The accounts payable automation market teems with solution providers.
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Welcome to the latest edition of the Finance and Accounting Technology Briefing, a biweekly newsletter jointly produced by StrategicCFO360 and The CFO Leadership Council. Our goal is to help finance pros make confident technology choices and give software providers a better understanding of their customers' needs.
A reminder: Our inaugural Finance and Accounting Tech Expo at the Javits Convention Center in New York City on October 29-30 is fast approaching. See the unique code at the bottom of this newsletter for a limited-time, free registration.
If you have feedback, ideas or product, people and company news for the Briefing, please email the editor at vince@CFOLC.com. We look forward to seeing you in October!
Accounts Payable: Oversupplied And Under-automated
The accounts payable automation market teems with solution providers. Gartner estimates 40 active standalone AP software vendors and possibly twice that number selling functionality wrapped inside other systems. Pity the CFOs who must wade through that throng to find the platforms suited to streamline their cumbersome, paper-intensive AP processes.
"The [accounts payable invoice automation] market is very dynamic with a constant inflow of entrants, both from new vendors and from vendors in adjacent market spaces," says Gartner in its AP automation market guide. "Buyers have a hard time finding the correct solution for them due to the large number of options that all look alike."
According to the Institute of Financial Operations and Leadership (IFOL), the popular reasons for automating AP are straightforward: speed up the payables process, increase controls/reduce risk and increase visibility across the numerous steps in invoice processing.
Many finance departments, though, are still under-automated regarding AP. In a second-quarter study by IFOL, half of the AP professionals surveyed spent more than 10 hours a week processing invoices, and 60% still manually keyed invoices into ERP or accounting systems.
Those practices can lead to costly mistakes, including large overpayments, payment of duplicate invoices, poor approval processes, mismatched purchase orders, late payments (eroding supplier goodwill), lost access to early payment discounts and poor visibility into outgoing cash flows. All that adds to higher processing (and personnel) costs. For some finance departments, fully automated, "touchless" invoice processing is still a back-office dream.
Meanwhile, all the competition prods software developers to add more and more functionality to standalone software and services. It also leads to consolidation, so vendors can provide more comprehensive systems in a market that has evolved, according to Gartner, from three submarkets: e-invoicing (capture), AP automation (match/code and workflow) and payments.
A scan of vendor websites shows what, at a minimum, a standalone AP automation platform should be able to do: capture supplier invoices electronically; extract data with OCR to eliminate data entry; match purchase orders to receipts and invoices; intelligently route payment approvals; and schedule batch payments.
Fortunately, according to Gartner, vendors are extending functionality well beyond that to include:
- Supplier portals that accomplish more than just invoice submission and status checking of payments. They can also onboard suppliers and aid in dispute and payment management.
- Full payment capabilities, including ACH, virtual cards, wires and cross-border.
- Advanced analytics, including reports on invoice failures, payment term compliance and payment discount impacts.
Meng Liu, a senior analyst at Forrester Research, sees the following as critical differentiators among providers:
- Exception handling, particularly the management of non-PO invoices, for customers with complex billing practices.
- Robust tax compliance and e-invoicing, so customers can "navigate the intricate web of regulatory requirements" created to catch companies trying to evade taxes.
- Advanced data analytics for cash management, including actionable insights into optimizing working capital and forecasting financial needs more accurately.
As with any finance and accounting solution, there are promises of more sophisticated AP automation through the use of AI and ML: according to Gartner, those include AI-based intelligent matching of invoices and POs, smart workflow engines that route invoices with errors to the correct person and improved supplier identification through AI analysis of multiple data points on an invoice.
There's potential value in AP automation if a company has an invoice capture to OK-to-pay cycle of more than seven days or the invoice touchless rates are less than 50%, says Gartner.
But don't forget an important advantage to AP automation, especially when optimizing working capital is paramount: having enough information and control over the AP process to pay suppliers more slowly than usual. In times of constrained liquidity, having waded through this crowded market will be remembered as time well spent.
—Vince Ryan, editor, The CFO Leadership Council. vince@CFOLC.com
From our partner:
A guide to surviving AI. What skills do finance professionals need to hone if they want to thrive in this new, AI-augmented reality? Here are the five most important.
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Erin Sawyer is the CFO of Certinia (formerly FinancialForce), a Services-as-a-Business platform for services estimation and delivery to customer success management and financial planning and accounting. We asked Erin what software and systems Certinia runs internally.
