4 Emerging Trends in AP Integration to Watch in 2023
Staying abreast of the latest trends in accounting can feel like a full-time job for any seasoned professional. That’s why it’s always important, on a regular basis, to revisit ways to implement industry-proven advice and strategic best practices into your company’s financial strategies. As the technologies surrounding the sophisticated world of accounts payable (AP) grow, so should your knowledge of the most current trends affecting the industry.
There are several exciting directions that for-profits and nonprofits should watch closely this year. It’s important to note that while financial technology is always advancing due to the high level of importance associated with a business’s banking needs, it does take time for the financial world to implement new approaches. However, in the wake of the global COVID-19 pandemic and the associated rise in remote work environments, many of these trends have been expedited and will make an impact sooner than experts previously anticipated.
In this article, we’ll examine four trends that have staying power in the AP world and evaluate their impact on businesses. These trends include virtual AP payments, the growing prevalence of cashback on AP spending, decreased cost because of AP automation, and the benefits of streamlined reporting due to improved analytics and technology.
1. Virtual AP Payments
As AP processes continue to evolve in correlation to the financial technological platforms available, look out for increased opportunities to process AP through new virtual mediums. Specifically, there will be an uptick in the number of professionals looking to make payments through ACH, bank-based bill pay, wires, and virtual cards.
For company profiles that range from hungry startups to seasoned businesses, keep in mind that there are no major differences in the AP process, so these applications will be readily available for widespread use across all industries. Of course, there may be some fluctuations between which industries will gravitate towards certain payment methods.
While these trends are not new per se as they have been emerging for a long time, their application and general usefulness will be adopted as the new norm for AP departments. It will be interesting to chart the use trajectory of more traditional methods, such as paper checks and wire transfers, that may become antiquated in today’s technologically-savvy business environment. While this is still somewhat debated within the industry, it is important to think about which methods will win long-term, as these are all different processes that essentially serve the same function. One salient point is clear: one of them will emerge as the dominant forerunner and become accepted as the most popular choice at some point soon.
2. Cashback on AP Spending
AP spending is a large percentage of most businesses’ spending each month. Therefore, it only makes sense that emergent, forward-thinking companies would search for ways to maximize their ROI in this expense area. It is becoming increasingly common to get cashback on transactions that occur on AP software for spend management, which is an enticing feature for many companies looking to make the most of their budgets. Software programs like Airbase or Ramp (and there are plenty of others) often go as far as having individual spend cards, which can make it easy to earn points on a cash-based reward system.
The benefits of earning revenue back on necessary expenditures are obvious. Having a percentage of your AP spend come back to you in the form of cash back—even if it’s a small percentage—is a huge win for AP departments. This is also a fantastic way to reduce overall operating costs by choosing payment options that allow your company to get a return on that spending. The prevalence of these types of incentives will help drive many AP departments toward certain software that can offer these types of reward programs.
3. As AP Automation Improves, AP Costs Will Decrease
One of the benefits of the enhanced automation for AP integration is that there has recently been a reduction in the overall costs associated with AP. Thanks to advancements in AP automation, there is less of a need to spend money and time on things like tracking down envelopes, paying for postage, and tedious manual entries of numbers. However, with time-saving technology, these tasks can be automated and can provide better mitigation against the risk of human error.
Time saving is especially relevant as companies around the globe make strides to incorporate and adopt enhanced remote work environments, streamline AP processing, and cut costs. AP automation provides a holistic solution to these evolving needs.
4. Deeper Insights Into Data Provide Streamlined Reporting
As AP integration refines existing strategies for processing payroll, it also makes it easier to understand and interpret data. One of the major benefits of having all your numbers consolidated into one system is that it provides the flexibility to access deeper insights that help your data analytics make more of an impact.
One of the biggest advantages is that reporting becomes a lot clearer. When you make payments that are processed through your AP system instead of your bank account, there is an added level of transparency that simplifies reconciliation. Understanding key numbers such as vendor spend, spending by categories, the volume of disbursements by payment method, and the percentage of cashback earned on spending provides deeper insight of the data.
Ride the Emerging Wave
While changes are always occurring in the financial sector, prudent financial logic relies on implementing changes that work in tandem with your business’s goals. Take time to research the right fit for your industry and stay up-to-speed on the latest software that fits your needs. Whether you are a small business or require an enterprise solution, look for these trends to become more apparent in 2023 as you navigate the changing financial tides in the wake of the global pandemic.
Giuseppe Salamone is a Co-Founder of Tentho, a financial firm specializing in bookkeeping, accounting, and CFO advisory services. Combining insights derived from his own entrepreneurial journey with his 15 years of experience in the financial sector, Salamone works to help business owners understand and take control of their finances. Visit tentho.com to learn more.