5 Trends AP Leaders Must Know for 2023
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In Fall 2022, we hosted Brousseau & Associates’ Mark Brousseau for a presentation on the five accounts payable trends leaders should expect to see in the coming year. Along with interesting statistics, Mark provided amazing insight on just how the role of Accounts Payable is going to evolve. Gone are the days when AP pros were seen as number-crunchers and check-writers. The coming years will see organizations fully embracing the importance of AP teams and looking to them to make critical strategic decisions about the future.
“It’s not just about paying the bills, as if that was ever the case in AP. It’s going to be about helping to drive change for the business.”
Mark Brousseau, Brousseau & Associates
AP Trend #1: Push to Automation
As of 2002, 53% of a typical AP practitioner’s day is spent on burdensome, manual tasks [InsightAvenue]. And more than 40% of a typical end-to-end AP process is manual or paper-based [InsightAvenue]. From the moment you onboard the supplier to the second the invoice is paid, AP professionals are inundated with manual tasks. It feels like AP was left behind when the rest of the business world shifted to automation.
Controllers have noted lack of visibility into the entire process being their biggest challenge [IOFM survey]. Manual processes also drive up costs. As Mark Brousseau informed us during his October 2022 webinar, “compared to department with little to no automation, highly automated departments spend less than one-fourth as much to process a single invoice. Automation can help your staff process from eight to eleven times more invoices than in a non-automated process.”
“We know that over the past three years, we’ve seen a huge push among businesses to accelerate their so-called digital transformation initiatives. But it seemed to be that AP was left behind when it came to automation. We were always the folks fighting for the table scraps. Well that’s changed, in large part, because of COVID.”
Mark Brousseau, Brousseau & Associates
It was only during the flight from corporate offices to home offices during COVID-19 that companies began to realize just how lax security was around their AP processes. Vital information was simply floating from desk to desk with no processes or policies in place to protect that critical information. In many cases, this data was only as secure as the yellow interoffice envelope could offer – thin paper and a small string being the only thing between that data and prying eyes. Paper-based manual processes are simply not secure enough. Removing paper from the process and moving to an e-invoice system ensures that suppliers can feel comfortable that their information never gets into the wrong hands.
Given all of this, finance leaders are beginning to see the importance of automation. In fact, 93% believe that end-to-end automation can improve their overall AP processes [InsightAvenue]. According to the 2022 IOFM AP Professional Career Satisfaction Survey, 56% of companies deployed AP automation within the past two years. And per Forrester, 46% of companies are planning to move toward automated processes within the next one to five years. With that extra time and increased security, AP professionals will be able to focus on more value-added tasks such as analyzing data, collaborating with stakeholders, and building vital relationships with suppliers.
“Simply put, automation is the key to an agile and scalable AP operation. As technology advances, finance leadership will further understand the importance of investing in a solution that allows their AP team to go from transactional to strategic.”
Gina Armada, CEO of MHC Automation
AP Trend #2: Uncertain Economic Times
Between a potential recession, supply chain issues, and a seemingly unrelenting labor crisis, businesses are bracing for a downturn. Now more than ever, sustainability, adaptability, visibility, and control across a company’s finance teams will be the only way to assure continued fiscal health.
According to Accenture, 78% of finance and AP leaders would like to support business growth without adding staff. In 2022, SHRM cited recruitment and retention of employees as the most pressing concerns for organizations in 2022. And those issues are expected to continue and be exacerbated as financial crises reveal themselves throughout 2023. Subsequently, all of these challenges will result in additional supply chain disruptions. According to KPMG, 71% of companies globally have identified the increase of raw material costs as the main contributor to supply chain complications.
To keep from being negatively impacted by this unprecedented confluence of problems, automation is the key. The centralization of information is the only way organizations will be able to scale as needed without major changes to the workforce. The only way they can keep from being irreversibly being impacted by supply chain problems. Automation will take AP departments from pushing along manual workflows to providing strategic value across the business, as they are reallocated to mission critical tasks, resulting in greater adaptability, faster processing times, and a more fulfilled talent base.
“Many AP leaders are starting to wonder what role, if any, should they be playing in a run-up to a potential economic recession. What steps can they take to help the business navigate financial certainty or even financial turbulence?”
Mark Brousseau, Brousseau & Associates
AP Trend #3: Confusing Labor Market
The Great Resignation. The Great People Shift. Whatever you call it, the job market currently looks a lot different than it did even three years ago. And there doesn’t seem to be an end in sight. More employees are leaving roles voluntarily and this situation is being compounded by people using the pandemic to choose to take an early retirement. The labor market remains challenging in 2023 and the issue is global.