At the core, we use integrated ERP and professional services automation on the Salesforce platform to unify our financial planning, accounting and project management teams. Our organization also uses tools for revenue recognition and forecasting to automate calculations and maintain compliance with standards like ASC 606 and IFRS 15. As a CFO, my tech stack helps me pivot from growth defined by revenue to growth defined by profitability.
What's your joy, and what's your headache?
What brings me joy is efficiency and accuracy. When it comes to managing financial operations across a global organization, achieving these two together feels like Christmas morning. I’m a big proponent of companies looking at opportunities to automate revenue recognition, compliance and more—it just saves time.
One of the biggest headaches I have faced in my career was trying to fit our existing processes into new systems through extensive customizations. This approach quickly led to more problems than it has solved. I’ve learned that there’s value in leveraging the best practices inherent in the technology and adjusting our processes to match these systems.
If you could wave a magic wand, what would you make software companies do for you?
If I could wave a magic wand, I’d aim for software that fully (and ethically, compliantly and securely) leverages AI and machine learning for project assignments. Imagine a system that could analyze employee profitability, availability, efficiency, location and bandwidth to make the best scheduling decisions. Instead of resource managers simply picking the first available person, the system could recommend in an instant the most profitable and efficient choice based on comprehensive data analysis.
What’s your best piece of tech advice for others in your job?
There is great power in building a strong team around you. My advice is that you don’t have to know everything but how to get it. Learn the business, the team and the strengths and opportunities and how you fit into it.
Invest in solutions that not only meet current needs but can also scale along with your business. Look for platforms that offer robust integration capabilities and choose vendors committed to continuous improvement and customer support. Embrace automation to reduce manual processes and use analytics to gain actionable insights from your data.
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Have news to share? Drop me a line at vince@CFOLC.com — Vince Ryan, editor
SaaSWorks, a financial data platform, announced its rebranding to FinQore. The new name reflects the company’s support of usage-based, transactional and services business models.
Salesforce signed a definitive agreement to acquire PredictSpring, a retail POS vendor with a native cloud solution that enables store associates to engage shoppers and complete transactions on mobile devices.
Two accounting automation platforms raised early-stage funding: Rillet landed a $13.5 million round to build its ERP for high-growth companies. Materia, a GenAI platform for public accounting firms, launched with $6.3 million.
Tax software vendor Avalara announced the availability of Avi, its GenAI chatbot that provides customers conversational support for product questions, troubleshooting and other issues. Avi is trained on the company’s custom knowledge base.
B2B payment network Flywire acquired Invoiced, a SaaS platform for workflow automation of the entire accounts receivables process. According to Flywire, Invoiced has deep integrations with leading accounting systems and ERPs.
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Have news to share? Drop me a line at vince@CFOLC.com — Vince Ryan, editor
Healthcare cost management company MultiPlan named Doug Garis EVP and CFO effective August 5. Garis was previously the CFO of Oracle Health and Life Sciences and head of FP&A at Cerner.
Intapp named David Morton as chief financial officer, replacing Steve Robertson, who is retiring. Morton was previously CFO of DigiCert and Anaplan and chief accounting officer of Tesla.
Former GitLab chief revenue officer Chris Weber joined Amazon’s Project Kuiper satellite business as its vice president of sales and marketing. A former executive vice president of Nokia, Weber was chief business officer of UiPath before joining GitLab.
Paycom Software appointed Archana Vemulapalli to its board of directors. Vemulapalli is vice president of global commercial sales at Advanced Micro Devices and a former head of product and global strategy for data and AI at Amazon Web Services.
SAP’s Chief Revenue Officer Scott Russell and Chief Marketing and Solutions Officer Julia White have reached a mutual agreement to leave the company’s executive board, effective August 31. SAP CEO Christian Klein will assume responsibility for the sales organization while the company searches for Russell’s successor.
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Stock performance is as of the market close on August 7, 2024
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Plan to join us at the Finance and Accounting Technology Expo, the country’s largest annual trade show for buyers and vendors of corporate finance and accounting software. This year’s event will occur at New York’s Javits Convention Center on October 29-30, 2024. This is an excellent opportunity to network with industry peers, learn from experts and discover new products and services. Register online at StrategicCFO360.com/FATE/register/ and get a limited-time, free registration using the code czh510.
Keynote just announced! Daymond John, founder of FUBU, Shark Tank judge and bestselling author, will bring his unmatched expertise to the stage.
Unlocking Hidden Value: A CFO’s Guide to Establishing Procurement
Aug 21, 2024 | 1-2 pm EDT | Live, Online
Proven Strategies to Lower Health Plan Costs
Aug 28, 2024 | 1-2 pm EDT | Live, Online
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