Controllers Council recently held a webinar on 5 Ways Accounts Payable Departments Can Help Offset Recession Impacts, sponsored by AvidXchange.
AvidXchange is a leader in automating invoice payment and AP processes. A FinTech unicorn AvidXchange processes more than 140 billion in transactions annually, with 1,500 employees and 6,000 customers.
Our subject matter experts included Rhonda Greene and Michele Retzbach. Rhonda is a Certified Accounts Payable Solutions Consultant or APSC, and Principal Solutions Consultant for AvidXchange. She brings more than 25 years of experience to help companies streamline AP. Michele is a Senior Solutions Consultant for AvidXchange and specializes in helping companies create efficiencies in AP processes through automation and best practices. She has expertise in construction and real estate, and she joined AvidXchange in 2016.
Following are key takeaways of this discussion. If you are interested in learning more, view the full webinar archive video here.
Economic Challenges that We’re Facing
We’re all still recovering from the pandemic. With that we saw a big shift of more and more businesses looking to automate accounts payable as a result. And especially because more companies have taken on that kind of hybrid part-time working in the office, part-time working remote from home kind of mindset.
To understand how businesses are preparing for a potential recession, AvidXchange surveyed 500 finance professionals at middle market companies back in August and these are some of the things that we found. 88% of respondents are concerned about the current state of the economy. 70% of respondents said their company is adjusting its budget over the next 12 months. And 30% said they’re preparing for the forecasted recession by reducing or eliminating office space. And these are things that we hear when we’re out talking to our peers in different industries. So where are businesses refocusing resources? A third or 34% of respondents said their company is decreasing their budget for overhead costs, so things like rent and utilities. And again, with the new hybrid remote work from home type environment, we’re seeing and hearing from folks that we work with that rent is being impacted because more and more companies are downsizing.
30% of the respondents said they’re preparing for the forecasted recession by investing in technology to increase their business efficiencies. So, things like AP automation, AR automation, if not already, payroll automation. 30% said of digital transformation projects that their company is prioritizing to be able these automation technologies to be able to streamline their internal processes. And much like the businesses who delay digital transformation in the wake of COVID, those fighting the reality of increased cost could struggle to compete with those that are adapting to circumstances out of their control.
The State of Play for Accounts Payable
So, in that same survey, it became clear to us that attracting, retaining, and growing top talent while navigating economic uncertainty will require AP professionals to really rethink their processes. So, we asked, how would you describe your AP department’s current level of automation? And only 4% said that it was fully automated, 33% at largely automated, 57% at partially automated, and 6% still running a manual paper-based department. That partially automated 57% number, I know most companies now are taking their invoices rather they’re receiving them paper through the U.S. mail, or if they’re maybe being emailed the invoices by their vendors, but they’re scanning them and getting them into a digital file cabinet.
So really that is a part of automation, and what we see a good portion of companies have already moved toward, which is a huge benefit. But really, there’s so much more to automation, way more than just capturing the invoice, really all the way through to making those payments. So, they also told us that high staff turnover contributes to more errors, lower productivity, late payments, missed early payment discounts and burnout among the staff who remain. And so really, automating those AP processes can help organizations do more with less, and it can allow your AP department to grow without adding additional head count to their teams.
Five Ways AP Departments Can Offset Recession Impacts
1.Ensure Business Continuity
Business continuity remains vital as staff turnover can prove very costly for company if safeguards aren’t in place to keep operations moving. And just because your workforce isn’t together in one office doesn’t mean that your financial operations can’t be centralized.
Steps your AP team can take today:
- Centralize important documents
- Design custom, role-based workflows
- Address potential “tribal knowledge” challenges
2. Closely Manage Costs
Record inflation is forcing companies to spend more across the board.
Steps your AP team can take today:
- Minimize reliance on paper
- Handling paper invoices requires manual data entry that costs your business time and money
- Reduce the number of paper checks used for payments
3. Analyze Data to Pinpoint Savings
Taking a closer look at invoice and payment data can uncover unique saving opportunities.
Steps your AP team can take today:
- Look for any unusual increases in recurring payments or charges to repeat vendors
- Take stock of average time and cost to process and pay invoices
- Build custom dashboards and reports that provide actionable insights
4. Capture Early Payment Discounts
AP teams should regularly contact vendors to inquire about early payment discounts.
Benefits:
- Suppliers are paid earlier than usual, which improves cash flow
- Purchasing companies reduce the costs of goods and services
- The two-way relationship is improved
5. Improve Vendor Management
Buyers understand the importance of their suppliers, but you must invest the time and money to better those relationships
Steps your AP team can take today:
- Share goals and priorities
- Identify and select top vendors
- Negotiate win-win outcomes
- Monitor KPIs
- Invest in the right tools
To view the complete webcast, link here.
ABOUT THE SPONSOR:
AvidXchange is a leading provider of accounts payable (“AP”) automation software and payment solutions for middle market businesses and their suppliers. AvidXchange’s software-as-a-service-based, end-to-end software and payment platform digitizes and automates the AP workflows for more than 7,000 businesses and it has made payments to more than 700,000 supplier customers of its buyers over the past five years.
