When it comes to electronic payments, there is a growing gap between buyers and suppliers. The data is part of MineralTree”7th Annual Accounts Payable (AP)”, which includes suppliers for the first time. The report reflects the increasing importance of supplier relationships for business in today’s environment.
With this added perspective, the 2022 report provides a 360-degree view of the AP and B2B payments landscape, identifying the most pressing challenges for both buyers and suppliers and their impact on various industries.
In 2022, companies accelerated their digitization efforts in an attempt to overcome ongoing operational challenges related to the pandemic, including disruptions in supply chains, hybrid operations, and difficult hiring and retention conditions.
At the same time, business leaders continue to put pressure on financial managers to pay suppliers on time to keep goods and services flowing. As a result, many finance departments are using digital tools to streamline their AP operations, streamline payments, and strengthen vendor relationships.
In addition to AP’s growing focus on automation and its impact on B2B relationships, this year’s report also examines the rise of electronic payments and the gap between buyers and suppliers regarding adoption.
Some of the specific topics include:
Macro trends are putting increasing pressure on AP
While the pandemic has caused significant challenges to all business operations, its impact has been particularly acute in AP due to its strategic role in timely payments to suppliers and ensuring access to business-critical supplies and resources.
- Nearly 71% of CFOs said their supplier relationships have grown in value in the past year, up from 59% in 2021.
- Invoice processing issues and delays (44%), followed by payment delays and/or reconciliation issues (39%), were cited as the top issues associated with supply chain disruptions.
- The shortage of qualified candidates due to the Great Retrenchment has increased the pressure on the AP teams. More than half (54%) of CFOs surveyed expect problems or delays in hiring quality AP staff this year.
Companies are digitizing AP to improve efficiency, but there is room for much more
Companies are accelerating their AP automation efforts to shorten the billing-to-payment cycle and meet suppliers’ desire to get paid quickly. At the same time, they also benefit from increased staff productivity, lower processing costs, stronger security and improved cash flow.
- For the second year in a row, AP remains the back office digitization priority ahead of AR, cost management, lean management and forecasting.
- 52% of respondents have automated their AP process, up from 32% last year. However, only 16% say they are fully automated, missing out on critical value in the form of end-to-end efficiency, visibility and insight.
- Automation allows AP teams to do more with less. Of those with an automated AP, nearly two-thirds process more invoices and payments on a team of the same size (61%), alleviating some of the hiring challenges discussed earlier.
ePayment adoption continues to grow as more CFOs realize its value
In 2022, the use of every form of electronic payment increased, while the number of checks decreased by 10% compared to the previous year.
- The number of AP teams planning to shift the majority of their spending to ePayments increased from 65% in 2021 to 71% in 2022.
- Virtual maps showed the most significant growth last year, from 9% of companies increasing their use in 2021 to 38% this year. ACH saw the next largest growth, from 50% in 2021 to 67% in 2022. International/FX ranked third (19%), likely due to the need to find new overseas suppliers to compensate for supply chain disruptions.
- Suppliers embrace digital payments wholeheartedly – 82% want to receive more electronic payments from their customers
The “blame game” prevents even wider adoption of ePayment
While both buyers and suppliers favor ePayments, they continue to name each other as the biggest obstacle to further adoption.
- 57% of finance leaders cited vendor reluctance to accept electronic payment types as the primary reason hindering growth.
- Conversely, 63% of suppliers identified the main barrier to ePayment as customers not being ready to give up checks.
- Other buyer concerns center on their perception of the time and effort required to set up ePayments, including the team’s ability to contact/register suppliers (40.4%). The irony is that CFOs can easily eliminate this backlog by partnering with an AP automation vendor that offers managed services such as vendor onboarding.
Elizabeth (Elle) Kowal, MineralTree’s COO, says AP teams are facing a number of major challenges throughout 2022 – supply chain disruptions, work-from-home and hiring issues, as well as an increase in invoices and inquiries from suppliers.
“AP automation combined with managed services is a no-brainer for AP teams trying to do more with less and stay afloat in the face of supply chain volatility,” says Koval. “Automation solves common AP headaches for understaffed AP teams while increasing productivity, visibility, control, savings and even profits. The 2022 State of AP Report reveals several ways AP teams can address these challenges and rapidly increase the operational effectiveness of their AP operations.”
The 2022 State of AP Report is available. HERE.