Key trends reshaping the accounts payable automation in 2023
Businesses across the globe are undergoing a tech-enabled upheaval. Digitalisation has touched every aspect of business operations. The Procurement-to-Pay process, too, has been reimagined to achieve end-to-end efficiency. Businesses are now looking toward the future and pondering the potential transformative disruptors for the Accounts Payable (AP) function in 2023.
There are multiple bottlenecks in the non-automated accounts payable process, from paper invoices to payments by cheque. Each step is time-consuming, prone to errors, and laborious. Automated conversion of paper invoices to digital invoices using optical character recognition (OCR) and machine language or only AI allows the invoice to be routed through a workflow for purchase order and delivery receipt cross-check, approval, integration into the enterprise resource planning (ERP) system, and electronic payment. Automated invoice conversion saves human effort but can be erroneous and does not achieve Straight-Through-Processing (STP). E-invoicing is essential for STP. Automation will be the destination for AP in 2023.
Businesses are moving to e-invoices, but it hasn’t been a large-scale adoption. SMEs especially have been reluctant to make a move. E-invoicing has multiple advantages such as massive cost-savings, a significant reduction in processing effort, a lower carbon footprint, reduced tax evasion, minimal errors, and facilitation of straight-through-processing (STP). Various governments are trying to boost the transition to e-invoices. The EU has mandated e-invoicing in the business-to-government (B2G) and government-to-government (G2G) space since 2020. The Business Process Coalition (BPC) has published the ‘E-invoice Exchange Framework’ in the US. It is working on completing an in-market pilot to test an e-invoice standards framework. The standardisation of e-invoicing is expected to amplify the adoption among SMEs, as generating e-invoices in various formats for multiple trading partners was the primary deterrent. 2023 should see a steep rise in e-invoicing.
AP Analytics and Cash Flow
The AP process generates valuable data regarding spending, payment, resource utilisation, suppliers, and inefficiencies. Economic uncertainty and inflation are the norms now. AI-enabled insights from mining the AP data can strengthen the organisations’ cash flow. Intelligent analysis of invoice payment data and supplier contracts can help organisations land the best deals and optimise invoice payment. Timely and accurate AP data should be made available through digitalisation to realise the full potential of insights using machine learning. The acumen gained can also shape the business’s strategy for managing resource allocation, procurement, finance, and accounting.
Real-Time Payments (RTP) mode of funds transfer is initiated, cleared, and settled almost instantaneously and can be done 24/7/365. It provides immediate payment confirmation and access to funds, improving cash flow and liquidity management. The “Request for Payment” functionality helps businesses expedite payment by sending a request to pay to the payer, and the payer only needs to approve and make the payments. The steepest growth in RTP happened during the pandemic and ensuing lockdown, which closed retail and in-person banking. RTP is growing exponentially worldwide and is all set to change how business is conducted and transacted. 2023 will be another year of a steady rise in the adoption of RTP.
Data Security and Fraud Prevention
Most organisations have been subject to business email compromise scams like phishing and spoofing, which are used for account takeover and payroll diversion. Most cybercrimes are social engineering scams, not system intrusions. These threats evolve so quickly that legacy security controls cannot avert them. Accounts payable data is highly sensitive and a prime target for fraudsters. AI-based fraud prevention can detect emails that diverge from normal communication and quarantine them, thus foiling any potential attack with pre-emptive action. Intelligent and automated AP solutions can spot fraudulent transactions like duplicate invoices or charges for unrendered services. In addition to having intelligent fraud prevention, regular cybersecurity training is essential for all employees. Machine learning-led security features are a must-have in 2023.
The pandemic brought home the convenience of a no-commute lifestyle. Many employees want to continue with the arrangement post-pandemic, forcing organisations to change their operational methodology. Organisational units have had to improvise, adapt, and upgrade to accommodate remote and gig workers. AP has been no exception to this trend. It has increased pressure on organisations to automate their AP processes and vice versa; the digitalisation of AP has promoted remote work. Hybrid work is here to stay and shows no signs of ebbing in 2023.
Cloud-based accounts payable solutions offer scalability, security, lower costs, remote access, and flexibility. Cloud solutions are automated and intelligent. They offer customisation per the organisation’s requirements and budget, with the option of scaling up when needed. Aspects such as remote access for a hybrid workforce, and the absence of the hassles of maintaining and upgrading on-premises systems are the other plus points. 2023 should see much more AP processing moving to the cloud.
2023 will likely see a metamorphosis in the Accounts Payable function of many organisations, as they transition from cumbersome and error-prone processes to automated, efficient, and agile functioning.
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