The world of business continues to digitize in 2021 and automated solutions are innovating every aspect of business operations, across marketing, analytics, human resources and finance. So it’s no wonder that accounts payable solutions are also benefiting from this shift, evolving to making business finance simpler and more efficient.
Here are six accounts payable trends 2021 will bring to the table.
1. Money in the cloud
Cloud technology is one of the most significant developments of the decade. Through the power of cloud-based storage systems, employees can now access, edit, update, download and share digital content from anywhere allowing for more effective remote work set-ups.
The outsourcing of finance, accounting, and bookkeeping services is nothing new, but the recent events of 2020 put that trend in overdrive. As Covid-19 pushed small businesses to adapt to digital technology, many teams started working from home and more accounting and finance departments rode the wave of change.
Remote setups will likely not disappear post-pandemic as companies now see the power and control cloud-based technology provides their finance departments. While it’s not plausible that the office space will disappear completely, cloud-based services and apps will allow accounting staff to manage books, accounts payable, cash flow and other finance activities on a semi-remote basis.
2. Automation will make AP management more efficient
Handling accounts payable can be tedious work, but recent shifts in machine learning and artificial intelligence allow innovators to build advanced AP automation workflows that lessen the need for human touch. Bots and digital systems allow for automatic reminders, structured workflows, billing systems and other applications that automate accounts payable and make the process less time-consuming for companies. You no longer have to add a separate scheduling software or calendar system as your solution already takes care of it for you.
AP automation systems help accountants and staff automate invoice arrival, invoice categorization, routing, approval, data capture, payment validation, invoice matching, general ledger coding and many others. It’s likely that as AI applications improve, so will the intuitiveness of the automated accounts payable management process.
3. Data science will improve accounts payable
The future of accounts payable hinges heavily on how software developers and tech companies integrate data science into the mix. Big data trends are in their early stages as companies continue to figure out ways to leverage data mining, crunching and analysis capabilities, given today’s meta-tagging and tracking features.
Fintech helps finance departments improve their systems by introducing online bill pay management solutions like Melio and bookkeeping software like QuickBooks. Most fintech innovations rely heavily on data management. As applications improve, finance teams can better analyze accounts payable trends and take better action in terms of payment follow-up, expense projections, cash flow management, spend analysis, strategic sourcing and working capital.
4. Liquidity will be the name of the game
Covid-19 reminded businesses once more how important cash is for an organization’s health. As companies and small businesses prioritize building up cash flow, they try to convert accounts payable into cash.
Liquidity allows companies to get through bad periods where cash flow might remain in the red, so trying to preserve or build up cash reserves to survive is likely not just for the current recession, but any other dry spell in the future.
One example of this is the increase in the use of virtual cards by healthcare suppliers. Other industries also made unprecedented moves to preserve cash in the bank to prepare for slow economic recovery. The return of the “cash is king” mentality of many businesses today will greatly affect how accounting departments prioritize and operate. Expect to see an increase in initiatives to better handle cash flow through B2B payment management, supply chain finance and other methods.
5. The rise of mobile capture and document access
Smartphones and tablets invaded the professional workplace as much as they have the personal one. Currently, 62% of global users access the internet with their mobile phones. As technology continues to shrink to fit the mobile phone screen, business applications will follow suit.
Allowing for data capture and invoice document access and approval on mobile gadgets helps increase employees’ and executives’ responsiveness. Increasing data privacy and security on mobile devices will be a priority in the coming months and years in an effort to make working on-the-go possible.
As trends move towards a more mobile direction, financial shared service firms can capitalize by integrating the lines of business with geographic hubs and smartphone-using clients. Mobile camera capabilities will also improve the receipt documenting process, allowing for better expense management. There is also an increase in one-time pin security features, significantly improving data protection in the process.
6. Online billing management and e-invoicing will continue to grow
As “digital” gradually becomes the norm and not the exception, e-invoicing will continue to grow. The e-invoicing industry is expected to expand and scale to around $20.5B by 2026, at a compound annual growth rate (CAGR) of around 20% between 2019 and 2026.
Online billing management and e-invoicing can help vendors make faster revisions and amendments to their records. Other benefits of an e-invoicing system include lower expenses given reduced printing costs, faster delivery and quicker payment options.
Expediting the AP process
Any finance or accounting department’s goal will always be to shorten the wait time on fulfillment of accounts payable. As companies try to bounce back financially from the economic crunch caused by the Covid-19 crisis, this objective might become challenging. Digital tools, however, can help in many ways if applied effectively to a company’s financial management system.