Accounts Payable Trends

Published on June 13, 2023
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Which accounts payable trends to embrace and which to ignore

There’s a reason that the phrase, “May you live in interesting times,” is considered both a blessing and a curse. And looking back over the past few years, “interesting” is probably a bit of an understatement!

Economic factors can create disruptions that businesses must navigate. And one of the business operations that experiences the most transitions in the face of any upheaval is accounts payable (A/P). Here are the accounts payable trends to watch in 2023 and beyond.

Accounts payable trends that are here to stay

1. Automation, automation, automation

The importance of automation in today’s accounts payable has become a “location” in real estate – essential, to the point that it’s worth repeating. If you’ve been working in accounts payable for the past few years, you’ve likely watched as process automation has crept into almost every business activity over the past few years.

In fact, according to a 2021 study of global automation trends, Tipalti and the Institute of Financial Operations and Leadership found that, among its survey respondents, the number of businesses that had fully automated their A/P processes had nearly doubled when compared to the 2019 figures. And 41% of respondents planned to have it fully automated by the end of 2024.

This trend is only expected to continue, with Data Bridge Market Research predicting the A/P automation market will witness a compound annual growth rate (CAGR) of 10.8% between 2022 and 2029, yielding a total market value of $5.8 million by the end of the decade. At this point, there is some debate about whether automation is a trend or more of a certainty regarding effective accounts payable management.

Ready to automate your A/P processes? Check out our guide to How to Automate Accounts Payable

2. Your accounts payable department might be working from home

A large portion of the workforce has moved from the city to the suburbs, and many employees have begun working remotely in 2023. McKinsey found that 58% of American respondents had the opportunity to work from home at least one day each week. And 35% could work remotely all five days.

Similarly, in its 2022 State of Remote Work Report, Owl Labs uncovered a 24% increase in staff choosing to work remotely and a 16% increase in those choosing a hybrid position. Conversely, interest in in-office work dropped by 24%, and 52% of respondents indicated that they would be willing to take a 5% pay cut for more flexibility in work locations, while 23% said they would entertain a 10% pay cut or more.

Employees that have already had the chance to work in a remote or hybrid position are relatively protective of this arrangement, with 66% indicating that they would begin searching for another job if forced to return to the office. Even more drastic, 39% stated that they would immediately quit. All of this means that if your A/P department is remote, chances are that this “trend” is here to stay.

3. Demand for quick, regular, and reliable access to reporting

Cash flow management and other strategic operations remain a priority for accounts payable. However, as business and project timelines accelerate, these critical decisions often need to be made quickly, leaving less time for research and reporting efforts. Even worse, according to a 2021 survey by Experian, 55% of business leaders said they need to trust their underlying data fully.

To compensate, many organizations have shifted to more centralized A/P software installations that deliver automated reporting and real-time visibility into company finances. Automation can replace the routine reporting aspects and allow personnel to focus on interpreting and deriving insights from data. With this information, key personnel can make more nuanced choices based on facts.

4. Use of artificial intelligence (AI) and machine learning (ML) has become commonplace

Artificial intelligence (AI) and machine learning (ML) continue to grow in adoption for critical back-office operations. According to Info-Tech Research Group, 44% of respondents indicated that they would invest in AI during the 2023 fiscal year. Furthermore, 65% of businesses surveyed stated they plan to use AI for business analytics or intelligence by the end of 2023. And 63% intend to use it for repetitive, low-level tasks.

As both initiatives intersect with routine A/P operations, AI will inevitably influence payment, verification, and auditing processes.

There’s much fear-mongering around AI and ML, but its use does not have to be scary. These are tools, and useful ones at that. Humans are still needed to interpret data and apply insights. However, AI can detect patterns too subtle for human notice, aiding with forecasting efforts and making it incredibly useful in identifying potential fraud or billing irregularities.

5. Digital payments are becoming commonplace

Detailed in its 2022 B2B Payments Survey Report, Bottomline Technologies, Inc. found that nearly two-thirds of its surveyed businesses used electronic transactions for most of their payments. Conversely, only one-third of respondents relied primarily on checks.

The driving motivation for this shift is the convenience offered by e-invoicing systems and digital payment portals. For example, balance Payments, Inc. uncovered — after surveying over 400 companies — that roughly 83% of respondents identified smooth payments and easy checkout as their first priority in choosing an e-commerce supplier. Meanwhile, 90% stated that a complicated checkout experience would make them less likely to become repeat or loyal customers.

At the same time, the use of virtual cards is steadily growing. These single-use payment options offer increased data protection for users while limiting fraud opportunities with strict spending limits. Some virtual cards even offer recipient controls that guarantee that only the authorized party can receive payment.

Due to these unique security advantages and other card benefits, Juniper Research predicted in a recent report that virtual cards will likely dominate other emerging payment methods for the foreseeable future. And in more detail, the firm forecasted that between 2022 and 2027, the total value of global virtual card transactions will grow from $28 billion to $121 billion — a 340% increase. During that same timeframe, Juniper expects that the total number of virtual card transactions through mobile payment platforms will skyrocket from 5 billion to 53 billion.

Accounts payable trends to move beyond

1. Fearing automation

It’s no secret that technical innovations can directly impact the job market — particularly in reducing the number of available jobs. Automation is no exception. However, workers are likely to overestimate the impact of AI and automation on job replacement, at least according to a research article published in Socius, a peer-reviewed, open-access academic journal by the American Sociological Association.

And thankfully, accounts payable is much more than a collection of repetitive tasks. Its strategic elements — such as managing cash flows and negotiating payment terms — are often sacrificed to maintain focus on day-to-day processes. But through automation, businesses can instead adjust the responsibilities of these critical workers toward capturing early payment discounts, forecasting costs, strengthening supplier relationships, and other tasks more important than rekeying invoices.

2. Letting the software do all the work

For those businesses that have embraced AI, automation, or other efficiency-driving innovations within their A/P departments, there can be a tendency to believe that once the solution is live, all of the hard work is done. But an effective accounts payable management strategy requires constant effort.

With any new technology, you’ll want to have established clear benchmarks from both before and after the rollout to determine the success of the engagement. Further, you should continuously monitor key performance indicators (KPIs) related to your A/P operations, giving you insight into any process abnormalities, bottlenecks, or other issues before they can mature into catastrophic failures.

Beyond these efforts, you should also schedule routine discussions to evaluate trends within your A/P metrics. There are potential opportunities for new efficiencies and improvements hidden within this data.

3. Sticking to business as usual

As already discussed, we are in a time of transition, and depending on a few factors, it might even be a period of radical transition. Either way, it’s unmistakable that there have been worldwide changes in how we live, work, and play over these past few years.

Flexibility will be critical throughout the rest of 2023 and into the near future. Businesses that thrive will be the ones that can adapt quickly and capitalize on emerging market opportunities before the competition. But outdated processes and overly-complicated payment efforts will only slow down your operations, artificially restrict your cash flow, and limit the options available for you to consider.

Keep up with the latest in A/P technology with Invoiced

In these exciting times, success and survival may be determined by the narrowest of margins. And embracing the right solutions at the right time can make all the difference. Ideally, you’ll want to employ A/P technology that drives efficiencies, lowers costs, and accelerates payment timelines, ultimately improving supplier relationships.

Capture these advantages for your business in a single platform. Schedule a demo of our Accounts Payable Automation Software and see what it can do today.

Published on June 13, 2023
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