Finance leaders are maintaining their unwavering commitment to digitising accounts payable, marking the third consecutive year of prioritising this transformation, as highlighted in the MineralTree 2023 State of AP Report.
This annual report provides insights into back-office finance operations and an overview of how businesses are navigating economic uncertainty while striving to streamline their accounts payable processes.
Drawing on input from both buyers and vendors, this report sheds light on the persistent pursuit of digitisation in the world of accounts payable and payment automation.
Five overarching themes
- Persisting commitment to AP digitisation: Finance leaders continue to prioritise digital transformation, even amidst economic challenges.
- Economic headwinds: Rising costs and the need to “do more with less” put pressure on AP teams.
- AP automation’s efficiency: AP automation remains a key driver of efficiency, with significant benefits for finance teams.
- Strategic vendor relationships: Vendor partnerships play a pivotal role in the automation journey, but vendor dissatisfaction persists.
- Room for growth: With only 20 per cent of businesses fully automated, there’s ample opportunity for others to innovate and compete.
Brian Greehan, head of B2B Solutions for global payments at MineralTree, emphasised the significance of digital transformation in today’s financial landscape.
“As businesses continue to face a number of challenges and pressures, finance teams are being tasked with finding new ways to drive operating efficiencies and get more control over cash flow. In response, they are prioritising investments in back-office automation and working with vendors to increase the adoption of digital payments.”
Economic challenges fuel ongoing transformation
The MineralTree 2023 State of AP Report underscores the formidable challenges faced by finance teams in their quest for digitisation. With economic headwinds persisting and costs on the rise, AP teams are under pressure to deliver more with less. The survey reveals that 59 per cent of respondents prioritise “doing more with less,” followed by reducing AP processing costs (49 per cent), improving cash flow management (43 per cent), and gaining enhanced visibility into current cash positions (42 per cent).
However, a new challenge looms on the horizon. Almost half (45 per cent) of firms seeking to hire anticipate significant difficulties and delays in the hiring process. Concurrently, the adoption of a hybrid or fully remote work model is on the rise, with 68 per cent of AP work environments embracing this trend.
AP automation: a beacon of efficiency
Despite the turbulent economic climate, AP automation remains a beacon of efficiency for finance teams. An overwhelming majority of survey respondents (85 per cent) have reported tangible efficiency gains from AP automation, with 63 per cent experiencing accelerated and more punctual payments.
Fifty-eight per cent have managed to handle a growing volume of invoices and payments with the same-sized team, while 24 per cent have reallocated freed-up staff time to other critical projects. Automation has streamlined processes and provided finance teams with much-needed visibility into cash flow and working capital.
The report further delves into the facets of AP automation, highlighting that the most digitised tasks include invoice approval/workflows (71 per cent), followed by invoice data capture and coding (66%), payment execution (58%), and payment authorisation (58 per cent).
Vendor relationships: A catalyst for automation
Strategic vendor relationships have also quietly emerged as a catalyst in the drive for AP automation. A notable 66 per cent of finance leaders acknowledge the growing significance of their vendor relationships. Speed of payment remains the top priority for vendors in the payment experience, yet dissatisfaction lingers regarding the time taken by AP to respond to payment inquiries. Only 52 per cent of vendors believe that AP follows up on payment inquiries in a timely manner, down from 56 per cent in the previous year.