Covid-19, and specifically the new age of lockdowns, has proven to be a stress test for purchasing and accounts payable functions that will act as an accelerator for both organisational and technological change.
In a post-Covid-19 world, hybrid remote working will emerge as the new normal for the majority (55%) of accounts payable staff with digital systems serving as the great enabler.
Artificial intelligence (“AI”) was gaining ground in accounts payable before Covid-19 (21%) and over the next 12 months (33%) will gain more ground. It is unclear whether in the long term it will complement or be a substitute for the role of staff. A sizeable minority (24%) see no value from AI in accounts payable.
The dramatic change in the economic environment over the last 12 months has shifted the key financial metrics from revenue growth to cost-cutting. This places more emphasis on the purchasing and accounts payable functions.
One form of cost-cutting during the pandemic has been staff furlough and accounts payable staff have experienced this across all sectors.
The late payment of suppliers and particularly the payment practices of large companies have been in Government focus for some time. The pandemic has seen a deterioration in measured payment practices. However, the majority (74%) see themselves as good performers.
The timeliness and accuracy of management accounts and reliable cash forecasting are brought into focus in uncertain times. A majority (71%) of businesses report within 10 working days and a majority (94%) complete cash forecasts.
Budgets are a key overarching control for most businesses (90%) and those that use this control at the point of management reporting (58%), publish more quickly (79% within 10 working days).
In cash forecasting, the visibility of forward commitments is key to avoiding financial surprises. Most businesses (62%) use integrated forecasting (sourcing data from their accounts payable and purchasing systems).
The pandemic has emphasised the importance of the supply chain. A major element of a healthy supply chain is supplier trust. Many businesses (68%) use competitive tendering and related contractual terms in lieu of building supplier relationships. Compliance with these, in such instances, is key to trust.
Efficiency, visibility and control in the purchasing and accounts process are vital for businesses to achieve timely and accurate accounts, reliable cash forecasting and supplier trust.
In this survey, we see that generally the movement away from paper-based processes towards digital has yielded improvements.
Digital systems have:
- contributed to faster processing times by reducing the time spent transforming data on paper into the accounting system, introducing ease of use that helps improve compliance and joined up processes that enable a faster accounts close;
- improved control, delivering more robust systems to deal with fraud and error;
- and provided greater visibility, reducing the duplication of work and improving customer service levels, both at the transaction in process and audit level of activity.
There remains much fragmentation and anomalies exist at many levels:
- Invoices received by email being printed out (85%) even if the system is digital (25%);
- The accuracy of account coding in digital environments is still considered to be inferior to manual coding by accounts staff.
The report is based on the views, gathered in February 2021, of 210 financial decision-makers who have responsibility for the accounts payable function. They represent medium (50-249 employees) and large companies (250-plus employees). Their job titles include Finance Managers, Senior Finance Managers, Finance Controllers and Chief Financial Officers.
Visit www.invu.net to read the report in full.