To understand where AP is headed, it’s worth a backwards glance to remind ourselves where we’ve come from. Jimmy LeFever, Research Director at PayStream Advisors, gave an inspiring presentation at last year’s UK Basware Connect event in that showed the delta of change in the last decade, and how technology is shaping new practices and mindsets.
2006: the manual era
Back in 2006, the emphasis was on eliminating paper: most organizations were still doing manual data entry and routing invoices via internal mailrooms. Businesses had invested heavily in their ERP systems, and due to a dearth of other options in the market, turned to these same mega-vendors for bolt-on P2P capabilities. These hyper-focused, on-premise solutions were heavily customized, built for a specific need within a specific department of a specific organization. They were costly, required a lengthy, resource-intensive implementation, and were tough to maintain. Worse, these solutions were aimed at automating existing, flawed processes, rather than re-engineering them for greater efficiency, and often ended up creating more problems than they solved.
2011: a tsunami of change
By 2011, organizations were starting to realize that relying on IT for software decisions was overlooking the tribal knowledge of their P2P people. On-premise was no longer the only game in town: Software-as-a-Service was enabling faster implementations at lower cost – no consultants or costly IT resources required. Outsourced scan and capture was leaving in-house OCR solutions for dust. Smaller, nimbler players had entered the P2P space and were starting to apply competitive pressure to ERP vendors. “Automation” was the buzzword du jour, with P2P decision-makers attending big conferences to learn about emerging solutions. This education started to shift the conversation from process to value, from tactics to strategy.
2016: disruption, not differentiation
Fast-forward to 2016 and cloud had become the new normal: 95% of new implementations were cloud or SaaS, with businesses turning to specialists like Basware rather than big-box ERP vendors. As piecemeal implementations had led to a tangle of disparate systems, organizations were looking to more global solutions to provide a unified view from source to settle. Single, streamlined systems could accelerate communications and reduce errors and delays, while increased visibility would benefit every department’s activities, from strategic sourcing and negotiations to treasury forecasting and handling supplier enquiries. The P2P software market was characterized by disruption rather than simple differentiation, and as the niche market reached critical mass, mergers and acquisitions provided the necessary consolidation to offer holistic solutions.
2017 and beyond: what’s next for P2P?
Today’s focus is on innovative strategies to achieve returns from source to settle: supply chain, sourcing, procurement, operations and treasury.
Electronic payments are finally pushing cheques into decline in the US – little wonder, with the average cost of cheque disbursement at just under two dollars. For an organization that processes 50,000 payments annually, switching to electronic payment programmes or pCards (which yield an average $6 return on each transaction) could turn this $100K cost into a $300K income stream.
There is mounting appetite for real-time payments: while banks are only just starting to roll out the technology, trail-blazing platforms are already allowing buyers and suppliers to transact at the speed of business. Combined with automation, this will enable more companies to take advantage of supply chain financing, factoring, dynamic discounting and other smart, flexible and collaborative practices. It’s anticipated that three-quarters of organizations will be employing these types of financial instruments by 2021, as adoption is growing rapidly year on year.
In 2017 and beyond, the term “blockchain” will be on everyone’s lips. These transformative technology platforms create an indisputable record of transactions and guarantee their provenance, authenticity and accuracy. Without the need for a bank’s clearing house, organizations stand to strip out layers of bureaucracy from supply chains, dramatically reduce the cost of doing business, and eliminate many types of fraud.
We’re in the midst of an exciting time for P2P. To achieve greatness, AP leaders need to start thinking of themselves less as accountants, whose role is, by default, historically-focused, and more as financial strategists, who are inherently forward-looking. They also need the courage to be change agents: whether to convince their CFOs to invest in technology that will streamline and simplify, or to explain to a clerk of 20 years how their role is set to adapt once touchless processing is implemented.