We’ve reached that time of year when people pause, reflect and try to predict the future.
What will 2022 bring for accounts payable (AP)?
Well, if there’s one sure thing we’ve learned over the past two years, it’s that there are no sure things. But there are four trends that we believe will have the biggest impact on AP in 2022.
Prediction #1: Machine learning becomes table stakes.
AP professionals have long dreamed of the day when they aren’t bogged down by manual, repetitive tasks such as keying invoice data, shuffling paper, fixing errors and mistakes, and chasing down information. Machine learning will make that dream a reality for more AP professionals in 2022. Machine learning is a powerful type of artificial intelligence that analyzes patterns in data to optimize decision-making and improve business outcomes. Automating monotonous tasks is a game-changer for weary AP professionals. Consider how machine learning can transform a time-consuming and error-prone task such as three-way matching. Traditional AP automation systems rely on rigid rules for comparing the line-item details on the invoices that they receive from suppliers with information residing on purchase orders and proof-of-delivery receipts in their system of record. The smallest discrepancy – such as a price increase or the addition of freight charges – can result in days or weeks of frustrating back-and-forth telephone calls and e-mails as AP professionals and stakeholders sort things out. With machine learning, price changes are automatically detected and routed for approval, getting invoice approvals back on track fast. Similarly, buyers can use machine learning to configure business rules for approving freight charges that fall within a predefined range. Machine learning also analyzes historical invoice data to assist with general ledger coding, determine who must approve and invoice, and identify potentially fraudulent invoices. The applications for machine learning in AP are seemingly endless. By automating mundane and laborious invoice processing tasks with machine learning, AP professionals will have more time to focus on more fulfilling and value-added activities such as resolving true invoice exceptions, analyzing data, collaborating with stakeholders, and building relationships with suppliers. It’s for these reasons that more AP departments will deploy solutions in 2022 that include machine learning capabilities.
Prediction #2: North America takes a big step towards electronic invoicing.
Inefficiencies in the AP lifecycle start with the way that suppliers submit invoices. Compared to electronic invoices, invoices sent through snail mail, e-mail, and fax cost more, resulting in more errors, taking longer to process, and providing less visibility. Businesses cite lots of reasons for submitting invoices through mail, e-mail, and fax. But the lack of invoicing standards in North America is one of the primary reasons that sending and receiving invoices and making business-to-business (B2B) payments is so inefficient. That may be about to change. The Business Payments Coalition (BPC), a working committee of key industry players established by The Federal Reserve, will pilot a virtual exchange network in 2022 that promises to make it easier for all types of businesses to transmit and receive e-invoices. The pilot comes on the heels of a successful test of the exchange in 2020. Seventy-three companies across the United States, Canada, and Mexico, mostly service providers representing hundreds or thousands of customers, will take part in the market pilot. If all goes well, the market pilot will transition directly into a production environment in 2023. The pilot is like an initiative by the European Union to exchange e-invoices, e-orders, e-catalogs, and other standards-based electronic documents over a network. The Fed’s virtual exchange network can be a big step towards eliminating inefficiencies and unnecessary complexities in payables and receivables. One thing that businesses can do in 2022 to prepare to reap the benefits of this initiative is to digitize and centralize the receipt of invoices from suppliers through the deployment of an AP automation solution. With their invoices in a single place, businesses can more easily take advantage of the virtual exchange network – and start exchanging invoices globally – when it is generally available.
Prediction #3: AP becomes an ‘information hub’ for the corporate enterprise.
If there is one lesson that business leaders learned over the past two years, it’s that the data that flows through their enterprise can help them stay one step ahead of the market and economic volatility. It’s for that reason that more businesses will automate AP in 2022 to gain better insights into their cash flow, corporate spending, operational performance, and potential fraud and compliance risks. Over time, automated AP departments will transform into an information hub to the corporate enterprise. Graphical dashboards will put smart insights into financial metrics at the fingertips of those who need them. Drill-down capabilities will empower decision-makers to identify trends and uncover the source of financial operations issues. Ad hoc reporting will enable managers to quickly access the reports they need without costly customization. Mobile access will keep senior managers in the know while on the go. And exports will speed the delivery of invoice data downstream for 360-degree visibility into transactions and suppliers. The visibility provided through AP automation will empower stakeholders across the enterprise to make faster, better-informed decisions. Transforming AP into a ‘control panel’ for financial decision-making will also make the function more fulfilling for AP professionals and more attractive to job applications, particularly millennials. The AP job role will transition from a data clerk to a data analyst, making the job more meaningful and desirable. If you want to transform your AP function into an information hub, automating in 2022 is a good first step.
Prediction #4: Automation helps AP professionals regain control over their time.
Processing invoices in a manual or semi-automated environment was never easy. But doing it from home while trying to juggle family and home responsibilities has been hard on AP professionals. The operational disruption caused by the prolonged shift to remote working has impacted every part of the invoice-to-pay lifecycle. As a result, 25 percent of AP professionals are working longer hours these days, according to the Institute of Finance and Management (IOFM). Eight percent of AP professionals are working an additional two hours per day. Many AP professionals would be working even more hours if their employer hadn’t put a lid on overtime. Long, stressful days performing manual, repetitive work can take a toll on AP professionals. With no telling when or if AP teams will be returning to the office full-time, it’s imperative that AP leaders find ways in 2022 to achieve sustainable operational improvements to avoid burning out their staff. AP automation was built for hybrid work environments. Invoices sent via e-mail, File Transfer Protocol (FTP) upload, or a supplier portal can be aggregated onto a single platform. Invoice data can be automatically extracted and validated with a high degree of accuracy and matched against POs and proof-of-delivery information residing in an accounting system. Unmatched invoices or invoices requiring approval are digitally routed based on pre-configured business rules, whether the person is across town or across the world. Approved invoices are posted directly to the buyer’s accounting software, without the need for rekeying. And AP managers have full visibility into the entire process. By eliminating manual, repetitive tasks with automation, AP staff can regain control over time.
Machine learning. E-invoicing. Analytics. Hybrid work environments. These trends will reshape the AP function in 2022. They also will establish a foundation for a longer-term change in the way that business gets done: an environment where goods are purchased and paid for without invoices.
Want to learn more about these bold predictions for the AP function in 2022 and how your department can prepare? Click here to watch our recorded webinar.