2022 trends in AP automation: Transition, efficiency and investment

For the third year in a row, Strategic Treasurer and Deluxe have partnered to survey more than 200 companies and financial institutions across the world to identify and analyze account payable (AP) insights and emerging trends. Strategic Treasurer Founder and Managing Partner Craig Jeffrey, along with Deluxe’s Executive Director of Digital Payments Solutions Chris Clausen, shared the results of the 2022 Modernizing AP Processing survey during a webinar in May. 

The survey itself focused on areas that account payable and other financial professionals care about: pain points; priorities; reasons companies will move providers; areas where your peers see increasing value in this part of the cash conversion cycle; areas of expected investment; changing work locations and activities; and more.

Technology spending plans

“At Deluxe, we’re seeing more and more companies look to migrate to electronic solutions and so they are planning to spend on the technology necessary to make those migrations happen,” Clausen shared. While different automation solutions and automation software require different amounts of tech spending, almost every digital solution will require some type of change to spending in terms of implementation. 

Just over a third of companies plan to spend more or significantly more on AP technology in the next two years. This tells us that more companies and financial institutions are preparing to automate their payment processes using software and solutions, and they’re even more prepared to adjust their spending to do so. The move to technology spending correlates on the AR side as well, with 29% of respondents saying they plan to spend more or significantly more over the next two years. 

A closer look at payments growth

The 2022 Modernizing AP Processing Survey uncovered an expansion in the number of payments made per months and growth in the number of payment channels (i.e. PayPal, Zelle, EBPP, VISA and Mastercard). In 2022, 45% of companies and FIs are making more than 2,000 payments per month, compared to just 36% of respondents in last year’s survey.

Companies are making more payments for a variety of reasons. “One of the findings that we’ve had on the Deluxe side is the number of unique payees that a business is paying has actually increased,” said Clausen.

There are a few possibilities for this growth: Some are motivated the dynamics in the marketplace as companies have had to search out new partners for fulfillment, vendors and suppliers to deal with supply chain disruptions. Or there are companies being dislocated or going out of business. Overall Clausen shared we’ve seen that within business payments, on an annual basis, the average growth rate is about 4% year over year and that’s been going on for some time.

“We’ve seen that percentage correlate with what we’re seeing in our digital payments groups,” added Clausen. “That’s one of the benefits of digital payments is you can see some of these patterns emerging and look for some of the underlying root causes.” 

Increased move to AP automation

The top priorities for companies and FIs who want to move to full-electronic processing included: cost savings (73%), more transparency with data (44%), improved cash flow (44%), low IT spend (32%) and incremental revenue (20%).

Cost savings continues to be a primary driver to AP automation. “We’re seeing that across the board. It means that whatever solution you look at, you want to make sure there’s a good ROI,” said Clausen. “The good news is, with the industry moving to automation, those ROIs are going to grow.”

While cost savings remained the top motivator for companies and FIs to move to fully electronic payment processing, “more transparency with data” moved up on the priority list as well. Up from 29% in 2021, 44% of survey respondents said they wanted more data transparency as motivation to automate their AP processing. This 15-point jump nearly matched all other changes combined.

“What that tells us is there’s a recognition of the value of transparency that is inherent in electronic payments,” said Clausen. By focusing on the data value proposition that digital payments offer, more companies and FIs will have interest in moving to fully electronic processes.

Accounts payable automation roadblocks 

Management priorities and IT availability were the top blockers of automation for all companies. Lack of staff resources was a roadblock for 55% of those surveyed and IT staff limitations affected 53%. 

Jeffery noted the difference in magnitude between large and small companies points to “notably more significant blockers” at larger companies. For example, 65% of larger companies reported that management initiative prevents them from being highly automated, in comparison to 49% of smaller companies. 

“Overall, there is a broader recognition across the industry that a good AP strategy can actually help drive revenue both directly and indirectly. It creates new opportunities for revenue and new paths to business. It turns what used to be cost centers into profit centers,” said Clausen. “A sophisticated account payable strategy can leverage all of the items we’ve discussed and also help you prioritize the move to fully electronic processing.”