Ardent 2024 ePayables Study: Automation, AI Earning AP a Seat at the Strategy Table

Accounts Payable (AP) continues morphing from a series of back-office paper chores into a prime focus of digital transformation. Adopting AP automation and optimizing strategies around it today requires leaders to step up and meet rapidly evolving market conditions. 

In The State of ePayables 2024: Money Never Sleeps, a new report from Ardent Partners, over 200 AP executives surveyed describe ePayables today as fundamental to supporting the speed and accuracy of outgoing payments. The cash management capabilities alone can serve a vital role in strategic planning. That wasn’t so in 2019. Much has changed. 

Not surprisingly, the 2024 edition found that AP teams are ramping up efforts around artificial intelligence (AI). What is startling is the speed of change as the trend builds.  

Noting that 31% of AP teams now use some form of AI, Ardent said the figure will grow to 45% by the end of 2024. It’s a more rapid adoption rate than new tech typically undergoes. Ardent predicts that 76% of AP operations will be leveraging AI within the next 12 months. 

“When you look historically at how enterprise technology has been adopted, not just AP, not just procurement, but more broadly, it takes decades to get to the anticipated adoption rate or usage rate of AI by AP organizations that we predict by the end of this year,” said Andrew Bartolini, Founder & Chief Research Officer at Ardent Partners. 

AI in existing and emerging forms (namely Generative AI) are already exhibiting the “up and to the right” growth pattern we see in the hottest tech trends. And while rebates can and do monetize AP automation for many users, Bartolini added that the idea is less to make AP generate revenue than to add value, realize savings, and gain efficiencies through data. 

“The goal is to be operationally efficient and effective, and then to provide the information needed to the cash management function within the organization to make decisions that impact the bottom line,” Bartolini said. 

AP Gets Strategic 

With roughly one-quarter of those surveyed planning to embrace near-shoring and on-shoring for procurement in coming quarters, new suppliers will need to be onboarded. Bartolini said a multi-year AP strategy can better adapt to these and other future changes. 

As that happens, AP teams will face new challenges that are best handled by automation, and the skills to use it. For example, there are hurdles to clear when trading in regions or countries that have different invoicing mandates. Bartolini warns AP teams to be aligned with the “larger, bigger picture moves” in this market space, and in their organizations. 

“Expectations are a lot higher now. When you go to Google and search for something, you previously had to go to individual links to get your answers. Now the answer is generated for you. That has also become the expectation of your client base,” said Gunita Bindra, Vice President of Product Management & Partnerships at Bottomline.  

Bindra added that “We’re not there yet, but with automation, AP is evolving to meet these new expectations. No longer is a controller or CFO going to be satisfied with the old way of doing things. Moving forward, answers need to be in front of you even before you think of the question.” 

Similar thinking is influencing AP’s rising strategic role. 

This latest in the 19-year study series found that 73% of AP teams surveyed now have an AP strategy. Yet five years later and on the other side of a world-changing pandemic, an alarming number (26%) still have no AP strategy. That’s shortsighted given the pace of change now.  

Even so, the growth in ePayables users in six years also shows healthy interest among CFOs in this type of B2B solution, especially when speed and security are top priorities. 

“It has been a long, steady advancement within the enterprise, this move away from a historically siloed, highly tactical organization to something that is more strategic and that has become a process excellence hub,” the study said.  

Just be sure to share your high-level AP strategy with everyone on the team. 

Detailing the state of strategies today, 36% of AP leaders said they’re executing a multi-year strategy compared to 37% who are going year by year. As was noted, 27% of AP professionals surveyed have no AP strategy. That means 64% of users are without a multi-year plan for AP and risk falling behind competitors as automation is adopted. 

A long-term strategy for business payments is Business 101, as Bartolini sees it. “You can manage to the quarter, get a great quarter, and keep doing that over and over,” he said. “But longer-term planning ensures that you have agility.”  

That means the ability to pivot when something changes. Ancient business wisdom 101 is clear on that as well: something always changes. 

Better AP, By the Numbers 

The 2024 report focuses on how automation enhances AP’s role in the value chain, elevating its importance far beyond a cost center associated with payments. As AP automation positively impacts cash management, analytics, and more, interest is rising. 

“We've been talking about a data driven procure-to-pay or source to pay operation,” Bartolini said, “Organizations need to get their data houses in order. They need to become automated so that they can begin to organize and clean their data so that when the AI revolution hits, you're prepared to capitalize on that.”  

In evaluating the current state of AP, the survey uncovered prime reasons other than AI to consider automation in this function, including the following eye-openers: 

• AP teams spend $9.40 on average managing each invoice. B2B website CFO also published a $9 range for bottom performers, saying the median spent was nearly $4. Ardent notes that “…there is still plenty of room for improvement.” 
• The average AP organization takes close to 10 days (9.2) to process a single invoice. 
• Straight-through processing (STP) requiring no human intervention is ideal for handling payments, but only 32.6% of B2B invoices move via STP today. Ardent argues that STP use should be a key performance metric for AP teams. 

Becoming Best-in-Class 

Leading forms of B2B ePayables (payment networks, ACH, wire transfers, commercial cards, virtual cards) examined as part of the study now “constitute over 68.3% of all payments made by the average enterprise,” Ardent found. That’s due, in part, to the fact that over half (51.2%) of invoices flowing into the average enterprise are digital, not paper. 

The profile of a Best-In-Class AP operation reflects a faster, smarter way of transacting: 

• They spend $2.78 to process a single invoice (compared to $12.88 for all others) 
• They experience 3.1 days in processing time (compared to 17.4 days for all others) 
• They have an Invoice Exception Rate of 9% (compared to 22% for all others) 

“Best-in-class AP teams achieve per-invoice processing costs that are 78% lower than their peers, and invoice processing times that are 82% faster than all other groups,” Ardent said. “Their invoice exception rates are 59% lower than the rest of the marketplace.”