• ePayments (Part 1): Taking Cash Flow Management to the ‘Next Level’  

ePayments (Part 1): Taking Cash Flow Management to the ‘Next Level’

It may not be considered the most strategic or exciting aspect of today’s business world, but the back-office functions of accounts payable (AP) and accounts receivable (AR) are beginning to mount a bit of a late challenge for the spotlight when it comes to the evolving strategic nature of financial operations over the last few years.

There was a time, perhaps more than a decade ago, when CFOs simply did not find it necessary to put much focus in place to optimize invoice flows and schedule payments (usually via check at the time) as part of their strategic corporative initiatives. The problem, quite frankly, was that the processes weren’t deemed impactful enough to be viewed as game changing or career making for those in the finance department.

Enter ePayments
That has all changed with ePayments, the progression of which can be seen to link directly with more fluid and profitable financial operations over the past few years. Value has been actively driven towards more and more organizations via the strategic evolution of AP and AR. This has enabled enhanced spending analytics and cash flow visibility, combined with the advantages of early payment discounts and greater processing efficiencies. From a strategic standpoint, optimizing these back-office functions has unlocked more capital and released greater value throughout the supply chain and the overall economy.

A Look At The Stats
Indeed, in today’s business environment, the once perhaps mundane world of payments, processing, and scheduling has now become more critical than ever before. Payables Place, a leading research and advisory firm by Ardent Partners, considers the following points on the current state of payment processes from around the world:

  • 72% of all payments are still made on average via paper-based or manual methods (usually checks), leaving only 28% to be settled using electronic transfers.
  • Only 32% of organizations manage to make use of early payment discounts offered by their suppliers.
  • Less than 30% of enterprises are able to process invoices without the need for human intervention.
  • The cost to an organization to process a single payment averages ~$14.

Technology and process automation will continue to play an increasingly important role in the enterprise. Indeed, the rate at which business is capable of accelerating has increased exponentially over the past few years, and will only increase from here. Governments around the world – including in the United Kingdom, U.S., and Europe – have already launched initiatives to enable the faster payments to SMEs, and ePayables (along with AP and AR process automation) are becoming in vogue, and most definitely taking center stage.

ePayables Heating Up
Adoption and ‘promises to adopt’ ePayables technologies within the enterprise has been increasing over recent years, which is a sure sign that the C-suite and executive management teams are starting to recognize the strategic impact of these functions, and are making the required investments to automate and speed up the AP, AR, and overall financial processes. Internal politics may play a role here, but the good news is that automating and optimizing these processes will actually save money and drive value in the enterprise and supply chain as well.

Failure to sufficiently and aggressively implement early payment discount capture processes and faster, safer, smarter payments technologies means that enterprises are leaving millions of dollars on the table. Companies need to embrace the revolution of electronic payment methods if they are to start making their financial position a strategic imperative for the enterprise. That “next level” of success is there for the taking. It may not be pretty and it may not even be cool, but the world of AP and AR is finally being recognized as the place to be when it comes to making a strategic impact on the company and the economy.

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