What is the future of accounts payable?
by Anna Koussertari
The role of accounts payable staff has changed significantly over the past two decades as technology has continued to play an ever-increasing part in day-to-day duties. Today, AP employees are more likely to spend their time working at a computer, rather than chasing up paper invoices.
As more aspects of AP processes are taken over by technology, the question is, what is the future of accounts payable? What role will accountants and AP employees play in the next ten to 20 years? Will the processes become completely automated?
Read on to find out how the future of AP may play out, and how to prepare for it.
Machine learning technology and artificial intelligence are assisting people and managing processes in almost every aspect of the corporate world, including AP. In fact, the growth of technology in the business world is having the most significant influence on the future of AP.
In the financial sector, professionals are growing accustomed to the fact that accounts payable automation isn't a luxury reserved for larger companies with equally large budgets.
With cost-effective tools available, even small to medium-sized businesses can access the same features. Automatic approval reminders, invoice capture and code are some of the services that automation tools can provide for enterprises.
Making the move to AP automation has the opportunity to reduce costs and improve the department's efficiency. This can potentially make the accounts payable team a more strategic and data-driven body.
Challenging security threats
As digital storage continues to gain ground, many experts predict security threats will reduce significantly. Limiting access to critical files and using cloud storage can minimise the risks of fraud and other security threats, as long as the correct controls are put in place.
Accounts payable will need to keep on top of the ever-changing environment and keep up to speed with new security threats. Best practices should include performing daily bank reconciliations, so any unusual activities can be spotted as soon as possible.
The communications medium will minimise the risk of sensitive information falling into the wrong hands by establishing more secure communication channels with the vendor supplier.
Because the AP team will have access to more data in real-time, it is likely to be the first to notice if something is wrong. This will give the accounting department the chance to assist businesses and the IT team in navigating the digital financial landscape and supporting improved security efforts.
The advances in AP automation will provide businesses with greater access to performance indicators, such as the processing time of invoices. In addition, accounts payable will gain access to real-time indicators of business performance, including account reconciliation, the history of payments, and cash flow.
If the reports are automated, or almost fully automated, accounts payable professionals won't need to spend hours developing reports. Their role will change into a more advisory one. They will be responsible for explaining to business stakeholders what the reports mean and making recommendations about improving business health and cash flow.
It is predicted that AP automation can help businesses manage cash better, optimise performance, control spending, and mitigate risks in ways that weren't possible in the past. The next question is what the AP department might look like, ten years from now.
Less manual data entry
As technology advances, data will flow automatically from systems and clients into AP automation software. It could even flow into real-time reports. This means there will be a reduction in manual data entry. Considering manual entry is more prone to errors, this is likely to become a thing of the past.
Accounts payable professionals will be able to focus more on strategic tasks, rather than spending time on tedious tasks and businesses will have access to more insights, enabling them to grow without taking on additional AP staff.
Some aspects of the AP team's work are already managed digitally. For example, the query management system is in the form of an online database to register customers' queries and complaints.
In the future, most AP tasks, such as calculating and distributing internal reimbursement payments and sales tax exemption certificates, could all be managed by an automated system. This would further reduce AP employees' manual workload.
Accounts payable automation offers a wide range of alerts and notifications, including reminding decision-makers to approve an invoice for example. In the future, accountants are likely to have real-time access to a much wider range of data, including financial information about their own company, or about their clients.
On receiving these alerts, AP employees will be able to flag up issues, including invoice fraud, earlier in the process. They will also be able to gain a more accurate picture of the business's overall health.
Proactive vs reactive
Having real-time reports as part of an automated system will permit AP teams to become proactive rather than reactive when it comes to problem-solving. Employees will no longer be waiting for paper invoices to fall onto their desks. Instead, they will be able to log into the digital system to find out what's holding up a payment.
Problem solving will also be proactive rather than reactive, thanks to employees being able to see potential issues in real-time, preventing them from becoming significant problems. For example, if a dip in cash flow is projected, AP employees can make a proactive decision on freeing up cash for necessities, such as investing in new equipment.
More strategic role
Accounts payable is likely to play a more strategic role in the future, as the department becomes more streamlined and digital, involving less physical paperwork.
It will be unlikely to lead to the complete automation of AP. Instead, the department's employees will have more time to analyse data, ensure the appropriate controls are in place and look for growth opportunities.
Preparing AP for the future
There's no magical formula to prepare your AP department for the future. However, there are some steps you can take to ease into new methods of working. Diversify employees' skills as the work becomes more digital and less based on paperwork.
Future training areas for AP managers and employees could include data and business analytics, cloud storage and other technology, data security, online security, and handling payment-related inquiries.
With invoices uploaded automatically into the AP system and sent to the relevant person for approval, AP employees will have direct access digitally to the invoice management information they require. They will be able to focus more on building relationships with business stakeholders.
AP professionals should be willing to learn new technology skills to prepare them to become strategic partners. The Accounts Payable Association is here to help your business take the leap into AP automation. Subscribe for all the latest industry news and information.