MineralTree, an accounts payable (AP) and payment automation solution provider, has released its seventh annual State of AP report. For the first time, MineralTree expanded its research to include suppliers, reflecting the growing importance of vendor relationships to businesses in the current environment.
With this additional perspective, the 2022 report provides a 360-degree view of the AP and B2B payments landscape, identifying the most pressing issues for both buyers and suppliers, and their impact across a range of industries.
In 2022, companies accelerated their digitisation efforts in an attempt to overcome persistent, pandemic-related operational challenges including disrupted supply chains, hybrid work, and a challenging employee hiring and retention environment. At the same time, business executives continue to put pressure on financial leaders to pay vendors on time to keep goods and services flowing.
As a result, many finance teams are embracing digital tools to optimise their AP operations, streamline payments, and solidify vendor relationships.
In addition to AP’s growing focus on automation and its impact on B2B relationships, this year’s State of AP Report also looks at the growth of e-payments, and the disconnect between buyers and suppliers regarding adoption. Some of the specific themes include:
Macro trends put mounting pressure on AP
While the pandemic caused significant challenges across all business operations, its impact was especially acute in AP because of its strategic role in paying vendors on time and ensuring access to business-critical supplies and resources.
- Nearly 71 per cent of finance leaders stated that their relationships with vendors grew in importance over the past year, compared to 59 per cent in 2021.
- Invoice processing issues and delays (44 per cent), followed by payment delays and/or reconciliation issues (39 per cent), were cited as top challenges stemming from supply chain disruptions.
- A shortage of qualified candidates due to the Great Resignation has increased the pressure on AP teams. More than half (54 per cent) of the finance leaders surveyed expect challenges or delays in hiring quality AP staff this year.
Companies are digitising AP to increase efficiency, but there’s room for much more
Businesses are accelerating their AP automation efforts to shorten the invoice-to-payment cycle and address vendors’ desire to get paid quickly. At the same time, they are also benefiting from increased staff productivity, reduced processing costs, stronger security, and improved cash flow.
- For the second straight year, AP remains the top digitisation priority in the back office ahead of AR, expense management, close management, and forecasting.
- 52 per cent of respondents have automated their AP process, up from 32 per cent last year. However, only 16 per cent say they’re fully automated, missing out on critical value in the form of end-to-end efficiency, visibility, and insights.
- Automation is enabling AP teams to do more with less. Of those who have automated AP, nearly two-thirds are processing more invoices and payments with the same sized team (61 per cent), alleviating some of the hiring challenges previously discussed.
E-payment adoption continues to grow as more finance leaders realise its value
Every form of e-payment saw increased usage in 2022 while checks decreased 10 per cent from the previous year.
- The number of AP teams that plan to shift more of their spend to e-payments increased from 65 per cent in 2021 to 71 per cent in 2022.
- Virtual cards showed the most significant gains over the past year, from nine per cent of companies increasing usage in 2021, to 38 per cent this year. ACH saw the next largest gains – from 50 per cent in 2021 to 67 per cent in 2022. International/FX was third (19 per cent), likely due to the need to source new overseas vendors to compensate for supply chain disruptions.
- Vendors are wholeheartedly on board with digital payments – 82 per cent want to receive more electronic payments from their customers
The ‘blame game’ is impeding even broader e-payment adoption
While both buyers and vendors favour e-payments, they continue to name each other as the biggest obstacle to furthering adoption.
- 57 per cent of finance leaders cited vendor unwillingness to accept e-payments types as the top reason impeding its growth.
- Conversely, 63 per cent of vendors identified the primary obstacle to e-payment as being customers not ready to move away from checks.
- Other buyer concerns center around their perception of the time and effort it takes to set up e-payments, including team capacity to contact/enroll vendors (40.4 per cent). The irony is that finance leaders can easily eliminate this anticipated work by partnering with an AP automation provider that offers managed services, such as vendor enrollment.
“In 2022, AP teams face a number of significant challenges – supply chain disruptions, work-from-home and hiring challenges, and an increasing volume of invoices and vendor inquiries,” said Elizabeth (Elle) Kowal, chief operating officer at MineralTree.
“AP automation, combined with managed services, is a no-brainer for AP teams trying to do more with less, and stay afloat amid supply chain volatility.” She continued: “Automation handles common AP headaches for understaffed AP teams while elevating productivity, visibility, control, savings – and even earnings. The 2022 State of AP Report uncovers several ways AP teams can address these challenges and quickly increase operational efficiency of their AP operations.”