AP automation has moved rapidly up the priority list for finance departments as the COVID-19 pandemic exposed the limitations of manual back-office processes. Remote work, supply chain disruptions, and heightened attention to cash flow made it increasingly difficult for organizations to rely on paper-based workflows and checks. Research from MineralTree illustrates how these pressures accelerated the digitization of accounts payable while highlighting the continued reliance on traditional payment methods.
For finance leaders, the shift is about more than replacing paper with electronic processes. Automating accounts payable from end to end can improve payment efficiency, strengthen supplier relationships, enhance visibility into cash flow, and provide greater protection against fraud. As organizations reassess processes that may have gone unchanged for years, AP automation offers an opportunity to modernize financial operations while creating both immediate efficiencies and longer-term strategic benefits.
This release at Intrado GlobeNewswire provides some bulleted detail on the latest version of an accounts payable report from the Massachusetts-based fintech Mineral Tree, which provides mobile and online accounts payable automation software for finance professionals. The company has been conducting surveys and releasing similar reports now for the past six years.
One of the things that readers have been hearing on these pages and elsewhere is that the pandemic is accelerating the adoption of digital solutions across financial operations. This report from Mineral Tree, which one can download from the press release, provides some support for that assertion in the form of survey data.
‘The research effort surveyed finance executives about the impact of the pandemic on their AP operations, supplier relationships, the use of different electronic payment methods, and their adoption of AP automation…..COVID, remote work mandates, and supply chain dependencies all helped accelerate the digitization of businesses, especially in the back office where inefficient manual processes created enormous challenges for staff. The strategic importance of AP was elevated as organizations recognized the need for better cash flow management and prompt supplier payments to keep goods and services flowing. ‘
Reading the report summary is a reinforcement of many things we have been advising members for years, and one of those is that the best way to get optimal results in financial operations is through automation, and planning for that effort should include an end-to-end review to see how all the pieces can digitally converge. Amazingly enough, the report also suggests that even though digital is ‘in’ and accelerating, a majority of respondents still have checks continuing to be high-volume payables tools.
This speaks to the lingering inertia around not fixing what isn’t perceived to be broken while ignoring the opportunity cost and potential competitive disadvantages of failing to transform. Interested readers should read the piece and if further interested, download the full report.
“An end-to-end approach can deliver enormous operational efficiencies, better cash management, better fraud protection, and richer insights—all while accelerating digital payment growth,” said MineralTree President Vijay Ramnathan. “We’ve seen this within our own customer base, where many organizations have reaped the benefits of AP Automation since the pandemic and the percentage of ACH and virtual card spend has grown 31% and 270% respectively. Despite the perceived barriers, the business case for AP automation is actually quite compelling, with a very quick payback and significant short- and long-term ROI.”
The pandemic provided a powerful catalyst for back-office digitization, but the benefits of AP automation extend well beyond the challenges created by remote work. MineralTree’s research demonstrates that organizations are increasingly embracing electronic payments and automated processes, even as checks remain surprisingly prevalent in accounts payable.
For businesses still relying heavily on manual workflows, the continued use of checks can represent more than an operational inconvenience. It can prevent organizations from realizing the efficiencies, visibility, security, and cash-management advantages available through an integrated digital approach. An end-to-end strategy can help businesses address these issues while ensuring that individual technologies and payment methods work together rather than simply replacing one manual process at a time.
As ACH, virtual cards, and other electronic payment methods gain ground, organizations have an opportunity to reconsider longstanding AP practices and evaluate the potential return from modernization. AP automation can provide a foundation for that transformation, helping finance teams reduce manual work while improving their ability to manage payments, suppliers, and working capital. For organizations that have delayed modernization because existing processes still function, the growing business case for automation makes the cost of maintaining the status quo increasingly difficult to overlook.
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group