As we wrap up a year of record-high inflation levels that prompted interest rate hikes around the world, businesses are hunting for ways to rein in costs without inhibiting growth. 2023 presents ripe opportunities for accounts payable teams to be proactive about adapting to changing conditions. Here are the top accounts payable trends in 2023 and ways to address them.
As of 2022, more than 50 countries have enacted legislation related to electronic invoicing and digital reporting. Governments in 11 more countries, including the United States, the European Union, and New Zealand, announced potential e-invoicing pilot programs to modernize tax collection and compliance.
Ease of doing business, an efficient and effective collection strategy, and heightened fraud monitoring motivate governments to push for e-invoicing and reporting. Despite the lack of global coordination and appeals from the business sector for more time to comply with requirements, the demand for e-invoicing will continue to grow as a part of accounts payable trends for 2023.
While there are many benefits to using e-invoices, integrating a third-party platform into the AP process requires careful consideration. Large companies with customized ERP systems, for instance, may not be able to integrate systems easily with an external platform. Multinational companies face significant challenges as well. Companies operating in multiple jurisdictions need to align and integrate systems with the global infrastructure. Complications could arise as requirements vary from country to country.
Streamlining AP processes to comply with mandatory e-invoicing and finding the right partners will be critical as organizations prepare their AP teams for evolving legislation.
Finance leaders are facing the twin challenges of both higher costs and anticipated decreasing demand. Despite broad-based recession expectations, persistent inflation worries 73% of CFOs more than a recession. Rising costs have not only threatened profit margins but also wreaked havoc on accounts payable teams who are dealing with the rise of surcharges. Additional surcharges and freight charges with separate invoices from different logistics companies, for instance, make manual reconciliation challenging.
A greater focus on costs puts accounts payable departments under pressure. To keep a closer eye on cash outflows, AP teams have to take a proactive role in implementing strict controls over costs. Unfortunately, the lack of visibility across many AP departments makes it harder to ensure the accuracy of all invoices while making on-time payments.
While AP teams cannot control rising costs, they can improve vendor management, ensure the accuracy of a high volume of invoices before payment, and capture early payment discounts. Increased efficiency through accounts payable automation can achieve these goals while streamlining processes and reducing costly errors.
In times of uncertainty and diminishing pricing power, businesses need a competitive edge. Automation rewards companies with long-term deflationary effects that will ultimately improve their bottom line. Fast-tracking AP automation now is more important than ever to expedite those productivity gains and cost savings.
Despite a potential economic slowdown, 2023 will not bring relief to the talent shortage, as tight labor market conditions and wage pressures persist. 80% of employers expect hiring difficulties to remain for the upcoming year.
For job opportunities to be attractive, remote work has increasingly become a prerequisite for new hires. However, manual AP processes involving paper invoices, data entry, and in-person reconciliation are a major stumbling block for remote work. 86% of CFOs plan to have a hybrid workforce model in 2023, and support systems need to keep up.
Since the pandemic, CFOs have focused on changing the role of their finance teams through automation, digital transformation, and process standardization. Benefits from these changes include more time spent on higher-value activities, efficient processes, and deeper business insights. When CFOs were asked about changes they could make to increase finance team efficiency, driving digital transformation and automation, offering a flexible environment, and upskilling/reskilling talent were cited most often. These upgrades also directly address talent shortages.
Heightened Security Risks
The accounts payable department is the most susceptible department to business email compromise, with 58% of companies reporting email scams in 2021. Although companies are moving away from using checks and ACH debits which are the most susceptible to fraud, AP departments are still at risk. Demand for faster and almost real-time payments creates the need to prioritize data security for 2023. A security breach leads not only to financial losses but also to reputational damage and potential lawsuits.
Automating accounts payable processing intelligently combats fraud by minimizing errors and offering additional checks and balances. Using a procure-to-pay system, for instance, reduces error-prone human intervention. Technologies like invoice data capture, automated matching, and robust master data management further minimize opportunities for fraud.
Demand for An Environmentally Sustainable AP Process
AP departments can be overly paper-intensive because it deals with invoices, delivery receipts, purchase orders, and other supporting documents. As a result, AP teams have been working towards digitizing processes to improve visibility, and flexibility, and support hybrid work arrangements. However, the rising importance of environmentally friendly principles for customers creates new opportunities for companies to share their values.
Over the past five years, 85% of global consumers have been making more sustainable choices, and customers rank sustainability as part of their top five value drivers.
In addition to supporting visibility and long-term strategies, companies work towards creating paperless offices as part of their commitment to a social and environmental cause. By modernizing AP teams, companies reduce costs and their carbon footprint while meeting customer expectations for companies to take part in the global initiative to pursue sustainability.
Embrace 2023 Challenges with Automation
As businesses navigate through the difficulties presented by accounts payable trends, AP departments will need to modernize operations to remain competitive. AP automation helps companies beef up security measures, support sustainability, improve insights, and increase efficiency to meet the biggest challenges in accounts payable.