When it comes to accounts payable, the change to the market is having an unexpected trickle-down effect. In the IOFM Career Satisfaction Study, 37% of AP professionals stated that they are only moderately satisfied with their current jobs with 17% only slightly satisfied. Those numbers make up the majority of the population surveyed. Compared to previous surveys, one-third of AP team members are less satisfied with their job than previously reported. Imagine one-third of your staff walking out next week in an already-challenging labor market.
It has been proven that higher levels of automation within a role correlate to higher job satisfaction. In fact, 44% of employees state that fully automated workflows (with no manual tasks) result in them being extremely satisfied with their role. No longer are these employees spending their precious time running around for approvals and signatures. And as 35% of workers are more likely to look for another job if their company requires them to be in an office full-time, the inherent nature of automated cloud-based models to be accessible from anywhere gives them the flexibility that workers are coming to demand.
“The fact is that droves of workers are leaving their jobs voluntarily to find better work. They’re looking for more pay, more opportunities, more flexibility, or even just more opportunities to pursue their life’s dream. When it comes to AP, this trend is having a big impact.”
Mark Brousseau, Brousseau & Associates
AP Trend #4: Importance of Information
It’s not something that’s talked about a lot, but let’s be honest- accounts payable is where the financial health of the business starts and ends. Even without automation, 64% of companies report that the top use of their AP data is used for forecasting, budgeting, and planning, with 61% being used for cash flow analysis. Meaning: the information most important to the success of a company is coming directly from AP.
Digital workflows are a big step up over the emails many are using today to route invoices. Those emails made sense as a workaround when organizations without notice found their employees having to work outside of the four walls of the office. But with the lack of security, chain of custody insurance, ability to easily delete, email is no longer a sustainable workaround.
With automation, you’ll no longer experience misrouted invoices. Notifications of pending invoices and upcoming due dates will give you the visibility needed to avoid late payments and even benefit from early payment discounts. And automation escalation will keep your valuable workforce from being stuck running around the office trying to get invoices paid on time. With features like graphical dashboards, drill-down capabilities, mobile access, exports, and ad-hoc reporting, the data coming out of the AP team becomes vital to the CFO. Be responsible for uncovering the source of trends while understanding the root cause of problems- providing critical agility to the organization overall.
“All along, from its very start, accounts payable has sat on a treasure trove of information about our company’s cashflow and corporate spending. The only problem has been- we stored all this information in file cabinets and cardboard boxes.”
Mark Brousseau, Brousseau & Associates
AP Trend #5: Become More Strategic
Prior to the disruption caused by COVID-19, accounts payable only heard from the greater company when things went wrong. This seemed to change slightly during the last financial downturn in 2008. Not knowing where the company stood in regards to cash flow exacerbated financial crisis across organizations and industries on a global level. That was the catalyst for the leadership within companies to start to see the value offered by accounts payable. This will only be further confirmed as we approach yet another time of economic uncertainty.
There has been a shift in the role of CFO that is causing some ripple effects across the entire organization, especially AP. According to Accenture, 81% of CFOs now know that identifying and targeting areas of new value is one of their main responsibilities. And 77% believe it is their responsibility to rive business-wide operational transformation. In short: CFOs have moved from financial stewards to value drivers.
And with that, new expectations for AP have emerged. They’re not just the purveyors of spreadsheets and the signers of checks. The process of automating the AP process will put more controls into place to keep track of cashflow and corporate spending. Digitizing and simplifying will lead to more data driven initiatives for the payables team- including forecasting, business analysis, and performance visibility and improvement that drives necessary change for the business.
“For years, accounts payable was the quintessential back office function. We were the people in the basement with the hand-me-down office furniture and the coffee pot that didn’t work so well. But that changed and we’ve seen the strategic standing of accounts payable increase.”
Mark Brousseau, Brousseau & Associates
Stay Ahead of the Trends with Automation
One thing is clear: AP automation has become a necessity to any organization. It is no longer a nice-to-have. Given the changes we’ve seen in the roles and responsibilities of leadership and professionals within the finance branch of any company, automation is the only way to meet the evolving needs of the business. Whether it has been financial crises, unexpected pandemics, or global supply chain concerns, it is clear that the AP team will be relied on to light the way for organizations regardless of industry, and that automation is the only way they can do that successfully. The trend towards accounts payable automation is where the industry is going. Hop onboard!
AP AUTOMATION WEBINAR
October 27, 2022
In 2023, five trends will accelerate the transformation of the AP profession. Join us for this webinar as our speaker reveals the five trends that AP leaders must know for 2023, the dangers of being caught unprepared for these trends, and an action plan for seizing the opportunities presented by the trends.
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