology that furthers enhances the quality of the data provided.
These are just a few examples that we predict will be highly adopted in accounts payable in 2020 thanks to AI technology:
Intelligent invoice data capture technology that automatically applies corrections based on the latest manual entry.
Advanced AP automation functionality that suggests coding and distribution for non-PO invoices, and suggests configuration of tolerance levels for PO-invoices to avoid exception management and facilitate a fully automated process.
AP process efficiency analytics that will not only show the organization’s performance on the most critical accounts payable KPIs but also automatically compare these scores to industry benchmarks to highlight where performance is considered weak and suggest actions to drive process efficiency improvements.
#5 – Operational efficiency - not just revenue - is the key to growth
Especially in the uncertain economy that today’s businesses are facing, companies are having to rely on different areas than just revenue to prepare for growth. According to a recent survey conducted by HSBC and Forbes Insights, 44% of respondents reported that increasing operational efficiency is their top growth strategy for 2020. And it’s no surprise. With 2019 setting new records for consumer spend on peak holiday shopping days (such as Black Friday and Cyber Monday) companies, especially retailers, are facing huge demands to make sure their operational backbone can support a healthy financial process.
At the heart of operational efficiency is technology and automation, particularly in the finance department, which sees a large number of tasks that can be automated easily. One prime example is the Accounts Payable function, which historically is viewed as a paper-logged, back-office function. AP staff can rely on automation to cover over 40% of their day-to-day functions. This leaves the human staff to have their time freed up for more value-adding tasks, such as data analysis, process optimization, and supplier management.
With that transition for AP staff in place, in 2020, the CV of an accounts payable manager will need to include skills like change management, business software administration, and process performance analytics. Also, with the rapid development of machine learning, robotics, and AI, accounts payable may need to compete with the Silicon Valley in recruiting top tech talent with capabilities that include cybersecurity, data visualization and data analytics.
In summary, these five accounts payable trends for 2020 indicate that businesses need to stay on top of their accounts payable operations in every aspect, including:
- Implement automation technology to ensure the operational efficiency and control required to compete in the increasingly digital and competitive business environment.
- Leverage the data that sits in the AP automation solution to support critical business decisions and overall company growth.
- Use a cloud-based AP solution to maximize the benefits of automation.
- Partner with an AP solution provider that invests in the technologies of tomorrow to ensure you’re not left behind on important developments.
- Look to operational efficiency through technology if growth is in your 2020 roadmap