B2B Digital Payments News

As COVID Accelerates Back-Office Digitization, AP Automation Moves to the Forefront

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MineralTree’s 6th Annual State of Accounts Payable report highlights the progress finance teams have made in AP and payment automation, and the barriers they still need to overcome

 MineralTree, an Accounts Payable (AP) and payment automation solution provider, today unveiled its sixth annual State of Accounts Payable (AP) report. 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.

MineralTree’s 2021 State of Accounts Payable Report explores how a once-in-a-lifetime event left its mark on finance organizations and the lasting effect it will have on AP processes going forward. Several key themes and trends emerged:

COVID accelerated back-office digitization, with AP becoming the #1 priority

  • 58% of all respondents—and 70% of those who worked fully remotely during the pandemic—believe that COVID was a catalyst to digitize the finance function.
  • Respondents ranked Accounts Payable (AP) as their #1 back-office digitization priority, followed by forecasting and Accounts Receivable (AR). Enabling a remote workforce, improving cash management, and ensuring business continuity were all key drivers.

Supplier relationships grew more strategically important

  • Despite the various pandemic-induced challenges and disruptions, only 10% of respondents made fewer supplier payments over the last year. Nearly 40% made more.
  • 58% said their supplier relationships grew more strategically important; the percentage was even higher for healthcare organizations (73%) where the steady flow of supplies is critical to delivering care.

B2B digital payments grew but haven’t yet reached the tipping point

  • 44% of respondents reported a decrease in check payments, while 50% noted an increase in ACH payments over the last 12 months.
  • Despite digital payment growth, 45% of respondents still make more than half of their business payments via check; ironically, they cited ease-of-use (69%) and cost (44%) as the primary drivers for current payment types.
  • 64% of respondents intend to make more digital payments in the next year, but it’s clear they haven’t yet reached the tipping point and obstacles to growth remain.

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Top barriers to automation reveal inertia and perception issues

  • Although the pandemic exacerbated challenges with manual AP processes, the biggest barrier to adopting AP automation is the belief that current processes work, cited by 32% of respondents.
  • Lack of budget (18%) and lack of clear ROI (16%) were also key barriers, though they can be overcome by building a holistic business case that encompasses efficiency gains, cost reduction, and virtual card rebates.

AP automation accelerates digital payments

  • Overall, 32% of respondents have implemented some form of AP automation. However, only 9% have automated the end-to-end AP process from invoice capture through payment execution, suggesting a significant opportunity for improved efficiencies.
  • 64% of respondents who have automated are processing more payment volume with the same size team. They also report above-average increases in ACH and virtual card payments, along with a greater reduction in check usage.

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“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.”

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