With the increasing rate of technological innovations prevalent today, every business front is constantly experiencing a shift in its operations. Sophisticated digital products and automation are further helping businesses improve their processes to maximize profits. And as expected, several industries are progressively embracing this advancement.
Consequently, accounting actions such as accounts payable operations rank among the business processes reaping the fruit of innovative advancement. This industry has recorded revolutionary changes since adopting sophisticated technology in its methods. Manual processes are being replaced with error-free automation, and AI is gradually improving the efficiency of AP processes. While these improvements have been building up for several years, these are the accounts payable trends you should look out for in 2021.
1. Reliance on Cloud-based Software
With the advent of process automation in the accounts payable sector comes the likelihood of increased complexities in its execution. This means that businesses will have more to complete within a short period. And for companies that cannot afford to employ AI all the way, this could affect their budget in a not-so-good way.
For example, a business employing AI to capture invoices will need payment processing tools to make their AP seamless. And this could mean that different servers may need to be obtained for both processes – when storage is done physically. However, with the increased use of cloud-based software, companies can easily access most/all of their AP tools from a centralized platform. And the easy and remote access cloud-based solutions offer businesses will make it a desirable AP trend in the new year.
2. Cybersecurity Stigma
Cybersecurity has always been a sensitive subject in industries actively adopting digital means of operation. It is one crucial issue that technologically inclined establishments need to pay attention to because technological advancements prompt an increased need to protect information shared on the internet.
In the accounts payable industry, the trend of cybersecurity stigma may prevail in the nearest future because more and more AP data will be processed online as time goes by. There will be risks concerning supply-chain-powered attacks and incorrect payments to fraudulent bank accounts. More businesses will adopt digital, web-based methods of running their AP operations, which means that hackers and cybercriminals will have more information to exploit in the coming years. And since small and mid-sized businesses may not afford advanced cyber protection, more businesses would likely fall victim to cybersecurity stigma.
3. Automation & AI-Driven Payables
During manual AP data capture, errors and omissions are somewhat inevitable. These errors can financially damage businesses, and business-crumbling outcomes can result when decisions are made with erroneous information. However, automation and AI-driven tools can significantly minimize data entry and processing errors, and businesses can secure accurate information for core decision-making processes.
Automated payables also make the job of accounts payable experts much more efficient. The complexities and financial implications involved in manually running most AP operations will be eliminated, and more resources can be channeled into optimizing the entire process. And since automation gives businesses the freedom to pay more attention to other profit-generating sectors, we can expect an exponential increase in automation and AI-driven payables in the near future.
4. Data Science & Accounts Payable Analytics
The advanced features of any accounts payable system go beyond making payments to vendors and suppliers. It encompasses budgeting, vendor relationships management, cash flow management, and the establishment of relevant business policies. Hence, an ideal accounts payable process should provide users with analytical tools and valuable business insight.
Many accounts payable solutions are anchored on data science and finance analytics. With these solutions, companies can actively automate their invoice capturing processes, reduce the cost of manually transacting with their vendors, and further predict the future of each AP process.
And when data science can perform most of a business’s payables efficiently while providing a holistic approach to these processes, we’ll find that more companies will open up to data science and AP analytics in 2021.
5. Preference for Online Payments & E-Invoicing
Business owners will agree that processing payments and invoices manually can take an unpleasant toll on cost and efficiency. When you have to print invoices, approve them and fax or mail them back to your vendors, you may end up exhausting an entire business day on a single approval. And if you have to visit your financial institution whenever you have to pay your suppliers, you would likely squander your profit in making payments.
On the other hand, AP technologies have made it easier and less expensive to run AP operations. E-invoicing and online payments allow you to capture and approve invoices effortlessly and then process payments to your vendors from the comfort of your home or office. And if digital AP methods are constantly improving, more and more organizations will prefer to process their payments and invoices online.
6. Receipt Capture & Document Storage
Receipt capture and document storage are vital aspects of any AP process. Upon completing payment for commodities supplied to you, receipts are your business’ evidence for such transactions. Consequently, they would need to be stored in a secure but accessible space to be easily retrieved for reporting, budgeting, auditing, and tax preparation purposes.
Suppose systems and solutions are already in place to ease receipt capture and provide a safe way to store AP documents. In that case, the industry will experience increased use of such systems. Companies and accounting firms will continually embrace every effortless means of capturing and storing transaction receipts they find.
Furthermore, the inclination of AP solutions toward mobile-friendliness will drive more interest toward receipt capture and document storage. This inclination means that large business operations can be managed from a smartphone shortly, and fewer resources would be required to complete these processes.
7. Remote Work Transition
The coronavirus pandemic has revealed the two sides of remote working to the global workforce. Businesses of different industries and sizes have seen the benefits – as well as the drawbacks – of adopting a remote working model.
For businesses that employ the use of automated solutions for their AP processes, they will be equipped to complete most of their operations from remote locations. Consequently, remote work transition will be a breeze for these companies to achieve. And since most AP solutions are navigating towards mobile-friendliness, more users will be able to run several operations on the go.
Lastly, the prevalence of cloud-based business solutions has also increased how businesses adapt to remote working. There are also the benefits of reduced real estate and maintenance costs businesses enjoy when they imbibe a remote work system.
8. Cashflow Management
The movement of funds in and out of business makes up a crucial component of that business. It would be catastrophic for a company to experience an imbalance in its cash inflows and outflows. When accounts payable processes exceed accounts receivable processes or are not correctly managed, there would be less money on the ground to complete essential projects before their deadlines, vice versa.
However, cash flow management does not only help a business stay abreast of its payables and receivables. It also allows them to monitor expenses, maintain good relationships with vendors and customers, and actively prepare for the future. Hence, with the help of advanced business solutions, more businesses will pay attention to their cash flows for efficient cash management in the coming year.
9. Integrated Supply Chain & Accounts Payable Management
Without excellent supply chain management, accounts payable processes will undoubtedly go wrong. And if businesses will efficiently control the environment around their payables, they must first regulate their supply chain.
For businesses with broad and diverse supply chains, adequate management may become an arduous task if done manually. But with the current trend of advancement in AP operations, supply chain management would no longer be an issue for businesses, provided they adopt the right solutions.
Integrated supply chain management implies that businesses can run supply chain operations such as procurement and final distribution from a central platform. This integration also means that companies will not encounter difficulties in synchronizing their supply chain operations with other relevant aspects of their business.
It is now clear that businesses will no longer relegate AP processes backstage. First, it is a prerequisite for organizations to perform several other essential tasks like reporting, budgeting, auditing, tax preparation, and decision making. And the various advancements in the business front have forced business owners and executives to pay more attention to their AP operations.
In light of the evident importance of AP processes in the survival of any business, several trends – most of which are fostered by technological advancements – will be seen in this industry. And in a bid to stay afloat amidst the fierce competition ravaging different sectors, no business would want to be left out of the wagon. These trends have come to stay and would in no time become the modus operandi of many companies in the AP sector.