This posting about payables automation is in PaymentsSource, and summarizes one of the pain points for AP departments, in particular affecting larger organizations spread across various jurisdictions. The piece was written by a senior at Nvoicepay, a payables automation fintech that was recently acquired by FleetCor:
‘There are lots of reasons why it makes sense for a company to have multiple payment accounts, but nobody thinks much about the pain it’s going to cause in accounts payable….It’s one of those hidden back office problems banks and traditional financial service providers have never been able to solve, so accounts payable professionals have found a way to live with it. But today there are ways to live without it….How does a company end up with dozens, or even hundreds of bank accounts? It’s not an uncommon situation for a large enterprise, especially in industries such as hospitality, construction, or health care, where there are multiple locations and business entities under one umbrella.’
There remains a lot of manual processes and paper out in the North American landscape. Most will point to the staying power of checks as a proxy for paper, but even the various e-payments tools can each have disparate associated processes. In other words, a company can automate the use of checks, and ACH, etc, but if it has separate and non-standard workflows for each, the end result remains sub-optimal.
We consistently explore this opportunity with members, most recently in a report title B2B Payments: More Options Than Ever Before, which has a basic message for corporations: Overcome inertia and get moving on digitalization. The effect of manual processes runs across the full cash cycle, so if there are AP issues affecting DPO, one can be fairly sure that there will also be AR issues, most pointedly in account posting and reconciliation, which affects DSO.
‘Each bank and card provider can send it in a different format, with different information, or not at all. That makes reconciling payments data with the accounting or ERP system—or multiple accounting or ERP systems—exponentially more convoluted. It’s no longer X number of payment types times Y number of bank accounts. It’s a different procedure for almost every type of payment and/or bank or payment provider.’
This article is a good and brief piece to check out, highlighting an opportunity (and we believe a growing competitive necessity) for institutions and their corporate clientele.
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
